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Indian politics and the U.S.-India strategic relationship (Part 1)

25/12/2015


Indian politics and the U.S.-India strategic relationship (Part 1)

This past month has been an eventful one in Indian politics. The decisive victory of the populist Aam Aadmi Party (AAP) in the Delhi Assembly elections against Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) has led some Indian observers to question the patience of the Indian electorate with the pace of economic and anticorruption reforms. Meanwhile, in Indian-controlled Kashmir, an unlikely coalition government has emerged between the majority-Muslim People’s Democratic Party (PDP) and the Hindu-nationalist BJP. Some are hopeful that this partnership may provide a foundation for talks on the status of the disputed territory, but several early hiccups—including the release of Kashmiri separatist Masarat Alam by PDP leaders (reportedly without the BJP’s consent)—may be signs of trouble.


The AAP won a landslide victory in the Delhi Assembly elections, despite a strong campaign by Prime Minister Narendra Modi’s BJP. The previous AAP government was quite short-lived, but some analysts have argued that this victory could be a thorn in the side of the BJP, giving the AAP a real voice at the national level. What do you think this result might mean for the BJP and larger Indian politics? Are people starting to run out of patience with the Modi government?

It certainly should come as no huge surprise to the BJP that the AAP can win elections. The party won overwhelmingly in the previous New Delhi elections, and this time it once again had a strong and convincing turnout and performance. This second victory certainly conveys some of the AAP’s strengths and its candidates’ personal appeal. The result also reflects the Delhi voters’ concerns about economic growth, job creation, anticorruption initiatives, safety of women, the environment, and education. The AAP has performed well previously, and it shouldn’t be a surprise that the party did very well here again. It’s important to remember that just as the United States has a diverse array of interests present in our great democracy across different regions of the country, India also has a lively and energetic democracy with a broad range of opinions, values, and beliefs represented in different regions, states, and cities. I think it’s too early to make judgments about the Delhi election and broadly apply them nationally. Certainly there are some in the Indian press who argue that the BJP is moving too incrementally on reforms. Others oppose the reforms as too much too fast, and still others believe Prime Minister Modi has struck the right balance. Almost every expression is there, but from where I stand, it’s still too early to make a perfect prediction of the future politics. During the national elections, Modi outlined a number of very bold initiatives and goals, including promoting the “Make in India” initiative, clamping down on corruption, working to “clean India,” and returning economic growth to an annual rate of 7%–8%—all difficult to achieve in one year. The Indian electorate is increasingly aspirational and was ready for a change from the Congress Party UPA II government, but Indian voters are also exceptionally smart and recognize that these types of reforms take some time. Of course, there is a risk in the near future if voters do not see the Modi government successfully achieving its goals in a timely manner. But I don’t believe we’re there quite yet, especially given that the BJP has been so successful in other state elections. With elections coming in West Bengal and Bihar, we will have another barometer to read very soon.

North of Delhi, in the disputed region of Kashmir, the BJP surprised many analysts by forming a coalition state government with the majority-Muslim PDP, which calls for greater self-rule in the disputed province. What is the likelihood that this partnership will succeed? What are some potential implications of this coalition?

This political partnership is still brand new and relatively untested. We’ve only seen these two parties try to work together over the last several weeks, with some initial conflicts, and it will take time before we can draw any specific conclusions. I’m sure there will be more mistakes made in trying to find the right set of pragmatic working relationships between party leaders and the parties themselves. During my time as ambassador, I visited Kashmir in March 2011 and met with Chief Minister Omar Abdullah. He expressed a strong desire on the part of all the people in Jammu and Kashmir to increase access to reliable energy, improve the school systems, and attract more investment in the region. I think the desire for change and to work together certainly exists among the people of Jammu and Kashmir. We’ll see if these two parties can build on this potential, and I remain hopeful for peace and economic prosperity.

During my above mentioned visit, I was struck by several things. First, during this relatively peaceful period, one could clearly see the economic potential for the region. I was greatly impressed, for example, by the growth in residential housing and investment in hospitality industries that were occurring at that time. Today, of course, expectations and confidence all across India are increasing, and Kashmir is no exception. Second, during my trip I met with a number of youth groups from both Muslim and Hindu communities. Many of these groups emphasized working together to heal wounds, building community, and cooperating toward creating a more promising future. So my takeaway is that when there is peace, there is great potential for economic and social progress, even with small steps. Therefore, the fact that these two parties (the BJP and PDP) have come together, and polls show general optimism for the future, displays potential for tangible results.

Economic reforms have played such a central role in Indian politics of late. The Indian electorate clearly voiced its frustration with the sluggish growth rate and tepid reforms of the recent past, and Modi’s BJP has staked its political fortunes on its capacity to promote growth—setting a 7%–8% annual growth rate as its goal. What is your view on the economic performance of the current government, specifically following the recent unveiling of the 2015 budget?

There are many positive signs in the 2015 budget that make me optimistic about Prime Minister Modi’s ability to boost economic growth and achieve the goal of 7%–8% annual growth. In submitting this budget, the Modi government is striking a balance between a series of “big bang” reforms and an incremental approach. The recent drop in oil prices is an important windfall, and Modi’s election has bolstered confidence in India within the investment and business communities, both of which allow for more flexibility in the budget. The budget reflects a series of sensible reforms and proposals: deregulating the price of diesel, opening auctions of coal mining licenses, moving forward on direct cash transfers for the poor, implementing a national goods and services tax, and planning for infrastructure investment. All these demonstrate that there will be some tangible actions and not just talk about economic reforms. There are, of course, significant additional challenges. India, for example, is still ranked 142 out of 189 countries on the “ease of doing business” scale. This is partly a reflection of India’s massive bureaucracy and endemic corruption, which continue to be major issues that this government will have to address. Funding and building infrastructure improvements will also be crucial. Additionally, getting land-acquisition bills through parliament will be extremely helpful and will send strong signals to the United States and other FDI partners that things are truly changing. India should also demonstrate real progress on the issue of intellectual property protection. These measures would all signify continued positive steps, attract greater levels of investment and new business partners, and help propel economic growth in India.

(Part 2)

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