Security Studies Program Seminar

India’s Emergence as a Great Power: Implications for U.S. Policy in Asia

David J. Karl
Asia Strategy Initiative

October 21, 2009

Speaker’s Remarks:

• India’s power trajectory is very problematic.  The growing accolades that India is receiving mask some very deep-seated structural constraints that significantly diminish its power prospects and decrease its utility as a strategic ally for the United States.

• There is a current debate ongoing about how to measure and understand U.S. declining power relative to other, rising powers.
• China & India are key elements of this conversation, since they are seen as the world’s most prominent emerging powers.  Both are often mentioned in the same breath, such that a new term has been coined to describe them as a unit: “Chindia”.
• China is really the poster-child for Asia’s ascent, and much ink has been spilt analyzing its upward arc.
• India, by comparison, has received little sustained focus.

• India’s recent rise is worth reviewing:
• Not so long ago, India was viewed as a decrepit and backwards Third World country with an economy in severe financial crisis (18 years ago, it was the 3rd largest debtor country in the world, and its prime minister was assassinated).
• However, this crisis led to reforms that have since propelled India’s dynamic economic growth, becoming the 4th largest economy in the world measured by purchasing power parity.  The current prime minister of India was the architect of those reforms, and he is the first Indian prime minister in 40 years to serve out a full term and to be reelected.
• India is now permeated by a newfound sense of stability.
• Concomitantly, U.S. economic and political hegemony appear to be waning, accentuating India’s rise in a relative sense.
• With the switch from the G8 to G20, India is now at the center of global economic policy coordination  not its periphery.
• Paul Kennedy’s Rise and Fall of Great Powers displayed practically no awareness that India could be a future rising power, despite his inclination to believe this of China.

• The United States seems to be recognizing India’s rise.
• The Strategic Framework agreement reached between Washington and Delhi during the Bush Administration recognized India as a nuclear power and as a likely strategic ally with considerable great power potential.
• The Bush Administration was also marked by growing mil-to-mil ties and growing diplomatic recognition.

• India’s rise is undermined, however, by contradictory phenomena as well.
• In October 2008, there was a confluence of several events within a week or so of each other that paints an interesting portrait of Indian power that is worth consideration.
• India successfully launched its first (unmanned) lunar mission, signifying India’s upward technological trajectory and elite status and taken as a “wake-up call” by American newspapers and presidential candidate Barack Obama.
• The Global Hunger Index included figures that illustrated how tenuous India’s claim to global power is, demonstrating that nearly half of India’s small children – roughly 60 million in number – are malnourished, and over 200 million Indians suffer from hunger.  The food security situation in India is worse than in many parts of sub-Saharan Africa.
• Such incongruous events are a familiar pattern.  This past summer, India launched its first nuclear-powered submarine while the country is suffering its worst agricultural drought in decades, a development that highlighted the economy’s extreme dependence on unpredictable monsoon rains

• What are the criteria by which to measure a great power, and how does India stack up?
• Traditional measures include: military power projection, demography, economic strength, the quality of governance, and intangible factors such as national willpower and soft power resources
• However, I will focus only on two key criteria: India’s demographic resources and the administrative capacity of the Indian state.

• Some suggest that India’s population figures are a major strategic resource:
• Fareed Zakaria and Mukesh Ambani both argue that India’s demographic circumstances are a strategic asset relative to the OECD states’ aging and small populations.
• Unlike China, the working age population in India is growing faster than the total population.
• Some analysts have suggested that this large demographic dividend will sap America’s economic competitiveness.

• However, I suggest that India’s demographic resources are more a liability than an asset:
• It has archaic and constrictive labor laws that place it at a severe disadvantage with regard to manufacturing for export compared to China.
• It also has a vastly inadequate educational system.  Most of the growth in India’s working-age population is from regions where India’s public education system is worst, and India’s public education system ranks poorly compared to the other BRICs or other emerging market countries.  Despite efforts at reform, average years of schooling and literacy levels remain low.  Even the research output of India’s premier research institutions is relatively disappointing given the country’s reputation as a technological powerhouse.
• These factors have led to a severe skill shortage in India’s national economy.  Despite India’s enormous annual output of engineers trained, for example, McKinsey Consulting has reported that only about one quarter of these engineers actually have the skills necessary for high-end employment.  Indeed, India produces no more computer science Ph.D.’s than Israel per year.

• India is also plagued by weak governance due to its inefficient and counter-productive institutional frameworks.
• Two Indian-born Americans have written interesting books on this topic.  Although Fareed Zakaria is optimistic about India’s leading role as a future great power, Parag Khanna is more skeptical, suggesting that India is at best going to be a second-tier power pulled into China’s strategic orbit.  However, both agreed that India’s governance system will be a key political factor constraining India’s policy efficacy.
• Zakaria declared PM Singh’s reelection as the debut of India as a great power because its quality of governance with be fixed by far-reaching reforms.  We will see if he is right, but two ongoing develops cause me to be skeptical.
• As one of India’s leading economic thinkers puts it, “there is a strong consensus in India on weak reforms”.  No leading politician has come out in favor of truly decisive reforms.
• India hopes to use its plan to host the 2010 Commonwealth Games as a showcase for its suitability to host the Olympics in 2020, but there is growing anxiety that India does not have its act together to prepare for the games sufficiently.  The Commonwealth Games committee is so concerned about Indian mismanagement that it has appointed a panel of technical experts to oversee and exert pressure upon India’s preparation efforts.

