Structural reforms, transformative changes and course-correction needed.



After his massive mandate, Prime Minister Narendra Modi’s focus has turned to foreign policy, even as critical economic issues are also under scrutiny. In its second avatar, the government realises that the cycle of domestic investment, foreign investment and creation of jobs cannot be kick-started overnight and calls for structural reforms, transformative changes, course-correction and continuous monitoring.

Having scored a huge victory, the Bharatiya Janata Party has to govern as well as it has campaigned. The RSS supremo and the party leadership know that Modi’s current term will be tougher on several counts than the first.

The influx of Congresspersons into the BJP could result in a situation where many of those groomed by the Rashtriya Swayamsevak Sangh do not take kindly to new, untested entrants leapfrogging to positions of power in BJP governments. Today, the BJP led by Narendra Modi and Amit Shah resembles a centralised party, almost a corporate entity. It can ill-afford the emergence of new factions. Leaders coming in from the Congress (and other parties) could precipitate such an eventuality.

The Prime Minister made a positive start through his victory speech and by reiterating the norms and values that sustain the composite culture of India. He has demonstrated a capacity to achieve results such as with welfare delivery systems in his first term.

In the international field, the challenges are formidable.

The priorities of the government in respect of the “Neighbourhood First” policy have shifted in the direction of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) as an alternative regional platform to SAARC. The latter grouping came into being in Dhaka in December 1985 during Rajiv Gandhi’s prime ministership, much before BIMSTEC was formed in 1997.

Nepal is the current chair of SAARC and Pakistan and Afghanistan are among the members.

The leadership of BIMSTEC countries—Bangladesh, Myanmar, Sri Lanka, Thailand, Nepal and Bhutan—were invited to New Delhi for the Prime Minister’s swearing-in ceremony in his second innings; SAARC leaders had attended the event in May 2014.

India has shown diminishing commitment to SAARC, whose meetings have been deferred from time to time. It is a moot point whether the new stance is being appreciated by Nepal and other neighbours.

Amid China’s growing influence through economic and defence ties, the Kathmandu authorities denied permission (apparently on security considerations) to Tibetan refugees to celebrate the Dalai Lama’s birthday in July 2019. There are some 20,000 Tibetan refugees living in Nepal.

The stern Nepalese posture is in line with China’s tight vigilance and signifies compliance with prohibiting the entry into Nepal of individuals blacklisted by China. Tibetans on their way to India have been detained in Nepal and handed over to Chinese officials. Sometime earlier, China’s proposal of “covering” the salaries of teachers in Nepal who teach the Mandarin language had prompted many private schools in the Himalayan country to make it mandatory for students to learn the same. In doing so, the guidelines laid down by the state body, which designs school-level academic curriculum in Nepal, were overlooked. The move came at a time when China’s involvement in Nepal is surging on the strength of Beijing’s ambitious Belt and Road Initiative.

In South Block, the newly-inducted External Affairs Minister, S. Jaishankar, is believed to be firming up visits by the Presidents of the United States and China. With roots in the Foreign Service, he has accompanied Modi abroad; comparisons with his predecessor, Sushma Swaraj, are inevitably being drawn.

Reports have been afloat of Xi Jinping coming to Varanasi in October 2019 for an informal summit in continuation of the Wuhan talks.

A favourable outcome in regard to trade issues (which the Trump-Modi discussions were to have addressed at Osaka in the last week of June 2019) did not materialise, one reason being New Delhi’s quest for multi-alignment.

Within two weeks of the Osaka G-20 Summit, the question of India tariffs was again brought up by President Trump, notwithstanding “the talk of a deal” at the G-20. Trump said: “India has long had a field day putting tariffs on American products… No longer acceptable.”

The blast came on the heels of the Union Budget that envisaged customs duties on a large number of goods, an instance of reversal of long-standing policy. Protectionism is re-emerging as an instrument to promote domestic manufacturing, even though high import tariffs also act as a tax on exports by reducing the competitiveness of Indian goods.

Days after Prime Minister Modi began his second tenure, the Trump administration terminated special trade privileges for India under the Generalized System of Preferences, citing India’s reluctance to open up markets to U.S. companies.

The irritant of US criticism of “freedom of religion” in India remains. The fact that the strongmen at the helm in Washington DC and New Delhi are cast in similar mould is contributing to the unease.

Two pillars of India’s regional foreign policy, namely, the relationships with Iran and Afghanistan, have been affected by US strategy. The delicate equation that New Delhi had established with Tehran might not survive the American sanctions. India stopped oil imports from Iran in May 2019 and does not buy oil from Venezuela, thus increasing its dependence on Saudi Arabia, Iraq and the UAE.

From the Indian perspective, Iran was rated an important partner—sharing cultural affinities—who could have helped India in gaining better access to Central Asia. At one stage, Pakistan showed anxiety about India-Iran relations. India’s collaboration with Iran on the deep-sea port of Chabahar is sliding since there seems no point in developing it further when shippers and cargo handlers are kept away by US sanctions.

In Afghanistan, the objectives of India’s policy have been not to make it any the easier for Pakistan to set up a sympathetic government in Kabul and to obstruct the return of jihadi elements which could strike in India. But the country is losing ground on both fronts, largely because of the US decision to withdraw from Afghanistan. So far, none of India’s worries have cut much ice in the Afghan peace process.

To be a friend both of the US and Iran at the same time is becoming more and more difficult for India’s Foreign Office mandarins who had to bow to the US when the Trump administration ended the waivers that allowed India to continue with oil imports from Iran for six months.

The question is what side would India take if US-Iran relations continue to deteriorate and if Trump follows the motto of “with us or against us”.

For the US, an overriding concern is about how far they can rely on India to contain China. At the Shanghai Cooperation Organization (SCO) meeting in Bishkek (Kyrgyzstan), Modi appeared to hint at joining hands with Russia and China in the emerging “trade war”. President Xi stressed, at Bishkek, that China and India should celebrate the 70th anniversary of their diplomatic ties befittingly. In almost the same breath, however, and at a time when there are growing fears about the 84-year-old Dalai Lama’s health, Beijing has declared that they alone will appoint his successor and that it could adversely impact Sino-Indian ties if New Delhi did not recognise the “reincarnation” chosen by China.

The central issue for India is about navigating through the countervailing demands and protecting its own interests. Maintaining ties with Iran and prioritising our energy security is one side of the picture; the other is balancing this with India’s vital stakes with the Gulf States and the US.

In Osaka, Prime Minister Modi thanked President Trump for the “love towards India”; the latter stated that the two countries “have never been closer”. Can these words alone sustain the full breadth of relations between the two big democracies at a time of resurgent nationalism and national-populism?

The people of India are entitled to know.

Moreover, the recent comments of President Trump on the Kashmir issue are causing consternation in various sections of opinion in India. This might even be the beginning of a sequence that becomes particularly disturbing in the months ahead. The remarks have come from an office occupied by one who is described as the leader of the free world.

Arun Bhatnagar joined the IAS in 1966 and retired as Secretary, GOI