Be very wary

Can we trust Arvind Subra­ma­nian not to push for the kind of con­ces­sions the US will be de­mand­ing from In­dia?

Down to Earth - - CONTENTS - DOWN TO EARTH

In­dia should not tow the US' line on trade con­ces­sions dur­ing Barack Obama's visit to the coun­try

COM­MU­NISTS AND so­cial­ists may change their ide­ol­ogy to ac­com­mo­date eco­nomic lib­er­al­ism as many Latin Amer­i­can lead­ers have done—our erst­while com­rades in West Ben­gal had also be­gun to see the light just be­fore they were thrown out—but rarely does it hap­pen the other way round. Free mar­ket ide­o­logues sel­dom turn into pro­tec­tion­ists who want to nur­ture their do­mes­tic in­dus­tries or sec­tors. So it’s most un­likely that Arvind Subra­ma­nian has changed his eco­nomic phi­los­o­phy in the months since he be­came Chief Eco­nomic Ad­viser to the Gov­ern­ment of In­dia. That is, since Oc­to­ber 16,2014.

Be­fore that Subra­ma­nian was the se­nior fel­low at the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics and Cen­tre for Global Devel­op­ment, Wash­ing­ton DC, af­ter a stint at the In­ter­na­tional Mon­e­tary Fund. He also served at gatt dur­ing the Uruguay Round of trade ne­go­ti­a­tions. (Note: it was dur­ing this round that most of the in­iq­ui­tous agree­ments of the wto were signed, pacts that have proved lethal for de­vel­op­ing coun­tries.)

Subra­ma­nian’s back­ground has a bear­ing on what lies ahead. His in­puts to the Naren­dra Modi gov­ern­ment are key to the re­form path that In­dia will be tak­ing and spe­cially sig­nif­i­cant as Barack Obama pre­pares to come to Delhi for the Repub­lic Day Pa­rade. Obama is the first US pres­i­dent to visit the coun­try twice dur­ing his ten­ure and there is much spec­u­la­tion about the un­der­ly­ing quid pro quo. The con­sen­sus is that Obama’s pound of flesh will be sub­stan­tial— eco­nomic re­forms that will open up In­dia to US in­vestors.

In March 2013, as an econ­o­mist at the Peter­son In­sti­tute, Subra­ma­nian had made a scathing attack on In­dia’s “pro­tec­tion­ist” and “dis­crim­i­na­tory” eco­nomic poli­cies—dis­crim­i­nat­ing ap­par­ently against the US be­cause Delhi was sign­ing trade pacts with Ja­pan, Sin­ga­pore, EU and asean—and sug­gested a se­ries of mea­sures to make In­dia fall in line.

One of the steps he had ad­vo­cated in tes­ti­mony be­fore a com­mit­tee of the US Congress was that the US should launch more cases against In­dia at the wto to ad­dress fric­tions and con­flict “where In­dian pol­icy is egre­giously pro­tec­tion­ist”. One such case had al­ready been ini­ti­ated by the US on In­dia’s do­mes­tic con­tent re­quire­ment in its so­lar en­ergy mission pro­gramme. Laud­ing it, the In­dian aca­demic had sug­gested that the US “should con­sider ini­ti­at­ing more such dis­putes for poli­cies in other sec­tors”.

Co­in­ci­dence or not, within 10 months, the US had launched a sec­ond case against In­dia at the wto. That case has now gone to the dis­putes set­tle­ment body, plac­ing a ma­jor ob­sta­cle in In­dia’s ef­forts to up­scale its pro­duc­tion of re­new­able en­ergy.

Then there is his other sug­ges­tion which is more wor­ry­ing. The US, he had urged, should use the mega re­gional trade blocs it had put to­gether, such as the Trans-Pa­cific Part­ner­ship and the Trans-At­lantic Trade and In­vest­ment Part­ner­ship, to ex­ert “nat­u­ral pres­sure” on In­dia to open up. That is as bad as it can get: In­dia will come un­der tremen­dous pres­sure to change its poli­cies on a wide front—from eas­ing its in­tel­lec­tual prop­erty laws to cut­ting tar­iffs on industrial goods at a time when it is hop­ing to get its man­u­fac­tur­ing back on stream.

Now that he has joined the Modi gov­ern­ment, is Subra­ma­nian em­bar­rassed or con­cerned about what he had ad­vo­cated? More to the point, is he likely to have changed his views on what In­dia needs to do to tone up its far from sprightly econ­omy, spe­cially the man­u­fac­tur­ing sec­tor which is in the dol­drums?

It is un­likely that an econ­o­mist of Subra­ma­nian’s per­sua­sion re­grets his pre­scrip­tions since his ide­o­log­i­cal moor­ings make few al­lowances for de­vel­op­ing coun­try con­cerns. And yet, one hopes the view from Delhi is dif­fer­ent—even for diehard free mar­keters.


Newspapers in English

Newspapers from India

© PressReader. All rights reserved.