Nitin Pai: Our foreign policy is 8% growth

Nitin Pai 

April 13, 2014 

I took the opportunity on one of my infrequent visits to New Delhi last week to have coffee with one astute observer of the Indian policy scene. The discussion strayed, as discussions often do these days, into the composition of the new cabinet. I was struck by most of his choices, but most of all by his views on the foreign and defence portfolios.

He couldn't care less, he said, because these are mostly irrelevant to India's national priorities at this stage. Wars involving us are unlikely, neighbouring countries are caught up in webs of their own making and most international developments don't involve us, even if they sometimes affect us a little. In his view, therefore, the foreign and defence ministries are best used to balance competing political factions within the ruling party, rather than to house the best qualified person for the job. The key economic portfolios, on the other hand, ought to go to the best talent the ruling party or coalition can muster.

It is hard to contest this assessment at a time when growth has slowed down, inflation remains high and investment is yet to pick up. Getting back onto the path of high growth is the single biggest policy agenda before the new government. Students at Pune's Symbiosis International University were taken aback last year, when I argued, in a lecture on geopolitics, that "our China policy is 8 per cent growth, our America policy is 8 per cent growth and our Pakistan policy is 8 per cent growth". Now more than ever, it is important for India's foreign policy establishment to acquire a deep understanding of the economic bases of national power. It would be fruitless, almost absurd to talk about the new government's foreign policy agenda without rooting it firmly in the economic agenda. Now, more than ever.

Despite some attempts by some eager foreign analysts to over-read the semantics of party manifestos, there has been more continuity in the substance of India's foreign policy than it would appear. The 1998 nuclear tests were in the works under three prime ministers. The India-US strategic partnership was initiated by at least one previous government and realised by its successor. Negotiations with China have been taking place for two decades under different governments. There have been changes in tone, in style, in rhetoric and in specific priorities, but there have been few sharp departures. It is in reaction to events where these are most discernible. Different governments responded differently to terrorist attacks and national security crises in different ways.

This is not to say that foreign policy is so 'fixed' that outcomes cannot be improved. They can. In fact, mere differences in imagination, energy and style can improve our mileage, within the limitations of the engine's parameters. So there is a case to appoint the best foreign minister the new government can possibly find in its ranks, subject to the caveat that the outcomes will be circumscribed by how well his or her colleagues in the economic ministries perform.

While the question of who becomes the next defence minister might have been inconsequential when seen purely from a war and peace, military issues standpoint, it is highly important when seen from the economic perspective. What proportion of the nation's resources ought to be allocated for defence? It is misleading to look at the defence budget alone and argue whether it should be more or less than the current level of around 2 per cent of GDP. An unknown amount of national wealth is locked up in assets that are not reflected in the budget. A lot of what is spent by the defence ministry is strictly not defence expenditure.

Here's a shocking fact: we do not know how much India spends on national defence. No conversation on defence policy, from pay structures to equipment purchases, from doctrines to strategies, can be reasonably conducted without first answering this question. Until that time, incrementalism is the name of the game: some more guns here and some better ships there amid wishful talk of indigenisation and modernisation. We do not need the new defence minister to be an expert on military strategy. We need him or her to have the inclination for economic reasoning.

We finished our coffee before speculating on who the new National Security Advisor (NSA) might be. This important position has been staffed by retired foreign service officers three times out of four, and once by a retired intelligence chief. Here's the thing: there's no reason why the NSA should be an ex-civil servant. Given the scope of the NSA's responsibilities, it makes sense for this position to be occupied by an influential politician from the ruling party, perhaps even a confidant of the prime minister. In any case, it is a good idea to reverse the trend of appointing immediately retired civil servants (and military officers and judges) into government positions.

The external environment will certainly affect India's internal quest to get back onto the path of high economic growth -- but much of the slack is in domestic policy. If we manage our home and economic affairs well enough over the next few years, foreign and defence policies will again become important. The intervening period is an opportunity to clear the decks in the South Block of the Central Secretariat in New Delhi.

The writer is director of the Takshashila Institution, an independent public policy think tank
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