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2009: A year beset by problems for India

By Rajeev Srinivasan
December 29, 2009 20:01 IST
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India is beset by problems -- both internal and external -- caused by lack of strategic thinking, and by being a 'soft state.' One can only hope 2010 will be better, writes Rajeev Srinivasan.

This was a crucial year for India. Its economy is doing fairly well, but it continues to suffer from a non-existent long-term agenda. The latter may well result in India seizing defeat from the jaws of victory: Despite the 'demographic dividend', the lack of a compelling 'idea of India' may well cause it to flounder aimlessly, if not disintegrate into a million pointless mutinies. Events in 2009 would have sown the seeds of either success or failure.

On the world stage, India suffered the ignominy of a re-hyphenation with Pakistan and a downgrading of its alleged 'special relationship' with the United States. On climate change, India, apparently isolated and specifically targeted, may well end up in a constrained situation similar to the nuclear Non-Proliferation Treaty, wherein it is especially victimised.

While everyone talks about the G2 (the US and China) dominating world affairs, India is never mentioned in the same breath. The arrival of the Obama administration in the US has led to a severe de-prioritisation of India.

The Bush administration was eager to sell the nuclear deal to India, and to engage it as a counterbalance to China. The Democrats -- many of them cold warriors and non-proliferation ayatollahs -- would rather kowtow to China while paying lip-service to India.

The Congress party-led United Progressive Alliance government built a foreign policy around the wishful thinking of a permanent alignment of American and Indian interests.

It is now virtually certain that the US views Asia as China's sphere of influence -- it said so in so many words while inviting China to take a role in 'South Asia' to mediate between India and Pakistan. And China has struck a muscular pose, interfering in Arunachal Pradesh, building 27 airstrips in Tibet, and damming the Brahmaputra. India has few bargaining chips, and is giving them away for nothing.

Internally, elections produced what appeared to be a stronger mandate for the Congress; however, by year-end, it's blundering over a Telengana state made it look amateurish. Serious doubts were raised about its ability to deter China or Pakistan, because the thermonuclear explosion in Pokhran in 1998 now appears to have been a damp squib, and the armed forces are increasingly demoralised.

Public health and nutrition continue to be issues. India has been accused some time of poor health practices, especially related to poor nutrition, poor access to clean water and sanitation, etc. A lasting image was that of green surgical mask-clad city-dwellers attempting to elude swine flu, and the inevitable hoarding and black-marketing of the appropriate small-aperture masks.

In 2009, raging inflation -- official figures admit that the price of essential food staples have shot up by close to 20 percent -- implies that more people are going hungry. At the World Summit on Food Security, the Food and Agriculture Organisation reported that, in a shocking reversal of previous trends, 100 million people worldwide have joined the ranks of the hungry between 2001 and 2009. A large number of these must be Indians. Child hunger, in particular, persists, which is a national shame.

India's apparently quick recovery from the global financial meltdown -- it is now believed that the Gross Domestic Product may grow by as much as 7 to 8 percent in 2009 -- has been attributed to a thriving rural economy, and India's isolation from world markets (a reflection of India's poor export performance).

The rural landowner has become the target of advertising for anything from cars to washing machines to LCD TVs. However, there are still hundreds of farmers committing suicide because of crop failure, and as a result of the giant subsidies given to their farmers by developed nations, which allows their products to be priced below actual production cost.

Unfortunately, the way the UPA government has responded to the crisis in rural areas is to create a socialist make-work scheme, the National Rural Employment Guarantee Scheme, which is rife with opportunities for fraud.

Despite some anecdotal evidence, the increasing burden of food-price inflation and the resultant hunger negate its impact. Besides, this scheme is now being viewed as an omnibus solution to all the problems of the rural poor, not the band-aid that it is.

The price tag for the NREGA, and for other populist schemes such as the massive giveaway to bureaucrats (which carefully avoided the military, leading to significant anger there) will be macroeconomic disaster down the road. The bills add up: Rs 300 billion ($6.4 billion) for the bureaucrats, Rs 700 billion ($15 billion) for the NREGA, and another Rs 700 billion for a farm-loan forgiveness scheme. All this will add to inflationary pressures, and siphon off funds from investment.

Politics in India was, as usual, chaotic. The Congress won the national elections, although there were allegations of tampering with electronic voting machines, which are not exactly foolproof. The opposition, led by the Bharatiya Janata Party, had been expected to do quite well because of anti-incumbency, but did not.

In the aftermath of the elections, the BJP has appeared to implode, with calls for the resignation of its old guard.

The politics of balkanisation came to the fore towards the year-end with the revival of a long-simmering demand for a state of Telengana, to be carved out of Andhra Pradesh. In a reflection of centrifugal identity politics, there were copycat calls for other states to be created.

But the most worrisome short-term issue continues to be the appalling internal security situation. The interrogation of a suspect in the various blasts around the country, T Naseer, suggests that Kerala has become the new hub of terrorism. The revelations in the ongoing saga of David Coleman Headley suggest that the Inter Services Intelligence can strike at will anywhere in India with virtually no risk of detection. It appears another 26/11 -- the Mumbai siege of last year -- can happen any day, anywhere, in the country.

Thus, India is beset by problems -- both internal and external -- caused by lack of strategic thinking, and by being a 'soft state.' One can only hope 2010 will be better.

Rajeev Srinivasan is an entrepreneur and columnist.

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