India must look beyond the 5% world to a 100% universe

India must look beyond the 5% world to a 100% universe

By M.D. Nalapat | 23 February, 2013
Indian Small Arms System (INSAS) rifles have received cold shoulder from procurement boards who prefer foreign equipment instead.
The “5%” world is where the West has succeeded in bending the rest of the globe to conform to its interests, thereby jettisoning those of the remaining 95%.

Vibhav Upadhyaya has spent two decades — or close to half — of his life seeking to build a partnership between the two countries that he loves, India and Japan. He has visited that ancient and aloof country several dozen times, forging friendships that stretch from commoners to Prime Ministers. To every discussant, Vibhav talks about the "5%" world, by which he means the way in which the West has succeeded in bending the rest of the globe to conform to its interests, thereby jettisoning those of the remaining 95%. Certainly, the West has been hyper-successful in India, especially in the field of economic policy. Into its seventh decade of existence as the somewhat diminished title holder to the subcontinental British Empire, this country still has to beg or buy almost all its critical technologies from Western countries, including in national defence. Especially since the 1980s, any pretence of seeking self-sufficiency has been given up, with indigenous lines of manufacture such as the HF-24 aircraft, the Indian Small Arms System (INSAS) rifle, the Vijayanta tank and the Dhruva helicopter being given the cold shoulder by procurement boards hungry for French, British, US, Russian and other foreign equipment, usually purchases at prices far above those offered to buyers other than those unique purchasers, the oil-rich countries of the Gulf. Of course, Indian private companies are shunned, while foreign entities are welcomed.

The manner in which the "5%" world has succeeded in harnessing India to the cause of its betterment, despite frequent protestations of third world solidarity from South Block, can be gleaned from the policies of the Reserve Bank of India and the Ministry of Finance, not to mention that trusted ally of the World Bank, the Prime Minister's Office. These institutions are thought-led by birds of passage who take leave of absence from universities and other entities in the NATO bloc to take charge of major sectors of policymaking in India. Because they so often succeed in bending this country's policies to fit the interests of the "5%" world, these peripatetic "experts" usually land on more delectable perches when they return home to campuses in the US, the UK or other civilised countries after lording it over the natives in India. That Manmohan Singh loves and trusts those who have — like him — been educated abroad is perhaps one reason why he has presided over a halving of the rate of economic growth since he took office in 2004, and why Indian business is now migrating overseas rather than endure the hell that operating in India has once more become. The man who the PMO ensured got a second term in office after having damped growth during his first, RBI Governor Subba Rao, has implemented a set of measures that follow in the wake of his predecessor Yaga Reddy. Under the two, Indian companies have become severely handicapped by high borrowing costs and other regulations, while large foreign-owned entities in India take away billions of dollars each year in the guise of "royalties" or as transfer pricing. While Barack Obama has ensured accountability to banks fuelling speculation, these entities operate in India without any hindrance. By their interventions in the share and commodity markets, they have created volatility in the first and hugely elevated prices in the second. Of course, hardly any tax gets levied on the huge profits of these financial buccaneers, who operate with an impunity that would have been the envy of the East India Company in its early years.

Into its seventh decade of existence, this country still has to beg or buy almost all its critical technologies from Western countries, including in national defence.

Vibhav would like India and Japan to work together to create an international economic order that is "100%" i.e. which works for the benefit of all, rather than the few. Given the fact that Japan is very much a part of the "5%" world, and that India's policymakers have for centuries been content to allow this country to hobble along in the wake of the global order where a few gobble up many times more resources than the rest of the globe put together, perhaps his optimism is premature. However, what is clear is that a policy matrix needs to evolve in India that helps create a "100%" world. But for this to happen, the present 5%-oriented policy framework will need to get dismantled, much as Mao Zedong cleared the way for Deng Xiaoping by his Cultural Revolution.

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