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India's best friend

Published by The New York Sun on 2005-08-01

It used to be that whenever annual rains failed in India, the country's leftists would cite the Central Intelligence Agency for malevolently steering away monsoon clouds toward the thirsty wheat fields of America's longstanding Asian ally - and India's bitter enemy - Pakistan.

Yesterday, the leftists and their fellow travelers were in high dudgeon again as an unexpectedly violent monsoon continued to wreak havoc on India's premier commercial city, Bombay - also known as Mumbai - and the death toll pushed beyond 1,000.

This time the CIA was charged with choreographing a rain dance. And capitalist sympathizers in the West were accused of sabotaging India's strenuous efforts to become an economic superpower and an Asian counterweight to another giant, neighboring China whose economy has been galloping at an even faster rate.

The loud and absurd allegations almost smothered the thunderclap. Of course the CIA alchemized clouds to make them explode over Bombay; of course foreign agents spread pandemonium in the city; of course the Americans plotted with Pakistan to decimate Bombay's livestock. India's left invested the CIA with powers that even Langley would be embarrassed to acknowledge, even privately.

The complainants clearly missed the irony of Communists plaintively pointing to the closing down of the waterlogged Bombay Stock Exchange for much of the past week.

India's left, in fact, was more vociferous about alleged American plots than about the human tragedy that's still unfolding. Bombay has already been hit by record rainfall - nearly 40 inches in five days - and tens of thousands of people have been made homeless, especially in the sprawling slums whose very existence is testimony to another kind of havoc, that of six decades of the socialist Raj that Indians suffered under.

That intricate system of permits, licences, and garroting of the private sector, and the corruption and encouragement of huge state-run enterprises that it spawned, also resulted in something else - a woefully inadequate infrastructure.

The fact that Bombay's roads buckled under the monsoon force, that century-old drains choked, that poorly laid power lines snapped, that the fragile grid of electronic communications virtually collapsed, and that airport runways were converted into canals - all of this was also testimony to the fact that the socialist Raj valued bureaucratic perquisites and white-elephant projects such as steel mills far more than good governance and all the infrastructure building that it entails, especially in a largely poor society.

All of this could also be viewed as historical detritus, however disheartening, were it not for the fact that the left is still enormously influential in India. It is stymieing systemic change. It is re-floating the old canards about American plots to destabilize developing countries. It is pushing populist shibboleths at a time when much of the rest of the world has embraced invigorating globalization. It is resurrecting Karl Marx when he's been rejected almost everywhere in the third world in favor of Adam Smith's free market.

Even though Prime Minister Singh has expressly embraced a free market philosophy and somewhat loosened the state's grip on economic activity, his every move seems to be undercut by the left's cozy relationship with Mr. Singh's boss, Sonia Gandhi. She's the president of the Indian national Congress, the 14-party ruling coalition's main grouping.

Her rationale for such a relationship? That the support of 71 Communists in the 545 Lok Sabha, India's Lower House of parliament, is integral to the survival of her coalition.

Mrs. Gandhi openly humiliated Prime Minister Singh while he was in Washington not long ago at the invitation of President Bush. Mr. Bush formally signaled America's acceptance of India as a nuclear power and pledged to assist in its ambition to become an economic dynamo - notwithstanding the possibility that India could one day challenge American supremacy in the global bazaar.

Meanwhile, Mrs. Gandhi - who's a member of parliament but not a Cabinet minister - vetoed a Singh Cabinet decision to partially privatize a state-run heavy-electrical manufacturing company. The left argued that privatization would invite unemployment, and Mrs. Gandhi concurred. Earlier, they had argued opening up airport construction to foreign investment would be deleterious to the economy - and Mrs. Gandhi concurred. The Communists had also argued that India antediluvian labor laws must be left intact, and Mrs. Gandhi concurred.

Her actions - and those of her leftist comrades - raise three troubling questions.

One, can Prime Minister Singh effectively govern when it is his party chief who's calling the shots? Cabinet ministers these days make a beeline for Mrs. Gandhi's home before drafting proposals for their portfolios. Mr. Singh's role seems to be relegated to that of an ambassador hopping from one capital to another for photo-ops.

Two, what does the uncertain federal governance suggest to foreign investors whose support India badly needs and who are already confused by the mixed signals they've been receiving? While India's growing middle class of 450 million - out of a population of 1.2 billion - constitutes an attractive market, leftist ideology seems to trump practicality and consistency. India's equities markets get an annual inflow of $9 billion, most from America, but foreign direct investment - a more accurate measure of investor confidence in the economy- has long been stuck at $4 billion a year. In contrast, China gets $54 billion in FDI.

And third, if the private sector is discouraged from accelerating involvement in strengthening India's infrastructure, can India's economic trajectory toward superpowerdom be anything other than fitful? To be considered a genuine economic superpower, India would need to raise its gross domestic product from the current $675 billion to at least $4 trillion. (America's GDP is $12 trillion; China's is around $3 trillion.)

However much goodwill America and other developed countries demonstrate toward India's ambitions, the sad reality is that the country's entrenched left shows little receptivity to such support or to free-market ideas that can drive the economy faster. Equally sad is the fact that India's leaders - and Sonia Gandhi in particular - may be privately persuaded about the efficiency of markets but that publicly they must continually pay obeisance to the exigencies of leftist politics.

The devastation of the monsoon is bad enough, but a longer-term problem is the Indian left's recidivism.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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