Originally Published 2014-09-08 00:00:00 Published on Sep 08, 2014
All of our neighbours run huge trade deficits with India which is not good for promoting harmonious relations. Basically, the whole South Asia is India-centric and instead of playing the big brother, India can afford to be generous. It will be beneficial to us in the long run to have peace and prosperity in the region.
India needs to be a generous neighbour

Whether it is 100 days or 1,000 days, India's problems are too big to be solved any time soon. Even identifying the core problems is difficult. Unfortunately, promises and slogans are only palliatives and do not offer credible or lasting solutions. What Mr Modi has done is to talk about some of the problems like lack of toilets and sanitation openly. But how he will overcome huge obstacles in making India a world economic power — supposedly his aim — is something to be watched.

No one has been shedding copious tears for his dismantling of the Planning Commission. Many, however, have wondered what would replace it. But on the whole, it was increasingly being perceived as a white elephant that offered plum jobs to 'very important' people who could not be accommodated in the main ministries.

The real problem will arise when inter-regional problems begin to surface. There will be a lot of acrimony when the weaker states will not be able to cope with their own problems and ask for help from the Centre. There won't be a Planning Commission to come to their rescue because no one would have carried out the exercise of assessing inter-state regional disparities and the measures to solve them.

Every power, on the other hand, will be delegated to the state and Modi has spoken of cooperative federalism. But states, especially in the north and northeast, require special attention and do not have the means to solve their problems. They are the border states with Nepal and Bangladesh as neighbours. Across the border of the weaker Indian states a similar situation exists in the neighbouring countries. All are struggling with high youth population looking for jobs but lacking skills, lack of infrastructure and poverty. If only there could be more regional cooperation within the SAARC region — a joint solution to problems would be a possibility then.

Modi has started well by giving signals to the regional leaders and the aim seems to be greater cooperation between India and the SAARC countries. This will lead to much better regional investment climate which foreign and domestic investors are looking for. There would be better management of smuggling, illegal migration and cross border terrorism if our neighbours became our good friends. Sharing of water and power is a very important need in the region and this can be achieved with amicable ties between the neighbours.It is the unemployed youth from Nepal and Bangladesh who cross over to India in search of jobs. If there is regional cooperation, EPZs could be started in the border areas and young people could be trained in institutes along the border for recruitment in them. Also better trade and investment facilities would enhance job opportunities and enrich the surrounding areas. The welfare of the people would be enhanced and income inequalities could be narrowed.

Even with Pakistan, efforts should be made on the economic front for greater cooperation in trade and investment. Often economic relations are easier to manage and the fruits of cooperation can be realised immediately. Economic cooperation will bring benefits to the people of the region that is struggling economically.

There would always be a large number of people who will point fingers at the dangers of such cooperation. It is up to the NDA government to resolve the problems by taking a bold initiative, keeping in mind the welfare benefits and trade creation aspects of economic cooperation. Let there be more business delegations between the two countries and more people-to-people contact. But, of course, politics will always hold sway over economics.

Similarly with Bangladesh, the river-water sharing issue is something that should be resolved at the earliest and this would improve economic and political relations. Bangladesh has withdrawn the transhipment facilities through its territory to the Northeast because of the Teesta water sharing dispute between the two countries, and Mamata Banerjee has taken a stern stand. Thus, the important question of water sharing has been kept on hold. Water is the life source for millions of farmers in Bangladesh and the Teesta water sharing issue is of critical importance for Bangladeshi agriculture.

Transhipment of goods through Bangladesh will not only reduce costs for India in transporting goods to its Northeastern states but will also create jobs in Bangladesh along the roadways in diverse service-oriented industries. Poverty and deprivation, lack of jobs and amenities is what is the common feature between West Bengal and Bangladesh.Regarding trade in goods between India and her neighbours, tedious inspections and certifications are needed for goods to cross the borders which really slow down trade between the neighbouring countries. It raises transaction costs, making the traded goods expensive. One should not be surprised to see Nepal and Bangladesh markets full of Chinese goods that are cheaper, although in both countries people prefer Indian goods.

With Nepal too, despite the recent overt bonhomie, lots of problems remain. A small country like Nepal has tremendous difficulty in exporting to India though there is an open border between the two countries. Similarly, Pakistan also has a lot of difficulty in exporting to India. All our neighbours run huge trade deficits with India which is not good for promoting harmonious relations. Basically, the whole South Asia is India-centric and instead of playing the Big Brother India can afford to be generous. It will be beneficial to us in the long run to have peace and prosperity in the region. In fact, trade with the entire ASEAN region is of great importance. It is indeed surprising why the Commerce Minister did not go for the important India-ASEAN meeting recently.

India has to have better connectivity with its neighbouring countries to promote trade and investment. It would be good for attracting FDI to the region and more Indian investment could also go to Nepal and Bangladesh. Constant security threats and the problem of transferring money are spoiling the investment climate.

(The writer is a Senior Fellow at Observer Research Foundation, Delhi)

Courtesy: The Tribune, September 8, 2014

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David Rusnok

David Rusnok

David Rusnok Researcher Strengthening National Climate Policy Implementation (SNAPFI) project DIW Germany

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