The Asian Dream: Part Two
Investigating the geopolitical implications of the COVID-19 pandemic: the making of a new order.
The messiah
It was one of the richest countries. It traded with most of the world and supported all the countries by exporting most of its goods. It was at the heart of global trade and at the top of the world order. India enjoyed a share of 27% in the world GDP,1 and it was the most influential country the world had ever known. Although, as fate had it, India’s economy started deteriorating by the time it entered the seventeenth century. After that, the road looked forever downhill for India. An invasion followed another as the years turned into decades and the world changed. India saw a new emperor every century, each of a different religion and culture. From the largest exporter of goods, India was turned into one of the largest importers and its resources started draining at a massive rate. It seemed as if India had risen all that way to the top in the global hierarchy just so it could satisfy the greed of the imperialists and eventually fall back down. By the time the British left India in 1947, India had been relieved of all the invasions and with it relieved of its influential position in the world as well. India’s share in the world GDP had fallen to a mere 3%.2
After independence, Jawaharlal Nehru assumed the position of prime minister of this newborn nation-state. He straightaway appointed Prasanta Chandra Mahalanobis as his economic advisor. Mahalanobis was a decorated statistician and the co-creator of the Feldman-Mahalanobis economic model which was based on the Marxian theory. Under the leadership of Nehru, India was turned into an ‘inward-looking’ economic state.3 The regime believed in isolating India from world trade, and this led to the imposition of stringent license laws. Private industries were discouraged from carrying out business and no foreign players were interested in investing in India. India followed a socialist line of thought for the next three decades. Indira Gandhi took the license laws to a whole new level and carried out mass nationalisation of banks. This ensured that the state was able to lay a heavy hand on resources. In the 1970s the economic growth was disastrous for a developing country. The per capita GDP was growing at a trivial annual rate of 1.8% and the inflation was skyrocketing.4 The poverty rate was at an extraordinary 51.3% in 1977-785 and the socialist regime did not seem to have helped India to get back on its feet.
In 1991, after the assassination of Rajiv Gandhi, P. V. Narsimha Rao ascended the seat of the prime minister, heading a minority government. The India that Rao inherited was in shambles. The literacy rate was unusually low, and tariff and inflation rates were unusually high. Rao saw all these problems as consequences of the socialist regime which had persisted for almost three decades and in turn, he liberalised the economy. The license laws were eradicated, and foreign players were invited to invest in India. The income-tax was decreased, and the import tariff rate was dropped to 85% from the massively exorbitant rate of 355%.6 India was once again looking up at the power ladder and expecting to climb it to the top.
The liberalised economy gave India the confidence that it needed to make a place for itself in the world order; the confidence that led India to become a nuclear power, become a prominent member in the United Nations and exercise its full-fledged soft power. The Indian culture was spread to many countries all around the world and Indian academics and businessmen started taking up major posts in Western universities and eminent tech giants.
Today, at a time of a worldwide disaster, India is still standing on its feet and performing well. Yes, the economy has certainly tanked because the whole world is moving towards recession. But, if the impact of the COVID-19 pandemic on other nations is considered then India has performed the best considering that its population is around 1.3 billion. It has not only maintained the spread of the epidemic but has also managed to play an active role in mitigating the crisis worldwide. If there is any country which has a chance to inherit the power that USA has held for so long following the First World War, it is India. COVID-19 has provided the perfect chance for India to climb the power ladder and become one of the most influential countries in the world. In the current situation, India might just compensate for its three-hundred years of decline.
The growth of the Indian economy and soft power
India is the largest democracy in the world with a total GDP worth over 3 trillion dollars. It has been growing in a sustained manner; however, it still ranks below China in terms of economic prowess. The fuel for India’s hope to rise beyond China has been the economic growth of the former which has expeditiously shot up in the past two decades. Following the years of liberalization, India has created a strong middle-class working population. Instead of an export and goods-based economy, India has indulged itself in the service sector and remarkably expanded that particular industry.7 This supports their soft power approach to the world; however, it still causes several problems.
