Sunday, Nov 23, 2014

India and regional trade: UPA talks the talk; can’t walk the walk

Written by C Raja Mohan | New Delhi | Posted: January 17, 2014 9:30 am

Addressing the trade ministers from the SAARC in Delhi this week, the Union Commerce Minister, Anand Sharma called for greater visa liberalisation to make it easier for businessmen to travel across the borders in the Subcontinent. Sharma also called for more open borders, better regional connectivity, and expanded banking facilities.

But who is Sharma appealing to? For India, whose economy towers over those of its neighbours, has to take much of the blame for lack of rapid progress in regional cooperation; and within India, the Congress Party, which has been in power for more than a decade should be held responsible for the poor condition of South Asian regionalism.

The eight-member SAARC (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka) is the premier forum for regional cooperation, but presides over one of the least integrated parts of the world.

To be fair, Sharma has been ardent Indian champion of South Asian regionalism. It is also well-known that Sharma has the strong backing of Prime Minister Manmohan Singh, who has repeatedly articulated an impressive vision for regional economic cooperation both at the multilateral level in the SAARC as well as the bilateral level with Bangladesh and Pakistan.

As the decade long UPA tenure comes to a close, it is quite clear that Sharma and the PM have not been able to persuade the Congress Party to see the strategic virtues of trade liberalisation. Given its populist protestations against globalization, the Congress leadership has never embraced Manmohan Singh’s quest for economic integration in the Subcontinent and beyond in Asia.

It is also evident, that the UPA government has been too weak to implement some of the decisions on regional cooperation that it has taken. Whether it is visa liberalization or modernizing trade infrastructure on the borders, political ambivalence and administrative dysfunction have prevented the UPA government from turning its declared commitments into tangible outcomes.

While the Manmohan Singh government has indeed reduced tariff barriers against imports from least developed neighbours, it has found it harder to remove India’s multiple non-tariff barriers. The situation is more complicated in the case of Pakistan, where India has allowed other political considerations to limit the trade possibilities. India which complains against its growing trade imbalance with China, faces increasingly vocal protests from its neighbours against India’s trade surpluses.

The inability to translate sensible regional goals into practical results will go down as one of the greatest failures of the UPA government’s decade long tenure in office. The prospects for a more imaginative regional economic policy under the next government look dim, with the national leadership of the BJP showing no vision for South Asian economic regionalism.

The BJP’s prime ministerial candidate, Narendra Modi has often dropped hints of a different approach, but is yet to articulate ambitious regional goals and a credible strategy to achieve them.

(The writer is a distinguished fellow at the Observer Research Foundation, Delhi and a contributing editor for The Indian Express)

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