Many centuries ago, Kautilya had argued that the strength of an army is derived from the strength of the treasury.
Finance minister P. Chidambaram implicitly revisited this maxim in a speech he gave on 6 February in New Delhi in memory of K. Subrahmanyam, the geopolitical thinker. Chidambaram did well to place economic strength at the heart of his analysis of national security. He explained that national security stands on three important pillars: human resources, science and technology, and money. The finance minister then added that money is the most important of the three pillars. The other two cannot be adequately developed without the third, as China has shown so effectively in recent years.
Money comes from economic growth. The sharp slowdown in the Indian economy is a worry because it could eventually threaten internal social peace as well as put external security at risk. The committee headed by Vijay Kelkar on fiscal strategy hinted at one geopolitical risk in its September report: “It is imperative that as a responsible nuclear power, India pursues a responsible fiscal policy. This will enable us to retain our strategic autonomy.”
Though the Kelkar committee did not explain what it exactly meant by this warning, it is likely that an economically unstable India would be put under extra pressure from global powers, especially China, if it needs to be bailed out from another macroeconomic crisis. In more stark terms, it will be asked why a country that cannot manage its finances should be trusted to manage its nuclear arsenal. Strategic autonomy will be compromised.
The risk to national security from an economic crisis is admittedly an outlier. But sustained low growth over several years is a real danger. Chidambaram did not mince any words: “It is therefore a self-evident truth that growth is the key for greater public welfare and greater security. Yet, we adopt a disdainful attitude to growth. Some think that the value of growth is overstated and that we would be better off if we pursued not the goal of growth but other goals such as cultural nationalism or debt-driven egalitarianism.”
India needs to move back to high growth if it is to protect its national security in the widest sense of the word—ranging from military power to internal peace to technological capability. This is not some quixotic idea. It is what all great powers have pursued through history. China is but the latest example.
The loss in economic momentum is at times trivialized as basically a trend that affects share prices. It is sometimes dismissed with airy confidence that high growth is no big deal after all. The harsh reality is that slowing growth and a public finance mess eventually create political and strategic risks that will harm every citizen in the long run.