THE US-INDIA JUGAL BANDI
Last week, in the midst of an ongoing dramatic geopolitical reset, India and the United States etched a new chapter in their relationship. EPISODE #131
Dear Reader,
A very Happy Monday to you.
Last week Prime Minister Narendra Modi travelled to the United States for a summit meeting with US President Joe Biden. The trip which included a public yoga session led by PM Modi, the PM’s address to the joint session of Congress, a meeting of business representatives of the two countries and of course the one-on-one between the two leaders.
By all accounts it was a turning point in the relationship between the two countries. This week I explore the why of this thought. Do read and share your feedback.
The cover picture is sourced from Press Information Bureau.
A big shoutout to Rajit, Yugainder, Gautam, Lakshmisha, Karan, Premasundaran, Aashish and Vandana for your informed responses, kind appreciation and amplification of last week’s column. Once again, grateful for the conversation initiated by all you readers. Gratitude also to all those who responded on Twitter and Linkedin.
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A NEW CHAPTER
Prime Minister Narendra Modi is not the first Indian PM to be feted by the United States. And, certainly he will not be the last. But, this was different.
It was not just about optics. Instead it is about the substance.
Undoubtedly, US President Joe Biden and PM Modi have kicked off a new phase in the relationship between the countries—which till the turn of this Millennium was an uneasy one. Potentially, this new phase could be a game changer.
Further, Biden will be the first President belonging to the Democratic Party to so proactively rev up the relationship of United States with India. The stints of Bill Clinton and Barack Obama are eminently forgettable. Worse they sowed the seeds of discord and distrust between the two countries and looked the other way as South Asia transformed into a terror factory under their watch.
The big pivot in the relationship between the two countries was initiated under the leadership of Prime Minister Atal Bihari Vajpayee, who went against the popular refrain of America bashing and laid the foundations of a new relationship. The catastrophic events of 9/11 when terrorists took down the iconic World Trade Center, was a catalyst.
This was the mindset reset moment. The US, then led by President George Bush, realised that geography was no protection against terrorism and the acknowledged the wisdom of PM Vajpayee’s words at the annual meetings of the United Nations General Assembly (UNGA) in 2000.
PM Vajpayee had cautioned the world that they were making a mistake in ignoring the growing threat of cross-border terrorism promoted by countries like Pakistan.
The Pivot and After
Addressing the next UNGA Vajpayee cautioned the world afresh:
“Terrorism did not start on 11 September. It was on that day that it brazenly announced itself on the global stage, flaunting its immunity from distance and power.
And then added:
In our South Asian region, nuclear blackmail has emerged over the last few months as a new arrow in the quiver of state-sponsored terrorism.
Dark threats were held out that actions by India to stamp out cross-border terrorism could provoke a nuclear war. To succumb to such blatant nuclear terrorism would mean forgetting the bitter lessons of the 11 September tragedy."
This was the moment when the US State Department initiated a rethink of its approach to South Asia. You may recall, previously the relationship involved equating India and Pakistan. It was a balancing effort that gave a pass to the terror infractions by Pakistan.
Under President Bush, this rethink process got a huge leg up and laid the groundwork for the historic civil nuclear agreement between the two countries. The deal eventually got inked under the leadership of Prime Minister Manmohan Singh in 2005.
However, an Obama administration failed to exploit the opportunity. Instead it let matters drift—the intemperate remarks by the former US President last week only exposed his deeply held reservations about developing this relationship with India.
New India
Coincidentally, it was in the first decade of this Millennium that the Indian economy discovered fresh legs. If Vajpayee unleashed the infrastructure juggernaut, the Manmohan-led regime launched Aadhaar—the 12-digit identity that has completely reimagined India.
This momentum gained tremendous acceleration under the leadership of PM Modi. It also coincided with the period when fault lines between US and China started deepening and the western economies began to lose momentum.
The audacious win by the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) in 2014, dealt PM Modi an incredible hand. And, he didn’t miss out on the opportunity. A majority in Parliament ensured political stability and gave the PM a free hand.
The NDA chose to pursue a two-fold strategy.
At one level, they moved to ease the bottlenecks in policy that was holding back the animal spirits of business. This is still a work in progress, especially at the level of the state government.
And, at another level the government went the full distance in seeking to fix the legacy deficits of basics like financial inclusion, toilets, health insurance, electricity, cooking gas, drinking water and so on—building the foundations of a new market by making millions of Indians stakeholders in the economy.
Most importantly, they undertook this makeover of the bottom of the pyramid through the roll out of public digital infrastructure with Aadhaar as the foundation. This enabled the NDA to undertake public good at scale and incredible pace.
I have cited these statistics on social welfare earlier, but nonetheless will do so once again.
Till February this year India has:
Equipped 11.7 crore households with toilets;
Provided 9.6 crore LPG connections under Ujjwala;
Opened 47.8 crore Jan Dhan bank accounts;
Provided insurance cover for 44.6 crore individuals.
By any yard stick this is a huge achievement. This material empowerment has also led to decline in the levels of poverty—India lifted over 400 million people from poverty between 2005 and 2021.
Biden Mantra
By the time Joe Biden took over, China had replaced terrorism as the principal threat to the United States. And, the ageing US economy was desperate for a fresh start.
