Prime Minister Sheikh Hasina’s visit to Delhi over the weekend highlights the deepening bilateral relationship with Dhaka and also its important structural consequence — growing interdependence with Bangladesh. India’s foreign policy can claim great success for the former — relations with Bangladesh have never been as good as they are today. They are also the best when viewed in comparison with our other neighbours. But India’s economic policy makers can be rather insensitive to the logic of interdependence. Hasina’s visit saw agreements on expanding connectivity and transit, easing travel across the border, strengthening trade and investment ties, boosting development cooperation, putting the fledgling defence cooperation on a firmer basis and promoting regional cooperation. Even as Delhi celebrates the golden age in the relationship with Dhaka, however, it must heed some important warning signs.
That Hasina publicly complained, albeit in a light hearted manner, about the impact of India’s recent move to ban onion exports on her kitchen, underlines the headaches in the neighbourhood that Delhi’s economic decisions generate. Hasina was not objecting to the decision itself that has produced immediate onion shortages in Bangladesh. She was pointing to its sudden and unilateral nature. If Delhi had informed Dhaka in advance, Hasina said, her government could have made alternative arrangements for onion import. The problem goes deeper and reveals a lingering autarkic and anti-market orientation in Delhi’s economic policy even as India’s national strategy calls for regional integration. For example, governments in Delhi, both Congress and BJP-led ones, have long resisted export of cattle to Bangladesh where beef is a staple. In doing so, Delhi has created an incentive for cattle-smuggling across the border. Few in government had anticipated that the demonetisation of the Indian rupee at the end of 2016 might have consequences for Nepal and Bhutan that are so tied into the Indian economy. As India rises and integrates with Bangladesh, that is now one of the world’s fastest growing economies, Delhi must get its economic bureaucrats to integrate the regional dimension into their national policy thinking.
Beyond onions, Hasina was also channeling growing anxiety in Bangladesh at India’s implementation of the National Register of Citizens in Assam and the threats at the highest level about throwing foreigners (read Bengali Muslims) from the state. Given the deep political trust between PM Hasina and PM Narendra Modi, the problem appears to be under control. But the situation could easily get out of hand, become a major controversy in Dhaka’s domestic politics, severely constraining Hasina’s positive approach to India. The problem in Assam is part of the tragic legacy of the Subcontinent’s partition in 1947 and the movement of people across the new frontiers in the east since then. As two strong leaders focused on problem-solving, Modi and Hasina must try and develop a long-term joint strategy that will facilitate national identification and generate a system of work-permits for legitimate movement of labour. Today’s digital technologies offer solutions to difficult political problems that Delhi and Dhaka have inherited from the past. The markets demand it.