• What does this all mean?  In short, the material basis for future Indian power is not as secure as those in Washington have recently claimed it to be.  India is not prepared to serve as a counterweight to a rising China.

Question & Answer Session

Q: India has two things going for it that you did not mention.  First, India’s enormous middle class, and, second, a possible coming “accountability transition” in India as the middle class continues to sway the context for accountable governance as it captures more parliamentary districts.  Couldn’t these factors outweigh the constraining factors you emphasized in your talk?

A: There are certainly some reasons for optimism.  I might even agree with your two points, but I doubt the state capacity problems will be surpassed as quickly as many believe.

Q: Hasn’t India been making some considerable education reforms under the current government?

A: The new minister strikes me as very dynamic and reform-minded, but education in the Indian system is a state matter, not a national one, which makes crafting national reform considerably more challenging.  Similarly, shoddy private schools operate outside of the purview of official reform entirely.  There are business-firm indexes ranking these schools to encourage accountability, but this cause for optimism is currently quite limited in its impact.

Q: Is the comparison between India and China today fair?  Couldn’t one argue that India is just farther behind on the same trajectory, making a comparison to China in the 1970s as perhaps a fairer equivalent?

A: Chinese reforms first began in the farming sector, but India has not pursued the same approach.  Sixty percent of India’s workforce is in this sector although it only produces roughly 17% of its GDP – this sector is in serious need of reform.  To become a great power, India needs to be able to shift that enormous labor force into more productive economic sectors, but it cannot because of parochial interests resistant to reform and the country’s restrictive labor laws.  Yes, India started at reform later than China, but I think the drag on India now is much greater than the drag on China when it first launched economic reforms.

Q: Isn’t primary education a much greater source of India’s problems than tertiary studies?  Also, doesn’t our choice of terminology about what sort of big power we care about prejudice our findings?  The USSR was not a superpower in internal dimensions either, but we considered it one nonetheless.  Shouldn’t you focus more on military capacity and nuclear weapons for determining what constitutes a great power?

A: Sure, it is crucially important to fix the primary schooling sector.  I wouldn’t dispute that.  India also needs to develop its manufacturing sector.  Almost all of India’s manufacturing is capital intensive in nature, which is odd considering that labor should be India’s comparative advantage.

Q: Could you talk a bit more about natural resources in India?

A: India has to import considerable amounts of petroleum products.  Electricity is also a major problem in India.  The one thing India does have is a great deal of latent hydropower that could solve some of its energy problems.  However, being a democratic country, the NIMBY problem is a huge impediment to building dams that will displace population.

Q:  Isn’t it a bit unfair to suggest that the Bush Administration’s overly bullish attitudes toward India are reflective of the mood in Washington when we have a new president sitting in the White House and new personnel sitting in the Pentagon and Foggy Bottom?  Isn’t there more than a hairsbreadth of difference between the current administration’s understanding of India’s capabilities and constraints compared to the previous administration, and, if so, could you describe where those differences lay?  What do we know thus far about the Obama Administration’s read of India, and, alternatively, what do we not yet know?

A: The Bush Administration’s assumptions with regard to India have embedded themselves in the discourse in Washington.  George Bush overrode a sluggish bureaucracy to get the civilian nuclear agreement done.  Prime Minister Singh went so far as saying that the Indian people loved President Bush.  There is some anxiety in India about whether President Obama shares his predecessor’s commitment to U.S.-India partnership.  Certainly the current Secretary of State shares a strong focus on India – as strong as Condoleezza Rice and George Bush.  Whether or not she can persuade President Obama to spend more time on India is an open question.  It was a highly symbolic gesture that President Obama’s first invitation for a state visit to Washington was issued to Prime Minister Singh.  You also see it in the mil-to-mil relationship – the U.S. wants to sell India a huge fleet of jet fighters.

Q: Little is known in my home country, Japan, about India.  What are the prospects for an alliance between India and the United States?  And what about Indian sensitivities about sovereignty?

A: I and many others avoid the term alliance with regard to this relationship.  People think of it in terms of being a strategic partnership.  The Japan-U.S. relationship was forged when U.S. power was at its apogee and Japanese power at its nadir.  Supposedly rising India is determined not to be incorporated as a junior partner and it will likely stand firm on this point.  The China factor is going to be a key driver of Indian choices in this regard.  Indian choices about alignment with the U.S. will in considerable part be driven by whether or not Indian elites view Chinese intentions and actions as threatening or as benign.

Q: With India needing water desperately, how long will it take them to jettison its treaty with the U.S. in order to utilize their Thorium resources?

A: Actually, India is permitted to use its indigenous Thorium resources.  The U.S. just does not trade Thorium with them.

Q: Don’t India and China have different approaches to governance?  And isn’t U.S. policy toward India in part driven by an attempt to peel it away from its historic relationship with Russia?  And how would the U.S. like to integrate India into the reconstruction process in Pakistan and Afghanistan?

Q: Similarly, some suggest that Pakistan is cozying up to the Taliban in order to prevent possible encirclement by both Afghanistan and India.  How can we dampen the India-Pakistan dispute?  Is it possible to get India’s cooperation under parameters on Afghanistan’s alignment and India’s involvement in order to get Pakistan’s willingness to go along with Indian cooperation?

A: Indian-Pakistani cooperation and peace is the holy grail of U.S. diplomacy toward South Asia.  India worries that its commitments on Afghanistan would not be reciprocated by Pakistan because the civilian government in Islamabad does not call the shots on Afghanistan.

Rapporteur: David Weinberg