The Biden doctrine entailed integrating domestic and foreign policy. The contours of this strategy, loosely called the Washington Consensus, was articulated earlier this year by Jake Sullivan at an event hosted by the Brookings Institution.
Reiterating the global leadership status of the United States, the largest economy in the world at $27 trillion, Sullivan said:
“By the time President Biden came into office, we had to contend with the reality that a large non-market economy (China) had been integrated into the international economic order in a way that posed considerable challenges.
The People’s Republic of China continued to subsidize at a massive scale both traditional industrial sectors, like steel, as well as key industries of the future, like clean energy, digital infrastructure, and advanced biotechnologies.America didn’t just lose manufacturing—we eroded our competitiveness in critical technologies that would define the future.”
And then went on to add:
“United States, under President Biden, is pursuing a modern industrial and innovation strategy—both at home and with partners around the world.
One that invests in the sources of our own economic and technological strength, that promotes diversified and resilient global supply chains, that sets high standards for everything from labor and the environment to trusted technology and good governance, and that deploys capital to deliver on public goods like climate and health.
Now, the idea that a “new Washington consensus,” as some people have referred to it, is somehow America alone, or America and the West to the exclusion of others, is just flat wrong.
This strategy will build a fairer, more durable global economic order, for the benefit of ourselves and for people everywhere.”
India fits this strategy perfectly.
Not only is it the world’s largest democracy, it is an economy that packs enormous potential. To cite an example, the middle class in India presently estimated at around 400 million, is expected to nearly double by 2030 and then grow to a staggering 1 billion by 2047. Imagine the consumer demand this cohort will generate.
Further, India too has evolved a similar strategy: Atmanirbhar. The country wants to create the capability to become part of the global supply chain. For this it has to create the requisite production capacities.
While America is trying to rebuild an industrial base that has been hollowed out by its over dependence on China, India is virtually starting from scratch, especially in manufacturing.
And Chinese belligerence, not just along India’s borders, but also in the South China sea and elsewhere, made it easier for India to overcome its historic scepticism about US intent.
I am sharing below the link to an episode by Nitin Gokhale, Founder of StratNews Global, analysing the takeaways from the Biden-Modi deliberations. Do watch.
Give and Take
Driving this convergence in thinking between the two countries, is a capability that India has acquired over the last decade.
Previously, it used to approach every negotiation as a zero-sum game. This was not just because of a cold war mindset in South Block. It was also a tacit recognition that India just did not posses the capacity to offer something in a negotiation—which is always one of give and take. This was particularly apparent at multilateral negotiations, where India was perceived to be a nay sayer and thereby became easy game at the global high table.
Vijay Kelkar, the former finance secretary and chairman of the 13th Finance Commission, used to say that the best foreign policy is a strong domestic economy—very similar to the Biden doctrine. As the world’s fifth largest economy and the fastest growing one for two years, India is closer to realising this objective.
Not surprising then that India is gradually assuming leadership in shaping global conversations, particularly with respect to climate change and in forging a public digital infrastructure. This coming of age is also visible from the fact that the West is cutting India a pass on accessing Russian oil—despite sanctions.
It is then clear that India is embarking on a new relationship with the United States. The country has just stopped short of offering itself up as an ally. As the cliche goes: It is friends with benefits.
Recommended Viewing
Sharing the latest post of Capital Calculus on StratNews Global.
Little over a week ago, the World Health Organisation (WHO) released its review of India’s ongoing water mission. The findings only reconfirmed what most of us knew: India could have save upto 4 lakh lives every year by providing access to drinking water.
India’s tryst with drinking water through tap is a legacy of shameful neglect. The Har Ghar Jal mission is seeking to make amends. It has managed to more than treble the access to tap water in rural India. While it improves the health foundation of India, it is also leading to women’s empowerment and the idea of levying user charges for a public utility.
To unpack all of this we spoke to Vini Mahajan, Secretary, Ministry of Jal Shakti. One fascinating bit of information she did share was that the programme had crossed a tipping point and was installing one tap connection somewhere in rural India every second.
Do watch and share your feedback. Enclosing the link below:
Till we meet again next week, stay safe.
One of the best articles on this topical subject Anil. The added commentary by Nitin Gokhale, encapsuled the details 👌. Now it is no longer balancing India v/s Pakistan, as last done by the Obama administration; visiting both the countries and finally giving F 16 aircraft to Pakistan for fighting terrorism😉. This time India and US are both apprehensive of an assertive China, at the LAC and South China Sea, respectively. So it was a Jugalbandi, due to a need based, cautious alliance. Russia can no longer be depended upon and India had the foresight to implement a program for indigenous arms manufacturing, with advanced technology, shared by France and now US. The United States has alliances with Japan, South Korea and Australia in the West of China and with India in the South East of China. They are conducting war exercises in Guam and have placed an aircraft carrier in disputed Vietnamese waters. Chinese industrial production has slowed down and US is now tightening the screws. India stands to gain, if the astute Indian PM, steers the country into a position of strength in the troubled future. Thank you for a great write up.
Dear Anil,
You have analysed PMs high profile visit to the USA so well! it surely ushers in a new era in US - India relationship. But we all know Biden administration is primarily interested in India as a potential counterweight to China, which the USA sees as it's most formidable global competitor.US- India friendship will continue to grow as long as their shared concern over China remains!