Singapore: Countries in South-East Asia watching the rapid changes in India in the last six months have begun to slowly feel that they have a genuine cause for optimism. Rahul Mukherjee, a leading South Asian academic and policy wonk in Singapore, says there is no doubt among Asian investors that the Narendra Modi government has in a short span of time, significantly transformed the investment climate in India. And he believes for a good reason.
The Prime Minister is viewed to have quickly done away with the the United Progressive Alliance (UPA) government’s big ailments: policy paralysis, lack of unified leadership and taking action on urgent reforms that the UPA knew how to get done, but would not due to internal politics.
“Modi’s situation is exactly the opposite of Manmohan Singh. He is in command of his cabinet. And he is known to be decisive," says the 47-year old Mukherjee, who is the head of research at the Institute of South Asian Studies at the National University of Singapore.
“Anyone holding Indian stocks today can sense the 360-degree turn in their favour," he adds. “The mood has transformed from investment pessimism to investment opportunity for Asian investors."
But he is quick to also note that the problems facing the Modi government are formidable and in many ways exactly the opposite of the previous one. He says that whereas Manmohan Singh and his core team largely knew what needed to be done but could not implement the design, this government seems confused.
“One would have thought that it would be easy for the Prime Minister to increase the powers of regulators and reduce the discretion of the ministers—a fact that is at the source of corruption and riddles pertaining to India’s investment climate," he comments. “After all, Modi’s cabinet is reputed to be obedient rather than capable. And, his principal secretary is a former Trai (Telecom Regulatory Authority of India) chair. Why then is he not working towards making the regulatory system more transparent for all investors?"
Mukherjee, a measured and astute observer of policy reform in India, is also an associate professor in the South Asian Studies Programme at NUS, having earlier taught at the Jawaharlal Nehru University (New Delhi), the City University of New York and the University of Vermont (Burlington). His two recent books are: Globalization and Deregulation: Ideas, Interests and Institutional Change in India (Oxford University Press, 2014), the Oxford India Short Introduction to The Political Economy of Reforms in India (2014).
The academic believes that Modi has key lessons to learn from the positive impact of the work done by UPA government. His hope is that the new government will take a mature view of the relationship between growth and poverty alleviation—something he has written about extensively.
“I have no doubt that economic growth is necessary but it is not sufficient for poverty alleviation in India," he says.
Indeed, data suggests that the impact of growth on poverty reduction is the least significant in India, compared with all other regions of the world, except perhaps Sub-Saharan Africa.
“Also, state-driven programs such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) have made a very positive impact on poverty, especially where the programme is being implemented properly. The poor want to earn a living and have all the right aspirations after centuries of social oppression."
Mukherjee is of the view that the most pressing governance issues facing India are respecting secularism and election reform.
“First, the idea of India, however imperfect, has evolved as a nation that lives with and respects diversity," he says. “One worries that the government is allowing its allies to shout slogans about reconversions to Hinduism, thereby stoking worries among minority communities. Unless the government reins in the fanatic saffron elements, development as a progressive nation is unlikely."
On election reform, he points out a critical flaw that while every candidate has to spend within a limit in a particular constituency, there is no limit on the amount that a party can spend in a constituency.
“Placing a cap on a candidate but not the party, in my opinion, is a contradiction," he says. “This is surely the mother of all corruption that no amount of rights-based approaches based on the right to information can cure."
He strongly believes that the cap on election expenditures for candidates should extend to parties as well. And that the state should increase its contributions towards elections. And finally that all election contributions should be acknowledged with a receipt.
“Modi will go down in history as a statesman if he can move the country in this direction," he says. “Otherwise, history may judge him as more hype than reality."
Edited excerpts from an interview:
Now that the Modi government has been in power for some time, what do you think are its strengths and weaknesses in comparison with the UPA regime?
The UPA was a regime that had the intellectual capital to govern but could not place politicians in positions of authority to implement those goals. The failure to govern hurt most significantly India’s capacity to grow.
Nevertheless, the UPA regime, especially in its early years, had substantial achievements. It signed the Comprehensive Economic Cooperation Agreement with Singapore – something that set the stage for other special trading arrangements with ASEAN (Association of South-East Asian Nations), South Korea and Japan. It signed a nuclear deal with the US that lifted the nuclear apartheid on India.
The most notable success of the regime, in my opinion, was to inaugurate the Mahatma Gandhi National Rural Employment Guarantee Scheme. Even though this programme is ridden with corruption in many states, the scheme did make a dent on poverty, especially in states like Andhra Pradesh, Tamil Nadu and Chhatisgarh, where it has been implemented properly. If the economic reforms of 1991 ushered in an era of a economic growth and competitiveness which every party has only sought to emulate, I believe that ability to direct some resources from growth towards well being of the most vulnerable was a significant contribution of the UPA that has not been recognized adequately by the electorate.
What can the Modi government do better to improve ties with South Asian countries?
The Modi government began well by inviting all heads of South Asian states on the eve of his innings. No doubt he has charisma that spans our key allies including the US, Japan and Nepal too. Indeed, I cannot think of anyone after Nehru who can compare with Modi. This is very good for India’s image, especially in our own nieghborhood.
And he is now continuing the the quintessential priciple of the Gujral doctrine of giving more to the neighbours than expecting from them. It was followed by PM Vajpayee and consolidated brilliantly by Manmohan Singh.
India should practice reciprocity, which means that good gestures will be reciprocated with good gestures and conflict mongering will not be rewarded. But being such a dominant and hegemonic presence in the region, India should signal very clearly that it is deeply interested in cooperation by walking the extra mile. Beyond, reciprocity, senior diplomats within the region complain that there is a wide gap between India’s promises made in areas like trade concessions and aid, and its actual practice. This should also be an issue of serious concern for Modi to address in the near future.
What role in your view do you think Singapore seeks to play in the context of South Asia?
Singapore is one of globalization’s success stories. Global economic interdependence needs a peaceful rule driven environment where small states are not bullied by larger neighbors. Singapore will therefore support all foreign and domestic initiatives that work against hegemonic initiatives, secure peace, and promote commercial and cultural exchange. It is a keen observer and friend of South Asia.
Why has Singapore become an education hub in the last decade? What critical factors have led to this achievement for the city-state?
Singapore has actively nurtured some of the best Asian universities. NUS was a sleepy place in the 1990s. Today it is the top ranked global university.
Singapore provides an exceptional scholarly environment in a number of ways. First, it is emulating American standards of rigor. Second, and I must say that this true especially in NUS’s Asian studies departments, we are deeply sympathetic to an Asian perspective. My teaching and research remain largely the same as in JNU. And, this brings me to the third point, we have excellent resources to conduct scholarly research. In India, research funds come from different agencies that have diverse agendas. In NUS, the university itself has substantial funds for research, a factor that helps secure the autonomy of a researcher.
What can Indian universities and think tanks learn from the Singapore model?
Indian universities and think tanks can learn many valuable lessons. The first is the issue of rigor. Indian universities should commit themselves to high standards of teaching and research that can be measured. Indian and Singaporean standards need not be the same. But India like Singapore can create its own transparent standards. And, rewards should be based not merely on the years of work but on the extent to which those standards are met. Second, I think it is important to nurture a few centres of excellence and fund research generously. The paucity of generous research funds and good libraries are substantial bottlenecks to high quality social science research in India.
Finally, there should be greater integration between scholarly and policy work. I do not think that Singapore has the optimal relationship yet. Often policy work is considered short–term and academic work irrelevant for policy. Highest levels of governance in NUS, and within government, however, understand that good academic work can produce excellent policy results.