A new ‘Panchsheel’ needed for BRICS

A new ‘Panchsheel’ needed for BRICS

By M.D. Nalapat | 26 August, 2017
BRICS, five member-states, Red Tape Raj, Industries Ministry,  Prime Minister Narasimha Rao
A consensus needs to get built that the five member-states of BRICS will renounce the use of force against each other.

That Europe as a continent gained mastery over the rest of the globe for close to six centuries is because of the confidence within its population that little was impossible. They obeyed the ancient Indian dictum to “aim for the stars even if you miss”, rather than setting their sights low and then being satisfied with coming close to what at best would be a miserable result, the mindset of several elites in Asia. But times have changed, although India’s colonial-style bureaucracy has survived the British Raj in order to enmesh the population in Red Tape Raj. Despite the diversity of the country, the effort of those entrusted with governance has been a constant effort at funnelling the different needs and systems in India through a single spout, on the way rubbing off individuality and excellence and creating an undifferentiated outcome distinguished only for its mediocrity. This has especially been the case in education, whether it be medical, the humanities or science. All-India examinations, all-India syllabi, all of these and more work towards creating mass-produced brainpower far from the cutting edge. Any sparks of excellence get driven out through neglect, if not outright condemnation for such effrontery. Whenever the colonial collection of policy straitjackets got loosened even by a smidgen, such as what took place in the Industries Ministry when it was handled by Prime Minister Narasimha Rao in the early1990s, the performance of domestic players improved disproportionately. Early on, vested interests that thrive on the stifling controls over individual initiative that are a dominant facet of the colonial construct (another being the squeezing out of revenue no matter what the health of the contributing sector) rallied against Narasimha Rao. They midwifed the efforts of 1994, which resulted soon after in splitting the Congress Party, leading to the emergence as a national alternative of the BJP. After what happened to Rao, succeeding Prime Ministers have been hesitant in enacting fundamental reform of economic policy, out of fear that only a Robin Hood stance (of taking from the rich and giving to the poor) would ensure victory during the elections. The problem is that it is the (relatively) rich that give employment to the poor, and while it is essential to stamp out abuse and illegality, the conduct of business and the accumulation of wealth should not be slowed down by 1950s-1970s-style measures that are confiscatory and obstructionist. Even such solemn covenants as that signed between the Princely States and the Union of India were torn up without a tremor, on the principle that wealth is evil in itself. While Deng Xiaoping sought to make every Chinese (or as many as possible) rich, in India, the effort of Nehruvian (colonial-era) policy was to make poor as many honest but prosperous individuals as possible. Small wonder that the average income of India remains among the lowest in the world, far below that of the other billion-plus country, China. 

Just as millions voted for Rajiv Gandhi in 1984 on the promise of change, voters in 2014 chose the BJP led by Narendra Modi in the belief that he would ensure the substantive and systemic changes in governance and policy that had been elusive for too long. Confidence in Modi is still high, visible in the belief that he will soon begin to accelerate the process of change, now that he has settled in and mastered the processes of governance at the Central level. The expectation is that needed reforms, such as horizontal entry into the Central and state services at all levels from outside the government, will come about. That Modi is a visionary has been proved by the 8 November 2016 demonetisation of 86% of the country’s paper currency, in order inter alia to force through a shift to digital modes of payment, such as what has taken place in China during the period since Xi Jinping was put in charge five years ago. That shift in behaviour came about as a result of expansion of indigenous digital platforms and improvement in bandwidth, not by rendering worthless China’s paper currency. The Reserve Bank of India and NITI Aayog were wrong in assuming that a sharp fall in liquidity would change habits without seriously impacting employment and output, especially in the so-called “unorganised” sector. There is nothing unorganised about this sector. It even pays “taxes”, in the form of bribes to officials and politicians, and much of it would be rendered uneconomic were regular taxes to be imposed over and above such “unofficial” imposts. Hence the importance of Prime Minister Modi’s strenuous efforts at ensuring corruption-free procedures. Now, after so much has happened to the economy as a consequence of the DeMon measure the institution championed, the RBI seems to have accepted the need for liquidity and is no longer starving the economy of currency. A changeover to digital systems in place of cash needs a tax structure that has much lower rates than at present, as well as ways of ensuring compliance that are not reliant on regulations that empower (and subsequently enrich) officials beyond the limits that are normal in democracies. Overall, Modi can be expected to ensure by 2019 that present GST rates fall and compliance be made easier, given his genius for practicality. 

In days, Prime Minister Modi is expected to head for Xiamen, for the 9th BRICS Summit. There, a consensus needs to get built that the five member-states will (a) renounce the use of force against each other; (b) abstain from any action that threatens the security of any other; (c) ensure visa-free entry within the BRICS bloc; (d) have Russia and China take up the case of India, Brazil and South Africa as Permanent Members of the UN Security Council; and (e) set up a BRICS headquarters that would serve as the coordinating agency for cooperation between the five, perhaps in Durban, South Africa. The time for a 21st century Panchsheel among the BRICS Five has arrived, and hopefully this will become a reality at Xiamen. The five leaders need to aim at the stars during the 3-5 September meeting and not again keep their sights low.

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