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India’s election shows equitable globalisation can succeed

By Sadanand Dhume - posted Tuesday, 2 June 2009

The stunning victory of the Congress party in India’s recent election is a shot in the arm for globalisation. The results show that most Indians approve of a policy of gradual economic reform - including openness to foreign investment - as long as the benefits are seen to trickle down to the country’s vast rural population. The lesson: a pro-globalisation and democratic government can succeed in a poor country if its policies are seen as favouring the majority and not merely a tiny elite.

The victory for Prime Minister Manmohan Singh, the mild-mannered economist credited with pioneering India's rejection of autarky and embrace of globalisation nearly two decades ago, also feeds two other enduring debates: do democracy and development go hand-in-hand? And can poor countries embrace the same bedrock democratic values-including religious pluralism and freedom of speech - as their richer counterparts?

India's experience - unlike that of globalisation's other poster child, China - suggests an affirmative answer to both questions. Despite the global downturn, the International Monetary Fund expects India's economy to grow by 5.1 per cent this year, and 6.5 per cent next year, making it an engine of global economic recovery. Its conservatively regulated banks have escaped the Wall Street contagion. As for values, the second straight defeat of the Hindu nationalist BJP by the ardently multi-religious Congress shows that pluralism, if properly nurtured, is a universal value and not merely a Western one.


In many ways, the immediate significance of the election lies less in what it promises, than in what it averted - a crazy quilt government comprised of regional and caste-based parties incapable of fashioning a coherent national agenda. Instead, Congress, which has ruled India for all but 11 of its 62 years of independence, returned with its best performance in nearly 20 years - 206 seats in the 543-member lower house of parliament (up from 145 in 2004). This puts the coalition it heads, the United Progressive Alliance, within easy reach of a majority, and virtually ensures that the new government will comfortably complete its five-year term.

The defeat of the communists, who lost almost two-thirds of the 61 seats they held in the outgoing parliament, also frees the government from relying on a party whose approach to economics and foreign policy remains rooted in the Cold War. Before withdrawing their support to the outgoing Congress government last year over a civil nuclear agreement with the US, the communists stymied economic reforms for four long years. Their crushing defeat in both their bastions - West Bengal and Kerala - gives India what is arguably its most centrist parliament since independence.

The Hindu right has also shrunk. The BJP, which led a coalition that ruled India between 1998 and 2004, slumped to 122 seats, its worst performance since 1991. Unless it can find a way to expand its appeal to more liberal Hindus, as well as to Muslims and Christians, it faces the prospect of permanent exile to the opposition benches.

In terms of economic policy, the Congress victory gives Singh the opportunity to revive a lapsed reform agenda that would create new jobs, increase efficiency and further integrate the country into the global economy. The government is likely to relax foreign investment caps in insurance, banking and retail. Infrastructure spending will remain a priority. But though Singh and his economic team are intellectually inclined towards reform, temperamentally they are wedded to gradualism. (India's initial reforms, in 1991, were spurred by a balance of payments crisis rather than by a bedrock belief in free markets.)

Politically sensitive changes - such as revising labour laws that discourage investment in manufacturing by making it difficult to lay off workers - will likely remain on the back burner. A costly and patchily implemented "employment guarantee scheme" targeted at the rural poor will almost certainly be expanded. It is the centre-piece of the government’s commitment to "the common man", and credited by party strategists as helping them buck the usual anti-incumbent pattern in national politics.

In foreign policy, the drubbing of the left and the setback to the right gives Congress more room for manoeuvre. The US-India relationship, which has steadily deepened since the end of the Cold War, will no longer be held hostage by communist antipathy to Washington. The failure of the BJP’s campaign, which focused on the government’s dismal handling of Pakistan-backed terrorism - including the Mumbai attacks last November - makes it easier to resume negotiations with Islamabad if it can prove that it has mended its ways.


In the region, India will continue to use development aid and institution building to strengthen moderates in Afghanistan. In Pakistan too, India’s interests are aligned with America’s - the prospect of jihadists getting their hands on a nuclear weapon causes as many sleepless nights in New Delhi as it does in Washington.

But any effort by the Obama administration to extract concessions from India - whether in Kashmir or Afghanistan - as a reward for Pakistan’s belated crackdown on a radical Islam problem it helped foment - will be bluntly rejected. That, in the Indian view, would be tantamount to rewarding Islamabad for its role, along with Wahhabi Saudi Arabia, as the world’s leading exporter of Sunni radical Islam.

In the meantime, India will continue to lobby for a permanent seat on an expanded United Nations Security Council, and will welcome the shift of the locus of international decision making from the G-8 group of industrialised democracies to the more representative (but also more unwieldy) G-20. On climate change, it will (along with China) continue to make the case that countries ought to be judged by per capita rather than total emissions, and that rich countries are morally bound to bear the brunt of the costs of slowing down global warming. On trade, the politics that shape India’s demand for lower agricultural tariffs and greater labour mobility, especially for its skilled workers, are virtually set in stone.

In the long run, however, India’s global influence will be determined less by the sum of its policies than by the evidence from two central debates that set it apart from China and most of the Muslim world: the compatibility of democracy and development, and of poverty and human rights. By growing its economy an average of 8 per cent per year in the past five years, India has shown that democracy and development can go hand in hand. At the same time, however, the average Chinese is already twice as rich as the average Indian, and the gap is widening rather than shrinking. Unless India can rapidly close the gap with China and much of South-East Asia, the appeal of its development model will continue to be greater in industrialised countries that see democracy as an end in itself than in Asia and Africa, where China’s success spurs envy rather than moral outrage.

Nonetheless, though India’s human rights record is far from unblemished, its citizens enjoy a much higher degree of personal freedom than their counterparts in China and most of the Muslim world. It’s impossible to affix an economic value to the right to call the prime minister an idiot on television, to organise an anti-government protest, or to attend the temple, church or mosque of your choice. In the end, the powerful symbolism of the idea of India is the country’s greatest source of influence.

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Reprinted with permission from YaleGlobal Online ( Copyright © 2009, Yale Center for the Study of Globalization, Yale University.

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About the Author

Sadanand Dhume is the author of My Friend the Fanatic: Travels with an Indonesian Islamist, a book about the rise of radicalism in the world’s most populous Muslim country. Click here to read an excerpt. Click here to view his website.

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