From Europe, India is viewed as a balancing power in terms of the economy and global harmony, according to Dr. Medgyessy, former Prime Minister of Hungary. He says India is ideologically closer to Europe and the US than the other BRICS countries.
India has the unique opportunity to act as a balancing power in Asia, according to Dr. Peter Medgyessy, former Prime Minister of Hungary.
Speaking on "India’s Role in the Changing International Economic and Political Scenario" at the Observer Research Foundation on February 26, 2013, Dr. Medgyessy, who was the Prime Minister of Hungary from 2002-2004, stressed the parallels between India and Europe and the need for international cooperation in the aftermath of the economic crisis of 2008.
He said, from Europe, India is viewed as a balancing power in terms of the economy and global harmony. According to Dr. Medgyessy, India is ideologically closer to Europe and the US than the other BRICS countries - it has a strong, working democracy, and a great number of English speakers. Thirty years ago the world was split between the US and the Soviet Union. Now the major power ’opposite’ the US is China, and to this end the US needs India as a regional partner with knowledge of Asia and closeness to itself. If China and the US are ’condemned to cooperate’, India has a role to play in that relationship.
Dr. Medgyessy said despite the international economic crisis, India has continued to develop, especially in the research and development (R&D), electronics, computer science and medical fields. The world’s largest democracy is on the same platform as Europe, modernising and seeking solutions to the challenges of globalisation.
He noted that multinational institutions like the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD) and the World Economic Forum in Davos have all been quite pessimistic in their economic forecasts.
Dr. Medgyessy said while the past few years have seen many technological developments, there has also been rising unemployment and threats to natural and energy resources. Universities and other skilling institutions have come under fire due to changing demands of and on the workforce. A loss of confidence, economic and otherwise, has been observed worldwide since the crisis of 2008. When confidence is low, investment also drops, which means growth overall stalls. Furthermore, there has been no international consensus about the real problems behind the meltdown. Most of the answers provided have been superficial, focussing on short term solutions.
Short term measures in monetary and fiscal policy are not sufficient to combat economic lethargy. The slowdown in the West reduced demand, which served to slow growth in the emerging export markets also, perpetuating the problem. Despite their own declining growth rates, emerging markets like the BRICS (Brazil, Russia, India, China, and South Africa) countries have been driving the world economy when the traditional powerhouses have failed to do so, Dr. Medgyessy said.
Dr. Medgyessy pointed out that as developing countries are leading the way economically, they are looking for greater influence in world decision making; this would mean restructuring organisations like the UN and IMF to reflect global reality. To this end, Hungary supports India’s bid for a permanent seat in the Security Council.
India has a growing ’young entrepreneur’ generation, and a growing middle class anticipating and contributing to growth. The rapidly increasing workforce is one of the largest in the world, an asset which must be utilised efficiently to avoid the social implications of large scale unemployment. India also has a strong R&D sector, one of the fastest growing in the world, on which around 1% of the GDP is spent. By 2050 India will be the world’s second biggest economy. Foreign direct investment has doubled since 2006. More interestingly, India’s investments abroad have quadrupled in the same time and there are a growing number of Indian multinationals. India is the second most attractive investment destination worldwide. Maintaining a high investment rate is essential to guarantee future growth, so India and Europe must together capitalise upon these advantages.
This is not to say that India does not face problems. The government is dealing with a budgetary deficit, high inflation, high unemployment and inequality. Indian women face a particular set of social hurdles, from education to health. Dr. Medgyessy made reference to ’courageous reforms’ which had been enacted by the Indian government, but said they must be accelerated and more reforms must come. For example, redistribution policies designed to tackle inequality have so far only been ’timid’.
Globalisation has made international interdependence inevitable. Countries like Hungary increasingly desire larger and more dynamic global relations, which is why they implemented a new ’Asia policy’ at roughly the same time they joined the European Union. However, issues like immigration and cultural differences cannot be completely set aside.
Addressing the possible correlation of democracy and economic success, Dr. Medgyessy said that democracy was not the perfect system, but at the same time, there is no better alternative, China’s success with Communism notwithstanding. The difficulties faced by some countries in Europe may be down to the speed of integration; some countries were not prepared for the rapid transition from dictatorship to democracy. The current air of disappointment is down to the fact that people were expecting miracles which did not materialise.
On the question of Indian workers abroad, Dr. Medgyessy acknowledged that the nationalistic mentalities prevalent in Europe need to change. On one hand, European countries speak of India as a ’natural partner’, but on the other, they are concerned about job security for their own nationals. The idea that the boost to the economy created by foreign workers could lead to growth - which would itself create more jobs for national workers - is not popular, especially during election years. It may take years for the effects to be felt, and - as Winston Churchill has no living equivalent -there is no leader with personality enough to say that pain must be accepted now so that the future is brighter.
India’s role is expanding by leaps and bounds. Indian business interests exist worldwide, in established European markets and relatively unexplored African ones, and can do much to sustain economic growth in those regions. Meanwhile increasing political power adds the potential for peacekeeping activities. Dr. Medgyessy concluded by praising the strength and vibrancy of Indian culture, stating that the international community would benefit greatly from additional exposure to it.
Click here for Speech Video H.E. Dr. Peter Medgyessy, Former Prime Minister of Hungary.
(This report is prepared by Anahita Mathai, Research Intern at Observer Research Foundation)
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