Let India catch all our fish and bring investment

16 March 2015 05:53 am Views - 3521

Indian Prime Minister Narendra Modi was here on a landmark three-day visit; the first visit to Sri Lanka by an Indian leader in three decades. His Sri Lankan counterpart could well have upset the apple cart with his imprudent remarks, when he tried to justify the shooting of Indian fishermen by the Sri Lankan Navy. That the Indian policy elite, in particular, and the average Indians, in general, (save a rabble rousing minority in Tamil Nadu) have due to a soft corner for Sri Lanka prevented a calamity from happening. So, we have Mr Modi addressing Parliament, visiting temples, flagging off a new railway in Mannar and telling the TNA to be ‘patient’.

A dispassionate reading of our independent history would reveal that our fortunes and misfortunes have been intrinsically linked to those of India. The problem however was that during the most part, India has been a liability. Its static economic system, and resultant inefficiency generated an inter-generational cycle of poverty. Its strategic alignment with communist Soviet Union and its unwritten Indira doctrine kept away any form of progressive western influence from the South Asian region, barring Pakistan ( which however found its own way to self-destruction through the State orchestrated Islamic radicalization). South Asia’s behemoth which could have lifted its small neighbours with it was trapped in its quasi-socialist model.

 

"Our political leadership should mobilize their resources to attract Indian investment and tourists, rather than getting bogged down in the fishing issue – which is more like a family quarrel between two fishing communities who share kingship links"

 In a way, India, which inherited the best institutions of the British empire followed the British political economy dominant at that time. In the UK, Thatcherism dismantled it with a ruthless zeal. India continued on the path to nowhere for another one and half decades. The bottom line is that India went down the economic precipice, carrying most of its small neighbours with it. (Despite all our political ills, which were, in any account insignificant compared to those of many other South East Asian nations that progressed in the economic ladder, we would have been a different nation, had not India haboured and trained Tamil militants at the very moment the then government of J.R. Jayewardene unshackled our economy from our own license Rajs.)

Much water has flowed under the bridge since then. In 1991, faced with a severe foreign exchange crisis, then Finance Minister Manmohan Singh introduced economic reforms. Since then, India has grown at a modest rate. In early 2000, for the first time in its history, while it was tapping into its full potential, and was ‘shining,’  we have been busy fighting a monstrous terrorist group, which prevented us from exploring opportunities that a rising India had created for its neighbours. By the time we were done with terrorists, lethargy has set in New Delhi. Anyway, the Rajapaksas in Colombo were also more keen on potential kickbacks that would come from other development partners.

 

"Those decisions, which are taken at the whims and fancies of the political leadership in order to promote their political fortune at the next general election, however, sacrifice the our future on the altar. They scare away potential investors from the country, in same way the LTTE suicide bombers did in the past. "

 The election of pro-business Mr Modi has infused new hopes and galvanized India’s business community, one of the most vibrant. In its maiden budget, the new government has announced a major transformation of country’s ramshackle infrastructure, with a massive $ 137 billion new investment in the railway. For the first time in recent history, while other major emerging markets are slowing down, or already stagnant, India is growing. This year, (after revising the base year for calculating GDP) it is expected to surpass China as the fastest growing large economy. It is expected to grow at 8.5% current fiscal year (ending March this year), according to the Indian finance ministry. When large economies grow, they create opportunities for their neighbours. China’s manufacturing has created supply chains reaching as far as Cambodia. We in India’s backyard  should plan to take our share from the growing Indian pie.

In Colombo, Mr Modi talked about economic cooperation, new infrastructure projects, on arrival visa for Sri Lankans and promised to help Sri Lanka address its crippling trade deficit with India.

 

"The simple logic is that if Indian companies open factories in those coastal villages in the North that itself could significantly reduce tension, which is born out from scarcity of viable economic opportunities"

 However, the popular discourse in Sri Lanka was obsessed with Indian fishermen poaching in the Sri Lankan waters. In a way, that is insane. Sadly though, that is so typical of Sri Lanka as well. Ranil Wickremesinghe’s remarks, in an otherwise constructive interview could have meant to appease the gallery from where such rhetoric emanates.

