Syed Mafiz Kamal*
New York, August 1 (2014), Alochonaa: Over the past decade, an increasing number of Indian pundits have championed the idea that the 21st century will be the “Indian century.” This is largely based on economic projections suggesting that, in the second half of this century, India will surpass both the United States and China and become the world’s largest economy. At the moment, India is generally considered an emerging power due to its large and stable population, and its economic and military sectors have grown rapidly over the past two decades.
But, what could the future hold for the world’s largest democracy? In his famous book India 2020: A Vision for the New Millennium, a former Indian president, Abdul Kalam, stipulated a lengthy list of how India should, and will, be by 2020. He infers that, at this time, India will be at an optimal point of both prosperity and strength. This makes studying India’s future vital to policymakers both inside and outside the country.
In his book The World Economy: A Millennial Perspective, Angus Maddison states that history plays an important role in power politics and that great powers see themselves through a historical lens. Like China, India has historically seen itself as a superpower and a rich country. In the 1700s, India’s share of world economic output was 27%. In comparison, at this time Europe’s share was 23%. In 1950 that share shrunk to 3% and today India’s share of the global economy is around 6.5%. Believers in a richer and stronger India advocate that its economic strength is bound to continue rising at pace and will, in a generation, become the largest economy in the world. India’s advancement in the technological sphere and increased entrepreneurship led by its young population may resolve many prevailing social and political problems. However, skeptics argue that India is on course to self-destruct because it is unable to curb basic issues related to poverty and governance. They see a problem with a nation where more people have access to cell phones than adequate sanitation facilities. Such problems inevitably hurt governance and political stability – two manifestations that are perceived as the greatest threats to India’s influence on the global stage.
A series of publications by India-based think tank MSS Research summarises that, in 2020, India will be at a turning point because “India will be more numerous, better educated, healthier and more prosperous than at any time in the long history”. They highlight the potential factors that will make India a stronger democracy and make the Indian market more competitive in the near future. Economic forecasts suggest India will become the third largest economy in the world, passing Japan, in 2020. According to a report released by the United Nations last year, India could also become the world’s most populous country in the world by 2028. This is particularly important because not only will India remain the largest democracy in the world but it will also have the largest consumer base. If India plays its cards right, it will harness this asset to its advantage to attract immense investment in order to significantly grow its economy and accelerate social spending.
In addition to having a rapidly growing populace, in 2020 India will be the youngest nation in the world, with some 64% of its population of working age. This is expected to prompt a 10% jump in India’s urban population. In 2020, India will be four years into the South Asian Free Trade Agreement (SAFTA), the region’s first comprehensive free trade agreement to date. The benefits, and detriments, of SAFTA will be crucial in determining India’s regional strategy. These developments will place India in an important position in global great power politics and within a myriad of intergovernmental institutions. India will demand more say in various decision-making bodies of global concern. In short, by 2020 India will be at a tipping point in its history, which is why it is vital to examine and understand the possible alternate futures of India 2020.
Drivers Shaping India’s Future
In order to better understand what version of India will face the world in 2020, it is important to analyse and discuss the driving forces that will shape it between now and then. What are the tools that policymakers will use to shape the future of India? What are their likely decisions? What effects will their policies have?
There are various political and economic drivers that will shape the stability and the prosperity of India 2020. Of these, without a doubt the two primary drivers will be the external environment and the political economy. Entangled within these two drivers are factors including: India’s foreign and regional policy; influence from international institutions; forces of globalization; India’s domestic security apparatus; demographics; energy policy; anti-poverty policies and civil society. These factors will all play a strong role in shaping India 2020. Depending on the moderation of the mentioned drivers, India can “make it or break it” as a strong nation.
Keeping a robust economy by constantly making market reforms and indulging in international trade and finance flows can build and maintain the competitive edge that India so desperately requires. However, the political will to enact and sustain the necessary economic reforms to allow this will be a difficult challenge for India. Every economic measure undertaken has to keep poverty removal at the core of its agenda. India’s current status where, according to World Bank’s “below $2” data, more or less half of the Indian population is living below the poverty line, is not only socially unacceptable, but it’s also dangerous in terms of sustainable governance. Going forward, economic performance will largely determine social spending in India, which is important not only for poverty alleviation but also for other development challenges such as urbanisation and problems related to climate change.
