India and the United States are not natural partners or allies. The US has a $15 trillion economy and an annual per capita income of nearly $50,000. India has a $1.8 trillion economy and a per capita income of less than $5,500, including over half the people live on less than $1,200 a year. The US is third in world competitiveness rankings while India is at number 71.
Yet India is punching below its weight in global influence and the US is punching above its weight. They need to come closer for the sake of both countries but that requires a lot of hard work and focused determination.
Despite its unparalleled military and economic power, US influence is waning because of its West Asian wars, economic upheavals and, now, the growing tensions with Russia and China. Indian influence is growing because of its economic potential and military importance as a counterweight to authoritarianism in China and Russia (most of which is in Asia).
The enthusiasm of the expatriate Indians at Madison Square Garden and President Barack Obama’s keenness to turn Prime Minister Nar- endra Modi into a friend are auspiciously emotional beginnings but far from enough in the cold realities of international politics. The two countries have such dissimilar mentalities, civilizations, economies and governance as to reduce their common ground of democracy to little more than a fig leaf over troubling differences.
In recent years, some enthusiasts – often Westernised elites in India and NRls earning over $100,000 a year in the US – have dreamed of turning America into an engine pulling India towards modernisation and prosperity. The extraordinary success of Indian emigrants to the US has caused many to dream that India can be transformed, perhaps faster than China’s transformation since 1981, because Indians are young, intelligent and very entrepreneurial.
But the success of expatriates is not a signpost to success for similarly talented people living in India. Expatriates succeeded because the US provides a motivating and nurturing ecosystem for success, including relevant education and continual learning; financing for entrepreneurs and corporate expansion; positive working conditions; quick legal redress; and forward moving paths for hard-working people with talent regardless of background.
Modi’s own success shows that Indian
democracy works for talented politicians and the success of Reliance shows that the economy does work for clever entrepreneurs who began with almost nothing to invest. Many Indian; have success stories but they made it because of sheer grit. There is no reliable ecosystem to make forward paths easier for people struggling to move ahead.
This is the main obstacle to the hopes of those who would like to see India and America as natural partners. At this time, the hurdles are no: political or economic. Both countries need each other and should be informal if not formal allies in as many spheres as possible.
General Electric, Toyota, Citi, and HSBC are not signposts. They are here for inexpensive brainpower and a very large undeveloped poten tial market. Perhaps, they and others will turr India into an operational base for exports of se: vices and manufactures around the world, as! happened earlier in China.
To provide an ecosystem within 10-15 years! India will need to efficiently invest and produc-j tively operate over $5 trillion in various infrastructure, education and health facilities. Above all, it will have to lift at least 400 million people into the kind of middle class that lives on $25,000 a year instead of $6,000 and make thosej living on $2 a day an anachronism.
This need not be a dream. It is achievable with American, European, Japanese, Korean anJ other companies but requires drastic opening ol our services industries, more intellectual pro:# erty enforcement, much more efficient bank! ing, improved labour laws and massive boosts fol small and medium entrepreneurs. It requires predictable, less onerous and very rigorously enforceJ tax and customs regimes bolstered by dramatif efficiencies in public governance. It requires losing less electricity and food to wastage that cul rently runs at over 40 per cent in many areas. :l requires an invigorated rural sector.
Modi’s talks with Obama and top US official will open the doors of India more widely to bu:. l upon the past 20 years. High visibility projecl like cooperation on defence production and ar.: I terrorism will flow. But India will start punc J ing its weight only when minds and arms a:-l thrown open to the US-led democracies in mar # more domains and with more conviction.