Generally, expansion of soft power works better in countries which are already developed than countries which are still developing. India’s Hindi film industry might be attracting a lot of viewership from countries like China and the UK, but this does not mean that India can rise over the other countries by using soft power alone. India cannot make a big impact by solely using soft power for the simple reason that there are a lot of internal difficulties that need to be dealt with such as poverty and proper digital amenities. India has a substantially large base of soft power, but it has still failed to perform well.8
Despite the lack of good performance on its part until now, India has the perfect opportunity to exercise its soft power under the current circumstances. Many might interject that this would stand as unethical on India’s part, however, at this juncture, it might also seem vital to point out that this behaviour will only appear unethical if a country was to exercise its soft power for its benefit in these trying times (as was done by China). But India has the power and bizarrely also the resources to help the world by exercising its soft power. It can very well mitigate the impact the COVID-19 pandemic is projected to make and, in that process, also restabilize its stand in the global scenario. True, India has had a history of choking when it comes to the exercise of its soft power and the failure to make an impact on the world just seems to be growing evermore. But India has been subject to this undesirable situation because of its internal problems, as pointed out previously. On the backdrop of the COVID-19 crisis, India has a better chance to take control of its external dealings and climb up the hierarchical ladder.
Until very recently, the Indian government had not realized the potential of soft power and had distanced itself from it.9 For example, if the rise of the Hindi film industry is considered one can safely say that the government did not play any role regarding it. It became an attraction on its own accord. The Indian Premier League (IPL) is an independently created league of cricket. It has gained world recognition since its initiation in 2008. However, in this case also the government did not play any role. The Hindi film industry and IPL, both have become soft power assets independently without any government help.10
While China was actively exercising soft power and dominating trade, India was still busy sorting its internal issues. Eventually, the Indian government awoke to the reality. It registered that it already had hard power to assist in the development of soft power. One of the first initiatives carried out by the government regarding soft power was the Mars Orbiter Mission (MOM), more popularly known as Mangalyaan. Sending a space probe to Mars was impressive in itself but carrying out the whole mission in a budget of 4.5 billion rupees (73 million dollars)11 is unthinkable. MOM was the beginning of the Indian government’s active participation in soft power. It was followed by the Make in India initiative of the government. The former Chief Minister of Maharashtra, Devendra Fadnavis also noted the potential of soft power and the role of the film industry in it:
Film entertainment is one of the fastest and most prominent means to reach the public at large. It has long-lasting impact on the public and effectively showcases culture, tradition, history, locations, etc., in an artistic manner. The journey which started in 1913 has now become a cultural identity of Indians all over the world. People across the globe are enamoured by our cinema which also acts as a medium to showcase our diversity.12
For many years now, China has performed better than India regarding its soft power exercise. China is spreading its culture more efficiently than India, developing its economic capacity more rapidly than India and handling its internal problems also more efficiently than India. However, in the wake of the COVID-19 pandemic, China has lost all its resilience and is on the brink of economic destruction. The trust that China is bound to lose once the COVID-19 pandemic has subsided is in itself a diplomatic angel for India. The latter’s economy is stronger than what it appears to be in the first glance. The Indian economy will manifestly receive a backlash, but not a huge one because India has two things in abundance which the Western and other developed countries lack: young population and the large Indian middle-class.
The Indian middle-class
The emergence of the Indian middle-class can be dated back to the nineteenth century, during the Industrial Revolution in the West. The socialist regime, following the years of independence, encouraged a lot of public-sector investment and the state controlled the economy heavily. Due to this particular arrangement, many white-collar jobs were created in the government and public-sector industries. However, there were too many jobs and the middle-class was not as large as to take all of them.13
In the aftermath of liberalisation in 1991, there was a massive middle-class boom, and the numbers went soaring through the roof. There were more opportunities in this era and the middle-class was better educated. In contrast to the post-liberalisation Indian middle-class, the Chinese middle-class was destroyed due to the Great Leap Forward in the 1950s.14 To this day, the Indian middle-class is growing at a sharp rate. Today, more than half the population of India comes under the middle-class category, and it is projected to grow more swiftly in the coming years. How is the middle-class of India going to help the economy recover and earn recognition on a global level today?
The middle-class is essentially built of the consumerist population. Much of the population which lies on the middle-class slab tends to consume a lot of what is provided, be it services or goods. This is bound to help the economy because the world is running into recession. The demand has plummeted, and the only saviour right now is the consumerist middle-class. The chart given below shows the consumer spending of several countries. The higher the consumer spending, the better for the economies as the demand maintains its level and prevents the economy from crashing hard into recession. The consumer spending does not make the threat disappear, but simply keeps it in check and mitigates the damage. One can see that India is performing fairly better than the other countries, and this is mainly due to its large middle-class. China is the only country, which is significantly performing better than India, but that is largely because China has been out of national lockdown for a notably longer time.
COVID-19 is a huge disaster for the world. However, India is looking for ways to turn the disaster into an opportunity and has started investing heavily in the healthcare sector and pharmaceuticals. The most successful breakthrough that India has managed to make in recent months is that it has created a potential diplomatic asset. It is called hydroxychloroquine.
