Sanjeev Ahluwalia | Trump’s America poised to move much closer to India

Four factors drive the expectation that India-US ties can only get stronger.

First, Americans edged closer to India by ignoring the advice given by 27 Nobel Prize-winning American economists that Kamala Harris would be a better steward of the economy than Mr Trump. Indians have a similar disregard for economic advice, which while being well-meaning remains too theoretical and deeply hedged with “on the one hand and on the other hand” escape clauses, to be of any practical use.

Leaders reflect their voter biases. No wonder then, that both Prime Minister Modi and President-elect Trump share a “business-like” world view, impatient with the constraints of history, political philosophy, economics, or ideology -- through neither is averse to getting their contextually derived action plans endorsed by ideologues -- if the two converge. Getting something done in the near term is the core motivation for both leaders.

Neither leader was a foot soldier of the party they now lead. Mr Trump burst on the political scene as a leader with no prior political experience in 2016. Prime Minister Modi, though a child of the Rashtriya Swayamsevak Sangh, is the perpetual “insider-outsider” who marches to his own tune. He became chief minister of Gujarat in 2001, without ever being a member of the Legislative Assembly earlier. He shone by orchestrating Lal Krishna Advani’s 1990 Rath Yatra mobilising Hindu support for a Ram Mandir at Ayodhya -- an aspiration, now fulfilled, earlier this year. Both Mr Trump’s America and Mr Modi’s India are unmindful of treading on established conventions to suit short-term national interests. In this they differ from China’s Deng Xiaoping only in playing to a shorter planning horizon.

Then, managing the growing Chinese threat to the established global order is a common goal, albeit with differing intent. Maintaining global dominance is to the benefit of America. India is a new aspirant to global power, aiming to bend global rules to its own benefit in the medium term. In the short term, its objectives are complex, mirroring America’s, in seeking to moderate China’s bellicosity, whilst continuing to profit from China’s highly skilled workforce, malleable domestic regulations for foreign investment and competitive exports selectively. The US is India’s biggest export market, but China is the biggest import partner. If India succeeds in becoming a global hub for technology design and services, it can meet the demand of American and European consumers by using the manufacturing smarts of China in India. China is ageing and in a weak fiscal spot now, which could defer its dream of global hegemony to beyond 2045. Mr Trump and Mr Modi could work this to their mutual benefit by engaging with China to refocus its energies on development rather than strategic autonomy.

China is, however, yet to become a high-income economy going by the World Bank Atlas method for computing average per capita income in $PPP.

Neither Mr Trump nor Mr Modi worry overly about the ideological virtues of democracy, a system which, ironically, elevated them to the leadership. For both, as it was for Deng Xiaoping, all cats are good if they can catch mice. Functionality is the key. China has never had any experience of democracy based on multiple parties, universal suffrage and civil rights. But a significant majority of citizens across these three nations remain deeply attracted to the democratic principles of equity. Neo-capitalism (regulated markets with property rights or party-guided capitalism, Chinese style) is the global growth meme. The inevitable downside is inequity in the distribution of wealth and income. This requires global solutions for safeguarding individual rights against corporate bodies and the State. At first sight, there is nothing common between the US and India or China. But there is a reason why both Indian and Chinese immigrants to the United States do so well.

On reaching that “shining place on a hill”, they fit right in, because the US is a melting pot, like India, except that it is on efficiency steroids and minus the hassles of a growth- suffocating bureaucracy. The extensive welfare programmes funded by the Modi government (and imitated by competing parties in state governments, sometimes called “freebies”), are mood elevators to dull some of the pain of transition from a low

efficiency economy to a high value-addition economy where social customs, norms, ritual status and individual needs are all subject to the imperative of putting commitment to work above all else. Like the US, China privileges corporate interest above worker interest. India is yet to get there.

Finally, the intervening three decades from 1970 to 1990s were an aberration, book ended by collaboration with the US. The Kolkata-based Damodar Valley Corporation was established in 1948 as the first multi-purpose river development project, modelled on the Tennessee Valley Authority in collaboration with American engineers. In the 1960s America responded with food support to tide over two successive droughts in India. Actions speak louder than words, even if the relationship cooled over the subsequent three decades till 2008, when India’s access to the civil nuclear power suppliers’ club was facilitated by the United States.

Future complementarities exist despite the divergent resource base of the two economies. The United States is 20 per cent of the global economy at present, but just four per cent of the global population. India is three per cent of the global economy but 18 per cent of the global population. The complementarity is that future growth trends in the Indian economy are more than double the rate in the US, particularly if America’s borders are sealed to immigrants. India is expected to contribute 14 per cent to global growth over the next two decades, assuming an annual growth differential of four percentage points between global and domestic growth. India is changing and responding to the demands of global competition. The US, India and China together comprising about one half of global GDP -- could be the regulatory sandbox to chart the way ahead.