The external environment of India 2020 will be determined by the preparedness of India to deal with threats. India shares long borders with China and Pakistan, two of the world’s nine nuclear states. Moreover, its border with China has long been the scene of various disputes, both territorial and political (such as Tibet), that India will have to cope with in the years to come. Dealing with these potential threats will require the development of a forceful and modern defense force. Currently, the Indian military is substantially inferior to China’s. The latest Indian aircraft carrier speaks to the length that India needs to go to sufficiently modernise its military. India is deploying a refurbished Soviet aircraft carrier to counter China’s rapid naval modernisation and expansion campaign. Up-to-date security resources and military sector innovation are sorely required if India is to compete with China as an Asian superpower in the future.
In addition to a modernised military, India needs to advance its foreign policy, both on the regional and global stage. Globally, India’s role within the BRICS group will be an important factor shaping India 2020. BRICS is an acronym that refers to the economies of Brazil, Russia, India, China and South Africa. Will these emerging economies be able to cooperate to advance their development agenda and harmonise their political differences? If the BRICS are seeking to produce a shift in global power polarity, then India’s role in it must be examined. Regionally, stability with good governance and economic progress in neighboring countries are drivers that will also shape India 2020. Ongoing issues such as the dispute with Pakistan over the issue of Kashmir, the threat posed by terrorism, vast migrations of people from Bangladesh, and maintaining Nepal as a stable buffer state between India and China are just a few of the many regional issues that Indian policymakers will have to be shrewd about in the coming years. In addition, India’s role in regional instruments such as the South Asian Association for Regional Cooperation (SAARC) and the South Asian Free Trade Agreement (SAFTA) can be used to considerably boost India’s regional reputation.
Apart from those discussed previously, there are other drivers that will fuel India’s political economy and external environment in the coming years. A discussion on India’s future must include drivers such as the role of civil society and energy policies. Currently, India is home to the largest number of active nongovernmental organisations (NGOs). The number of NGOs is bound to increase if there is no drastic change in the poverty situation and stronger evidence of good governance. How India’s policymakers accommodate the civil society into its economic reforms will be vital in shaping India 2020. Current market reform trends, including the passing of the Indian Companies Bill, are a good signal to the public that the government is seeking to link civil society with the corporate sector to advance the social development of Indian society. The Companies Bill essentially mandates that the highest profit making companies in India must spend 2% of their revenues on social programs. In exchange, the Indian government will open markets and better protect corporate investors. New Delhi needs to build on initiatives such as this to ensure India 2020 is prosperous for all Indians, not just the rich and powerful.
Finally, drastic energy policy reform in India is vital to national economic growth and security. Currently India is neither energy sufficient, nor energy efficient. India is quickly addressing this issue by increasing its spending on nuclear energy. The US-India civil nuclear deal signed in 2010 will spur the development of nuclear facilities in India and increase energy production. India has signed similar deals with other countries, such as France. In addition, India is now also a major importer of Middle Eastern oil, with imports surging over the last decade. New Delhi is hopeful that the recent nuclear deal between Western powers and Iran will allow it to strike a deal with Tehran to import oil directly from its regional neighbour via a dedicated pipeline. However, despite these efforts, analysts propose that India has a long way to go to meet the energy demands of its rapidly growing economy.
The future for India 2020 is uncertain. In this article I have attempted to construct a picture of the primary drivers and factors that will likely determine the state of India in 2020. The most important drivers I have identified are the strength of India’s economic performance, its key foreign policy threats and objectives, and the progress of its domestic development agenda. In the next installment of this series, I will explore and analyse, based on these drivers, the possible alternate futures for India in 2020.
*Syed Mafiz Kamal is an international affairs analyst, formerly at New York University. His research focused on South Asian regionalism and also in the the thematic areas of political economy and peacebuilding. He is currently at the United Nations. He can be followed @SyedMKamal.
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