The Indian health sector and the potentiality of hydroxychloroquine
The health sector in India is vastly dominated by private platforms. Internally, the health sector has a lot of problems. The public spending is not adequate, and the infrastructure needed to house patients is also not properly available. The healthcare spending in India is merely 1.3% of the total GDP.15 The infographic given below represents the state of healthcare in several countries concerning the size of their population.
This particular infographic represents India in the lower scale as far as the state of its healthcare is concerned. However, one also needs to keep in mind that despite the state of its health sector, India is performing the best in controlling the virus. India recently converted multiple train coaches into potential isolation wards to compensate for its weak healthcare. And India has another advantage over the other countries as far as the pandemic is concerned, and that is hydroxychloroquine.
Hydroxychloroquine (hydroxychloroquine sulfate) is an anti-malarial drug approved by the government of the United States to treat “certain types of malaria, lupus erythematosus, and rheumatoid arthritis”.16 The U.S. Food and Drug Administration (FDA) has explicitly stated that “hydroxychloroquine sulfate has not been approved for the treatment of COVID-19”.17 However, it is being used experimentally to treat certain COVID-19 patients in the USA. The drug has been used in the view to stop the spread of COVID-19 inside the patient’s body. Hydroxychloroquine has been produced at a large scale in India and then exported to many countries which are in dire need of the drug. As mentioned, several times previously, hydroxychloroquine not only helps the world mitigate the threat of COVID-19, but also provides recognition to India.
Hydroxychloroquine might be a diplomatic game-changer for India. The drug has been exported to many countries around the world and India is earning a lot of “goodwill” due to that.18 India, being the largest producer of the drug has received great attention from the USA and other countries. The sales of the drug especially shot up after it was called a “potential weapon against COVID-19” by President Donald Trump and it still continues to be in demand.19
India produces 200 million of the hydroxychloroquine pills and consumes just a small fraction of it; that is 2.5 million. The rest is exported to other countries.20 With such a large manufacturing base, India can help the world overcome this pandemic. However, the downside of hydroxychloroquine is that it has been used by many hospitals across the globe with little or no results. If the drug potentially fails to be recognised as a legitimate preventive to COVID-19, then it might only have a minor impact on India’s diplomacy.
American outlook
In the previous part, The Asian Dream: Part One, it was distinctly noted that China is bound to lose trust after their attempt at hiding crucial numbers regarding COVID-19 infections. Until now, the USA has invested heavily in China, however, after the destruction of the American economy by the COVID-19 pandemic, the USA has to scout somewhere else to put its money. In this ever-changing world, who can be a better substitute than the emerging market of India?
The United States and India have viewed each other as quite consequential strategic allies for a long time now. But, since Narendra Modi came to power in India and Donald Trump in the USA, the bond between the two nations has increased materially. India is in great need of an ally as powerful as the USA. In 2018 “the United States was its second largest goods export market”21 and the goods and services trade was estimated at being 142.6 billion dollars.22 However, the USA is also wary of excessively indulging itself in trade with India because it believes that India lacks strong regulatory transparency which can be seen in the way “Amazon and Walmart-owned Flipkart conduct business”.23 In spite of this issue, it is highly probable that once the threat of the COVID-19 pandemic abates, the USA will have no choice but to indulge in trade with India.
The relations with USA will also improve and strengthen because India, a heavy investor in the Chinese market, will also have to move its weight from China and to somewhere else. India has already restricted foreign direct investment (FDI) from countries which share a direct border with it. This move has been assumed to be a direct retaliation to China.24 India has also criticized China over the latter’s handling of the COVID-19 crisis, putting the trade with China in a jeopardy. From what it looks like, India and the United States are more dependent on each other than what was previously considered. The most interesting part is that India has stated that “lack of democracy” in “China is part of the problem”.25 This might be an attempt by India to scramble towards the top of the global order and essentially woo the big democratic powers.
It can already be seen that the USA requires of India’s cooperation amidst the COVID-19 threat. The plea by Donald Trump to send over hydroxychloroquine was proof of it. Donald Trump also encouraged a discussion on Ayurveda and the “helpfulness of yoga.”26 All this means only one thing: at last Indian soft power is being recognized by one of the largest democracies in the world. It is just a matter of time before other countries view India in a strong economic and geopolitical position. And it is just a matter of time before India rises as a messiah for the whole continent of Asia.
© Anurag Inamdar, 2020
References
Tharoor, Shashi (2016). An Era of Darkness: The British Empire in India. New Delhi. Aleph.
Ibid.