The Indian establishment which has been confronted with a more acute version of the dilemma that Sri Lankan politicians face in terms of balancing myriad of interests groups ( which nonetheless is the beauty and strength of democracy) shrugged off Mr Wickremesinghe’s affront.

However, Sri Lanka should not squander yet another economic opportunity. The bottom-line is that  though as emotive as it may sound, the northern fishing issue is of marginal import to Sri Lanka in terms of its economic priorities. Whether Indian fishermen poach or stay at home sipping toddy, leaving their Sri Lankan counterpart to take all the fish home, that would not drastically change our economic situation. However, if several of India’s world-class companies set up their plants in Sri Lanka and invest in our infrastructure, that can drastically boost our economic fortune. India is a major emerging player in Outbound Foreign Investment. For instance, during the last year alone, Indian companies have concluded Merger and Acquisition Deals worth  US$ 38.1 billion ( up from $ 28 billion in 2013). And Indian companies have invested $ 27 billion in manufacture since 2009.  Fifteen million Indians travelled overseas for leisure in 2012 and the number is projected to increase to 50 million by 2020.

 Our political leadership should mobilize their resources to attract Indian investment and tourists, rather than getting bogged down in the fishing issue – which is more like a family quarrel between two fishing communities who share kingship links.  

The simple logic is that if Indian companies open factories in those coastal villages in the North that itself could significantly reduce tension, which
is born out from scarcity of viable economic opportunities.

Fisheries committees of the two countries should be better positioned to solve the problem than the Navies and the politicians. On their part, the political leadership should mobilize their resources to exploit opportunities generated by India’s rise, so that it can lift an entire nation from its current development level.

However, the danger is that peripheral issues could distort the bigger picture. The government should have a clarity on its strategic economic vision for the country. The rest is of secondary importance. However, sadly though, that is what the current administration seems to be lacking. Yet another incident that highlights this particular problem was a decision that was announced on the eve of the visit of Mr Modi i.e. a unilateral review of a project undertaken by a subsidiary of the Indian cooperate giant Tata Housing in an eight acre land in Slave Island.

Those decisions, which are taken at the whims and fancies of the political leadership in order to promote their political fortune at the next general elections, however, sacrifice the our future on the altar. They scare away potential investors from the country, in same way the LTTE suicide bombers did in the past. Another classic case of the government’s capricious handling of the economy is the Colombo port city, which has been halted due to misplaced political thinking.

Development, at some points, could be painful, destabilizing and cause displacement for some communities. However, that is a cost worth taking. While a democracy has to consult its stakeholders, our level of development and the sense of urgency for fast tracked growth warrant pro-active implementation. On this count, to give the devil his due, one cannot help but appreciate the previous regime for its pro-active approach in putting in place much needed infrastructure. Except the Mattala airport, which may not have an immediate economic viability, other projects which were implemented at a speed unseen in the past have truly improved our economic potentials and will transform our lives in the future, though they may have cost a bit too much.

The Indian Prime Minister’s visit and the hand of friendship and economic cooperation that he has extended, if fully embraced can transform our fortune beyond recognition. Sri Lanka should strive to be the gateway to the rising India, in the same way that Singapore aspired and achieved three decades back as the gateway to populous South East Asia and China. However, touting strategic allegiance to India would alone not help wooing Indian business. The government should make sure its economic decisions are not unduly influenced by the rhetoric from the gutter. For an example of the repercussions of the policy paralysis when the economic decision making was held captive by the petty interests of the grassroots, one does not need to look further than India, itself. Ranging from a landmark retail bill to a civil nuclear deal, (which was finally put into use early this year) India has a track record of blowing most of economic opportunities.
We should view India as an opportunity of enormous proportion and revise our policy priorities to exploit them.  Alternative course of action is that we can keep on talking about fish and the rights of squatters. Then, we can keep our fish and eat it.

Follow Ranga Jayasuriya @RangaJayasuriya on Twitter.