By Harsh Pant
The year 2016 will be long remembered for the decision by Prime Minister Narendra Modi to nullify Rs 500 and Rs 1,000 notes, and replace them with newly designed, more secure Rs 500 and Rs 2,000 notes. This scheme is perhaps one of the most far-reaching policy decisions taken by any Indian government in recent times.
The nation is still struggling to come to terms with it and it will have significant long-term implications for India’s economic growth trajectory.
In many ways, 2016 was the year when Modi, the economic reformer, got his groove back. His government managed to pass the landmark GST Bill through Parliament.
By levying one indirect tax for the whole nation, it will make India one unified common market. It is the biggest reform in India’s indirect tax structure since the economy started opening up 25 years ago and is likely to be implemented in 2017.
India remained one of the few fast growing major economies in the world in 2016, thereby managing to make its presence felt on the international platform. And Modi remained one of the most dynamic leaders on the foreign policy front, putting his imprimatur on global politics.
In a move of great symbolism, Modi did not attend the 17th non-alignment summit despite host Venezuela’s repeated attempts to woo him. Instead, he dispatched vice-president Hamid Ansari. Following Charan Singh in 1979, Modi was the second prime minister to miss the summit since the country had co-founded the movement.
Modi, with his centre-right political inclinations, does not share ideological attachment to Jawaharlal Nehru’s ideas. He has gradually but decisively shifted Indian foreign policy in directions which few would have dared try before.
While sections of the Indian intellectual establishment still retain reflexive anti-Americanism, Modi has used his decisive mandate to carve a new partnership with the United States to harness its capital and technology for his domestic development agenda.
He is not ambivalent about positioning India as a challenger to China’s growing regional might and assertiveness. With this in mind, he signed the bilateral Logistics Exchange Memorandum of Agreement with the United States in 2016 for facilitating logistical support, supplies and services between the US and Indian militaries on a reimbursable basis and providing a framework to govern such exchanges.
Modi is also busy pursuing strong partnerships with US allies in the region including Japan, Australia and Vietnam. He has taken a strong position on the South China Sea dispute in favour of states such as Vietnam and the Philippines as well as expanded the US-India bilateral naval exercises to include Japan.
The PM also recognises the domestic challenges as he pivots India closer to the US. So he continues to invest in non-Western platforms such as BRICS — Brazil, Russia, India, China and South Africa. Economically, the grouping is less attractive, given economic troubles in Russia, Brazil and South Africa. Still, India hosted the eighth annual BRICS summit in Goa in October with great fanfare, if only to assuage domestic critics that Delhi does not intend to put all its eggs in one US basket.
The other dramatic change in South Asia came when the Indian Army’s special forces took out terror camps across the Line of Control in Kashmir in response to an attack on an Indian Army post in Kashmir by Pakistan-based terrorists that killed 20 soldiers on September 18.
The Indian response came almost 11 days after the initial attack and reflected an attempt by the Modi government to pressurise Pakistan on multiple fronts, thereby gaining leverage over an adversary that had long used terrorism and proxies to challenge India.
At the regional level, the Modi government succeeded in ensuring the postponement of the SAARC summit after several member states took India’s lead and decided to boycott the Islamabad meeting in November. This was one of the rare occasions when regional states spoke in one voice against Pakistan’s use of terror as an instrument of state policy.
Even as Pakistan was reeling from these pressures, the Modi government decided to use the instrumentality of military power — a tool which New Delhi had avoided for long. What was new was not that cross-border raids took place, but that India decided to publicise them to the extent it did. Equally significant was the Modi government’s decision to call the world’s attention to the plight of Balochi people who have resisted the Punjabi-dominated military establishment of Pakistan.
Pakistan, however, continues to be backed by China. The Sino-Pak relationship is blossoming with China poised to deploy its naval ships along with Pakistan Navy to safeguard the strategic Gwadar port and trade routes under the $46 billion China-Pakistan Economic Corridor (CPEC).
If this move goes ahead as planned, it will be the logical culmination of a long drawn Chinese involvement in Pakistan, giving the Chinese Navy a foothold in the first overseas location — the Indian Ocean and the Arabia Sea.
Other equations in South Asia are also changing with the US getting more impatient with Pakistan, and Russia moving closer to Pakistan, changing its decades-old policy of being consistently pro-India.
The South Asian strategic milieu is in flux and old rules no longer apply. The year 2016 has been about dramatic changes which are only likely to gain further momentum in the coming years.
(Courtesy of Mail Today.)