Sanyal, Sanjeev (2008). The Indian Renaissance: India’s Rise after a Thousand Years of Decline. Penguin Books.
Palkhivala, N. A. (1984). We, the People. Mumbai. Strand Book Stall.
Sanyal, Sanjeev (2008). The Indian Renaissance: India’s Rise after a Thousand Years of Decline. Penguin Books.
Ibid.
Sources of Growth in the Indian Economy. Bosworth, Barry. Collins, Susan M. Virmani, Arvind. Brookings Institution. Retrieved on April 29, 2020. Retrieved from https://www.brookings.edu/wp-content/uploads/2016/07/2006_bosworth.pdf.
India rising: Soft power and the world’s largest democracy. Jaishankar, Dhruva. September 17, 2018. Brookings Institute. Retrieved on May 1, 2020. Retrieved from https://www.brookings.edu/opinions/india-rising-soft-power-and-the-worlds-largest-democracy/.
Blarel, Nicolas (2012). India: the next superpower? India’s soft power: from potential to reality? IDEAS reports – special reports, Kitchen, Nicholas (ed.) SR010. LSE IDEAS, London School of Economics and Political Science, London, UK.
Ibid.
Dear Mangalyaan: What India’s Mars mission means to me. Iyer, Geetha. November 15, 2018. Retrieved on May 3, 2020. Retrieved from https://www.nationalgeographic.com/science/2018/11/dear-mangalyaan-mars-orbiter-mission-india-space/.
Spotlight: 100 Scenic Locales in Maharashtra. Maharashtra Film, Stage and Cultural Development Corporation Limited. Retrieved on May 4, 2020.
Sanyal, Sanjeev (2008). The Indian Renaissance: India’s Rise after a Thousand Years of Decline. Penguin Books.
Ibid.
Growth of Healthcare Industry in India – Infographic. India Brand Equity Foundation. Retrieved on May 5, 2020. Retrieved from https://www.ibef.org/industry/healthcare-india/infographic.
Fact Sheet For Patients And Parent/Caregivers Emergency Use Authorization (EUA) Of Hydroxychloroquine Sulfate For Treatment Of COVID-19 In Certain Hospitalized Patients. U.S. Food and Drug Administration. Retrieved on May 5, 2020. Retrieved from https://www.fda.gov/media/136538/download.
Ibid.
How an anti-malarial drug has become a tool of India’s diplomacy. Bisht, Akash. April 16, 2020. Al Jazeera. Retrieved on May 5, 2020. Retrieved from https://www.aljazeera.com/news/2020/04/anti-malarial-drug-tool-india-diplomacy-200414095712611.html.
Exclusive: India agrees to sell hydroxychloroquine to Malaysia to help fight COVID-19. Arora, Neha. Das, Krishna N. April 15, 2020. Reuters. Retrieved on May 5, 2020. Retrieved from https://www.reuters.com/article/us-health-coronavirus-india-malaysia-exc/exclusive-india-agrees-to-sell-hydroxychloroquine-to-malaysia-to-help-fight-covid-19-idUSKCN21X0YQ.
How the humble hydroxychloroquine has become India’s unlikely new global strategic asset. Chandna, Himani. April 10, 2020. The Print. Retrieved on May 5, 2020. Retrieved from https://theprint.in/health/how-trumps-hydroxychloroquine-demand-changed-the-game-for-indian-pharma-companies/399057/.
U.S.-India Trade Relations. Congressional Research Service. February 14, 2020. Retrieved on May 5, 2020. Retrieved from https://fas.org/sgp/crs/row/IF10384.pdf.
U.S.-India Bilateral Trade and Investment. Office of the United States Trade Representative. Retrieved on May 5, 2020. Retrieved from https://ustr.gov/countries-regions/south-central-asia/india.
U.S.-India Trade Relations. Congressional Research Service. February 14, 2020. Retrieved on May 5, 2020. Retrieved from https://fas.org/sgp/crs/row/IF10384.pdf.
How is the coronavirus outbreak affecting China’s relations with India? Madan, Tanvi. April 30, 2020. Brookings Institute. Retrieved on May 5, 2020. Retrieved from https://www.brookings.edu/blog/order-from-chaos/2020/04/30/how-is-thecoronavirus-outbreak-affecting-chinas-relations-with-india/.
Ibid.
The US and India Should lead the Defense of Democracy in the COVID–19 Crisis. Jr., Vickery, Raymond E. April 7, 2020. The Diplomat. Retrieved on May 5, 2020. Retrieved from https://thediplomat.com/2020/04/the-us-and-india-should-lead-thedefense-of-democracy-in-the-covid-19-crisis/.