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India : Engaging the World Suman Bery Director-General

India : Engaging the World Suman Bery Director-General. India: The Next Decade Chatham House June 28, 2005. About NCAER. Independent Organisation Largely supported by contract research Concerned with public policy and business environment; both public and private clients

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India : Engaging the World Suman Bery Director-General

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  1. India: Engaging the WorldSuman BeryDirector-General India: The Next DecadeChatham House June 28, 2005

  2. About NCAER Independent Organisation Largely supported by contract research Concerned with public policy and business environment; both public and private clients Capacity for large-scale data collection Large and varied data holdings

  3. India: Engaging the World Presentation explores two inter-related questions (for the next decade): • What engagement is needed to support rapid growth? • What engagement might result from rapid growth?

  4. India: Engaging the World India is a poor country in a dangerous neighbourhood which badly needs to grow more quickly. This can only be done through active economic engagement with the outside world. India wasted the “liberal moment” in international economic affairs.

  5. India: Engaging the World Now has to make its way in a less certain, more hostile international economic climate. Elite, bureaucracy have only recently recognised India’s “offensive” interests in maintaining liberal international regime. Arenas of substantive interest include trade, energy, temporary and long-term migration. In time could include agriculture, international finance.

  6. India: Engaging the World • As Minister’s speech yesterday indicated, India has significant economic and strategic interests in a number of regions. • These include South Asia; East Asia; the Indian Ocean rim; the Middle East and Central Asia; Russia; Europe; and North America. Ties with Brazil and South Africa are also strengthening.

  7. India: Engaging the World How can/should India use international engagement to support its growth agenda? Past policy has been to protect, expand India’s market access, while minimising reciprocal obligations. Unlike China (e.g. through WTO accession), little effort made to use treaties as a “pre-commitment” or credibility device.

  8. India: Engaging the World Reflects shallow political consensus for reform, variety of political actors, unwillingness to take on domestic lobbies on too broad a front. Attitudes now changing (e.g. role in G-20, Doha Round).

  9. India: Engaging the World Bilateral Agreements (CECAs, FTAs), seen as a more tractable way of ‘locking in’ reform commitments, countering domestic lobbies. Also defensive against China. Also seen as insurance against failure of the DDR. Costly in terms of negotiating time, payoff, distortions, administration.

  10. India: Engaging the World All these are minor compared with the two CECAs that would truly matter: the U.S. and China. Preliminary discussions on each have taken place. Likely to be fiercely resisted by domestic interests, but could both protect market access and provide a roadmap for further domestic liberalisation.

  11. India: Engaging the World Like rest of Asia India thus far a (reluctant) multilateralist. Failure at Cancun, China’s assertiveness (ASEAN, ASEAN+3) have forced it to seek participation in regional discussions. Also will start participating in Japan-led discussions on financial integration.

  12. India: Engaging the World What engagement would result from growth? • Current Indian mania a little inexplicable. • Not that much has changed since three years ago. • But the rest of the world now seems to believe in the Indian story.

  13. India: Engaging the World Economic engagement with most partners still well behind diplomatic engagement. This cannot continue. Even though India still a minor player in world trade, size, visibility will entail reciprocity. Indian public opinion needs to be prepared for this.

  14. India: Engaging the World Differences from China include dynamic private sector, higher share of consumption in GDP, greater entrepreneurship and personal liberty. As already apparent, engagement is likely to be on a broad, sophisticated and diverse basis.

  15. Middle Class Households: Definition Households with annual household income between Rs. 200,000 and Rs. 1 million: ( US$ 4000 to US$ 21,000 at 2001-02 prices and market exchange rates).

  16. Income Groupings and Ownership (Ownership per household, 2001-02) Source: The Great Indian Middle Class, NCAER

  17. Observed and Expected Size of Middle Class Source: The Great Indian Middle Class, NCAER

  18. Average annual growth rate of number of households (%) All India Source: Great Indian Middle Class

  19. India: Engaging the World Summing Up: • India needs international links that both secure market access and support domestic liberalisation. • It is “shopping” for fora to achieve this in a way that is consistent with domestic politics.

  20. India: Engaging the World Summing Up (contd.): • It has a strong interest in a successful Doha Round. • But it is taking out insurance in case the round fails.

  21. Thank You

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