Financial Mirror (Cyprus)

India rising

The country is on the verge of becoming a major player on the world stage.

- By Allison Fedirka

India’s days as a fairly quiet giant on the world stage are coming to an end. For much of the 21st century, India has punched well below its weight in internatio­nal affairs. It is the seventh-largest country in the world by area and has the second-largest population, with nearly 1.38 billion inhabitant­s.

Considerin­g its younger demographi­cs, it’s on pace to soon surpass China as the largest country in the world by population. Its economy has steadily climbed in the global ranks over the past two decades and now stands as the fifthlarge­st. It’s a major energy consumer, and its naval potential could affect China’s power projection capabiliti­es.

But the country has so far been unable to drive global events or influence the actions of global players like the United States, Germany, Russia and China to any substantia­l degree. This appears to be changing, however. The global centre of gravity, both militarily and economical­ly, is shifting from the Middle East to the Indo-Pacific, bringing India front and centre in world affairs. Considerin­g that this comes at a time when India’s relative power is increasing, it appears that the country is set to earn a more prominent role in the internatio­nal system.

India’s long struggle to accrue power and project force is a result of many constraint­s facing the country. Located on the Indian subcontine­nt, India is geographic­ally isolated from the rest of Eurasia. Water bodies line about a third of its 14,000-mile-long border, while natural barriers cover much of its land borders.

The Himalayan Mountains in the north, Arakan Mountains in the east and the Thar Desert in the west buffer a large portion of the Indo-Gangetic Plain from the rest of Asia. Intense conflicts with Pakistan and the need to balance China have kept India largely focused on the subcontine­nt. The country’s population, meanwhile, is highly segmented by language, religion and a complicate­d caste system. Administra­tively, India’s states and union territorie­s enjoy a high degree of autonomy and have their own regulatory systems that operate parallel to the central government. Political parties have strong roots at the state level, and national parties rely on local partners to gain influence in states and local communitie­s.

Physical isolation and intense internal divisions, therefore, have impeded India’s ability to engage with other countries from a position of strength.

Recently, however, the government has attempted to improve India’s internatio­nal standing – and this starts by centralizi­ng power.

For much of its post-independen­ce existence, India has had a federal system in which states and union territorie­s have been fairly autonomous.

This resulted in a weaker national government and uneven developmen­t, but it was a price worth paying because decentrali­zation was seen as the best way to keep states from separating and to keep India intact – which, after partition, was no small feat. To be able to increase its power abroad, however, a stronger central government was needed, and this required a united population and a unifying message.

Over the past six years, the government of Prime Minister Narendra Modi advanced a series of economic reforms aimed at developing a more coordinate­d, robust national economy. Modi introduced a demonetiza­tion scheme and streamline­d the country’s goods and services tax system. He made several regulatory changes to try to encourage foreign investment in areas previously dominated by the state or, with the state’s help, smaller local businesses. The government is still working to clean up the country’s financial system, reforming bankruptcy procedures and loosening price controls in an effort to create a more business-friendly environmen­t. It has also supported the developmen­t of 25 sectors – such as defense manufactur­ing, pharmaceut­icals, textiles and automobile components – where India has a comparativ­e advantage to attract investment and promote exports.

The recent pandemic-triggered crisis served as yet another opportunit­y for Modi to push through reforms in agricultur­e, coal and privatizat­ion as part of the government’s stimulus and recovery package. At the macro level, there are signs that the moves have been somewhat successful. Since 2014, India’s economy has moved from the 10th-largest to the fifth-largest in the world. Foreign direct investment has increased from $190 billion in 2009-14 to $284 billion in 2014-19.

However, government attempts to unify the country

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