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    S Jaishankar on why economic choices can’t be divorced from a strategic context

    Synopsis

    In the last few years, India achieved ambitious export goals that would have been considered unrealistic till just recently. Now, this is not just a substantial increase in aspiration, but one realised as the world economy is still recovering from the Covid pandemic. The basis for this confidence is a range of reforms in manufacturing, labour, finance, skills and trade facilitation. Added to that is a steady improvement in the ease of doing business.

    Since the drive for prosperity is a constant endeavour for all societies, it is natural that policymaking is also devoted to this goal. The most obvious expression of that is the promotion of trade and investments. Just building capabilities at home, however, may not be adequate. Securing business abroad needs information, networking and access. There is a virtuous cycle at work here, whereby greater trade and economic activity strengthens skills, capabilities and employment.

    In the last few years, India achieved ambitious export goals that would have been considered unrealistic till just recently. Now, this is not just a substantial increase in aspiration, but one realised as the world economy is still recovering from the Covid pandemic. The basis for this confidence is a range of reforms in manufacturing, labour, finance, skills and trade facilitation. Added to that is a steady improvement in the ease of doing business.

    Foreign commercial policy is being tasked to obtain access to markets and lower trade barriers. This can be done in an orthodox way but hastened through negotiated understandings, including FTAs and global supply chains. That may be an objective in itself; its larger significance for employment and prosperity are obvious.

    Increasingly, foreign policy contributes to the creation of new capacities at home. In Asia, all modernising economies have single-mindedly focused their external interactions on obtaining capital, technology and best practices from abroad. Newer challenges like green growth and climate action have started to open up more possibilities. Our partners have expanded from the older industrialised economies to more innovative ones.

    The resources and opportunities provided by external collaborations speed up the natural growth of the domestic economy. Valuable as they are, they do not, however, substitute the continuous nurturing of deep strengths at home.

    Three decades ago, India embarked on much-needed reforms and opened up its economy. The benefits of doing so are undisputed. However, in the name of efficiency and modernity, easy options were taken at the expense of our SMEs. Instead of building effective domestic supply chains, we opted for integration and value-addition that were more profitable and less painstaking.

    Infrastructure projects were given out to others without any effort to absorb learnings for our own industry. The pursuit of short-term gains made us lose ambition and, with that, a sense of strategy. As a result, economic growth did not witness the commensurate scaling up of employment, skills, strengths and capacities.

    In the last decade, we have awoken to the realisation that mantras about globalisation, if mindlessly applied, can cause real damage. Not just that, if economic choices are divorced from a strategic context, it could lead the country down a very dangerous path. The real debate is not whether we should be an open or a protected economy. It is whether we are an employment-centric and capability-driven one, or just a profit-obsessed society content to be a market.

    Along with vulnerabilities, a dependent mindset has also been rationalised, which masquerades as globalised thinking. India's destiny is bigger than to be just a part of the future of others. Real growth is not only about GDP increase; it is equally about infrastructure, supply chains, skills, finance and socioeconomic progress. When we sacrifice the latter for the former, our long-term prospects are imperilled. We could slide into strategic lock-ins without even being aware. Foreign policy is surely an instrument to advance our strategic course. It is equally an insurance that our big picture is the right one.

    In an era of more interdependence and interpenetration, it is also expected that all nations will seek to expand their zones of deep influence beyond their national boundaries. In the past, trade, finance, military activities and migration were some of the means to do so. Nowadays, the role of connectivity and socioeconomic collaboration has become more salient. This is an important realisation for a nation like India, whose reach was constrained by Partition.

    As we grow in different dimensions, strategic sense dictates that our prosperity serves as a larger incentive for the entire region. Realising this, the Modi government has significantly expanded connectivity and collaborative initiatives with neighbours. Its results are evident in new road and rail connections, waterways, port access and transit rights, power grids and fuel flows, and especially in the movement of people.

    Interdependence, however, has its own downside and can be leveraged unfairly when global norms are cast aside. Exposure to competitive polities, therefore, needs constant monitoring. We cannot always assume that all others will play by the rules. For that reason, as an interpreter of the world, diplomacy is also voice of caution. It informs a society of the risks and pitfalls even as it explains opportunities.

    Doing so in a systemic and organised manner is part of formulating strategy. By its very nature, foreign policy develops a comprehensive outlook and can guide other sectors. It could be trade and technology, or education and tourism. Current times, in particular, require a holistic approach to relationships.

    A stronger and more capable India, one truer to its roots and culture, is a key factor in the larger rebalancing that characterises our contemporary world. In an era that is more globalised, our talents, capabilities and contribution have a growing value for the rest of the world. As we celebrate 75 years of Independence, there is good cause for Bharat to be confident about its prospects.
    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
    The Economic Times

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