India: an emerging power?

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India an emerging power?

• Mritiunjoy Mohanty
• IIM Calcutta
• IEIM, UQAM

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Preview

• There is no necessary convergence of interests
  between USA and India
• Whether India becomes a new power will be depend
  upon how it copes with internal and external
  challenges
• Indeed coping with these might lead to divergence
  of interests
• And new coalitions

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The upside growth and take-off

• Economy growing at nearly 9 over the last four
  years, i.e., from 2003/4 to 2006/7
• Will probably maintain that this year
• Per capita income growth has more doubled
• Currently at 7.1, as compared with3.4
  experienced during the 1980s and 1990s

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• Investment and savings ratios in the low 30s,
  which would seem the requirement for modern
  take-off
• Domestically financed, CAD in the range of 2
• Increased inflows of capital
• Huge increases in inward market-seeking FDI in
  the last 4 years
• Rising accretion of reserves
• Sustainable macroeconomics

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Private Capital

• Indian private capital finally came of age,
  showcasing itself in the 12 bn takeover of Corus
  by Tata Steel, catapulting it no.5 globally
• Tata Motors, currently no.2 in india in cars,
  frontrunner in the bidding for Ford brands Jaguar
  and Landrover
• Corporate india on a global buying binge
• Outbound FDI now almost equal to inward FDI. Next
  year it is predicted to be higher

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Public Sector

• A public sector renaissance
• Partial privatisation
• Privatisation stopped because of political and
  union resistance
• On 21st Jan 2008, 7 public-sector firms in Top20
  by market capitalisation and 14 in the Top50
• End of 2000, there were 5 in the Top20 (one of
  which has been sold) and 8 in the Top50

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Science and Technology

• Indias science and technology, seems finally to
  find its feet.
• In January 2007, ISRO successfully recovered an
  orbiting satellite.
• It is a technology that only China, the EU,
  Russia and the USA possess.
• In April 2007 ISRO commercially launched and
  Italian scientific satellite Agile into orbit and
  entered the international satellite launch
  market.
• Two days ago commercially launched an Israeli spy
  sattelite.
• Successful launch of the Geosynchronous Satellite
  Launch Vehicle, (GSLV-F04), which placed a
  2-tonne communication satellite, INSAT-4CR into
  orbit.
• Successfully tested an indigenously made
  cryogenic engine to power GSLVs
• Indian made super-computer ranked in the top-10
  in the world

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The international stage

• Major player in the Doha Round of WTO
  negotiations
• Important G24 member coalition of shared
  interests
• Expanded G8
• The Indo-US nuclear deal and the recognition of
  India nuclear power without signing the NPT
• The distancing from Pakistan
• convergence of interests
• Increase in strategic value an emerging power

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The downside

• Internal
• Unsustainable inequality
• Agrarian crisis and land hunger
• Poor quality of jobs
• Caste inequality related violence
• External
• Unstable South Asian neighbours
• China

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Unsustainable Inequality

• the gini coefficient has gone up from 32.9 to
  36.2 between 1993-2004
• Over the same period, the bottom 20 per capita
  expenditure has grown at 0.85 p.a. while the top
  20 has grown at 2.03 p.a.
• In China the comparable statistics are 3.4 and
  7.1
• That is Chinas bottom 20 expenditures rise 4
  times faster than Indias.
• It is this lack of growth at the bottom which
  makes increasing inequality potentially
  unsustainable

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. because

• An unprecedented agrarian crisis of livelihoods,
  income, employment and profitability has beset
  rural India for more than a decade
• 86 of Indias workforce is employed in the
  informal sector, the bulk of whom have gained
  little from the rapidly growing economy.
• Almost 97 of new non-agricultural jobs created
  between 2000-05 in the informal sector.
• 88 of Dalits and Adivasis population, 80 of
  Other Backward Castes (OBCs) and 84 of Muslims
  belong to the category of the poor and
  vulnerable. These groups constitute roughly 75
  of the population
• five years later, victims of the Gujarat pogrom
  still live in refugee camps and have not been
  able to return home and there has been no calling
  to account

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and therefore

• Land related violence
• The resurgence of armed left-wings groups
• Caste related violence
• Not just social but political as well
• In November 2006, a poor Dalit agricultural
  worker who had been elected the president of
  village panchayat in Tamil Nadu, was killed
  because he refused to oblige his deputy, an
  upper-caste vice-president, and become a
  rubber-stamp president.

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Unstable neighbours

• Pakistan
• Bangladesh
• Sri Lanka
• Nepal
• Burma

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Economies have fared well
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• Democracies and polarisation Bangaldesh and Sri
  Lanka
• Convergence of interests Pakistan
• Nepal
• Burma
• China

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Deepening of democracy and lower caste political
mobilisation

• Affirmative action in politics
• ensured that there were seats for socially
  disadvantaged groups (including lower castes) in
  all publicly contested elected bodies, from the
  parliament downwards to now the panchayat.
• Politics of affirmative action lower caste
  mobilisation around quotas
• Upper caste response politics of religious
  identity
• It is this political mobilisation and the
  consequent access to political power that
  probably explains one of the most truly
  remarkable aspects of Indias democracy that in
  India it is the poor and not the rich who are
  more likely to vote

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. new players and tradeoffs

• Indias first low caste (Dalit) chief minister at
  the head of Dalit majority government
• Changing elites the rise of the urban
  bourgeoisie and the middle class
• Eclipse of the rural bourgeoisie
• Deepening agrarian crisis and caste conflict
• Agrarian crisis and financial liberalisation
• Tradeoffs - land reforms will not be supported by
  rural bourgeoisie
• Tradeoffs - non-agricultural employment for
  reducing poverty rural biased growth strategy
  will not be supported by urban bourgeoisie

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• The 2004 defeat of the BJP-led coalition
• The coming of the Congress-led UPA
• Rural employment guarantee scheme
• Doha defensive interests
• Power of the urban bourgeoisie
• Continuing agrarian crisis
• Resistance to Indo-US nuclear deal
• Pragmatic India and stable neighbours
• No necessary convergence
• A new coalition of interests

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• Thank You