On the eve of a major bilateral CEO forum here Montek Singh Ahluwalia, Deputy Chairman of India’s Planning Commission, invoked Dennis Kux’s famous scholarly account of India-U.S. ties, “Estranged Democracies,” as he put across a plea to corporate bosses in both countries to not be “too depressed about the slowing down of [India’s] growth.”

He urged delegates at a Leadership Summit organised by the U.S.-India Business Council that “There should be no doubt that India has the long-run growth capacity – in the next 20 years – that should enable it to grow at about eight per cent.”

Yet Mr. Ahluwalia admitted that India had “not succeeded in attracting U.S. investment,” at least so far as “direct foreign investment by U.S. companies,” was concerned and he suggested that “We need to ask ourselves why that is so. It may be a perception problem, genuine constraints.”

The Deputy Chairman also described as a “knee-jerk reaction,” the view that the Indian economy had slowed down due to a lack of progress with reforms. He however noted that those who worried about India’s medium-term growth prospects should focus on policy areas that required “problem-solving decisions, looking at particular problems and resolving them.”

Mr. Ahluwalia emphasised that “implementation constraints” of, for example large projects facing problems of environmental clearances, or inter-ministerial differences that prevent projects moving forward, could be attended to before the elections.

However, Mr. Ahluwalia explained, “My expectation is that we are a little bit marking time. Wherever a legislative change is needed, it is quite possible that it will slip beyond the general election next year, to the middle of the year 2014.”

Even though Mr. Ahluwalia promised that there was no item on the reform agenda on which the government of India earlier said “It is a good idea,” which has since been taken off the agenda, some of the ambiguity about the scale of reform achievable over the next few years was underscored by a panel of former U.S. Ambassadors to India.

Particularly Ambassador Frank Wisner, who served in India during 1994-97 said he was “sorry to hear Montek talk only of executive action,” and urged the Government of India to build a national consensus on making progress in key areas of reform, saying, “Don’t fail by not trying.”

Touching upon strategic issues that could have an impact on bilateral ties, Ambassador Robert Blackwill, who was mission chief in New Delhi during 2001-03, said that India would be closely watching to see whether Pashtun areas of Afghanistan would be taken over by the Taliban after U.S. and international forces draw down troops next year.

He added that given India’s concerns about Afghanistan and Pakistan in this scenario, its focus on the general elections above major reform progress, and the U.S.’ preoccupation with the Middle East, China and domestic issues, implied that the India-U.S. relationship will be “troubled” but “manageable” in the near term, but remain in “damage limitation mode.

Seeking to bolster optimism on growth, however, Mr. Ahluwalia said to the business community here, “Don’t be too depressed at the slowing down of growth... [and the] volatility in currency markets.” He expressed hope that even if getting the growth rate up from five to 6.5 per cent in a year was “not going to be that easy,” moving it up to even 5.7 per cent in the medium term, could herald its rise to “anything between seven and eight per cent” thereafter.


‘We must explore option of NRI bonds’July 16, 2013