India's Global Challenge

INDIA’S GLOBAL CHALLENGES GLOBAL INDIA’S Ugo Tramballi “India wins yet again!” Narendra Modi announced in is ISPI Senior Advisor in charge of May 2019, just after securing a second term as prime the Institute’s India Desk. He was INDIA’S GLOBAL minister of the world’s largest democracy in a landslide global correspondent and columnist Founded in 1934, ISPI is with the newspaper Il Sole 24 Ore. general elections victory. When Modi and his Bharatiya Janata Party were elected for a first term five years ago, CHALLENGE an independent think tank committed to the study of Nicola Missaglia they promised India would win back its place at the high st is a Research Fellow at ISPI’s .Growth and Leadership in the 21 Century international political and table of leading world powers. Indeed, after decades of economic dynamics. Asia Centre, in charge of the India sustained growth, India today is at a tipping point both in Desk and of the Institute’s Digital edited by Ugo Tramballi and Nicola Missaglia It is the only Italian Institute Publications. terms of economic progress and of the human potential – and one of the very few in of its 1.35 billion citizens. As the global balance of power introduction by Paolo Magri Europe – to combine research and economic growth shifts towards Asia, and a whole activities with a significant new set of forces is seeking to redefine the international commitment to training, events, order, opportunities abound for the subcontinent to carve and global risk analysis for out its place as a leading, democratic, global actor. companies and institutions. Is India ready to do so? Which domestic and international ISPI favours an interdisciplinary challenges will the world’s second most populous nation and policy-oriented approach made possible by a research have to overcome in its rise to the world stage? team of over 50 analysts and an international network of 70 universities, think tanks, and research centres. In the ranking issued by the University of Pennsylvania, ISPI placed first worldwide as the “Think Tank to Watch in 2019”. euro 12,00 India’s Global Challenge Growth and Leadership in the 21st Century edited by Ugo Tramballi and Nicola Missaglia © 2019 Ledizioni LediPublishing Via Alamanni, 11 – 20141 Milano – Italy www.ledizioni.it [email protected] India’s global challenge. Growth and leadership in the 21st century Edited by Ugo Tramballi and Nicola Missaglia First edition: June 2019 The opinions expressed herein are strictly personal and do not necessarily reflect the position of ISPI. Cover image created by Diana Orefice Print ISBN 9788855260060 ePub ISBN 9788855260084 Pdf ISBN 9788855260107 DOI 10.14672/55260060 ISPI. Via Clerici, 5 20121, Milan www.ispionline.it Catalogue and reprints information: www.ledizioni.it Table of Contents Introduction........................................................................ 7 Paolo Magri 1. India’s Turn: Groundbreaking Reforms for a Global India............................................................. 15 Gautam Chikermane 2. How Solid is India’s Economy?........................................ 41 Bidisha Ganguly 3. Defining the Indian Middle Class................................... 67 Antonio Armellini 4. Inequality: Global India’s Domestic Bottleneck?.............. 85 Nicola Missaglia 5. A “Paper Tiger”? What India Wants to Be(come)............ 111 Abhijit Iyer-Mitra 6. Facing Global China: India and the Belt and Road Initiative............................. 141 Christian Wagner 7. India, Europe and Italy: Time to Boost Partnership............................................... 159 Claudio Maffioletti The Authors........................................................................ 179 Introduction “India stands tall as a space power!” tweeted Prime Minister Narendra Modi just weeks before securing a second, spectac- ular landslide win in India’s general election in Spring 2019 by an even bigger margin than many had expected. Minutes earlier, he had announced in a rare televised speech that India had just succeeded in shooting down one of its own satellites in low-Earth orbit with a ballistic ground-to-space rocket. Modi also added that the effort had been a fully “indigenous” one, accomplished entirely by Indians. Blasting apart a satellite that orbits the globe at 17,000 mph, analysts say, represents a technological breakthrough, one that puts India in the small club of nations with such a capability, along with the United States, China, and Russia. The event es- tablished the country as a military space power and confirmed a significant military advance in an area where China want to be a dominant power. “Now, it’s India’s turn”, Prime Minister Modi assured the country in a speech arguing for a bigger role for it on the world stage, delivered in Kuala Lumpur back in 2015, one year after his Bharatiya Janata Party stormed to victory in a landslide general election. India’s explosive economic growth over the last three decades has rapidly made it one of the world’s major emerging powers. Today, the country is at a tipping point both in terms of economic growth and in terms of the opportunities available to its people, who now number far more than one billion. India is the world’s sixth largest economy, with a GDP that has soared 8 India’s Global Challenge from US$270 billion in 1991 to US$2.6 trillion in 2017, and has a projected 2019 GDP growth rate of almost 7.5%, as the country continues – and will continue – to be a leading en- gine of world economic growth. India is also the world’s largest democracy – which China is not – and will soon become the world’s most populous nation, with almost 1.35 billion Indians in thousands of large (and growing) cities, as well as small towns and villages. Looking ahead to 2030, according to World Economic Forum estimates, India will still be a relatively young nation with an average age of 31 years (compared to 40 in the US and 42 in China), and will add more working-age citizens to the world’s workforce than any other country. The sheer scale of these numbers means that, whether willing or not, India’s actions will have a major global impact in the medium and longer term. Economic growth has transformed it from a bit player on the international stage to a leading actor. Yet there is a widespread feeling throughout the country that India – now ages away from the land of beggars and gurus portrayed until recently in the Western media – has not yet been given its due on the global stage, despite its size, its achievements and its vibrant democracy. It is no accident that governments in New Delhi have long been urging the international community to recognise India’s rise with a greater global voice at the high table of world powers, and a greater role in global institutions such as the United Nations Security Council. Pressure from India to reform twentieth-century organisations such as the IMF and the World Bank so as to take the growing weight and chang- ing interests of emerging economies into account is another demonstration of the country’s growing confidence. India is not a revisionist power, though: while clearly becoming less reticent about its global ambitions, New Delhi has re- affirmed its commitment to multilateralism – in the form of the Paris Climate Agreement, for instance, where it stood by its responsibilities just as the United States chose to withdraw. India today also plays a more prominent leadership role as a vocal member of global institutions such as the World Trade Introduction 9 Organization and the Group of Twenty (G20). “India stands for a democratic and rules-based international order”, said its External Affairs Minister, Sushma Swaraj, in a public speech in early 2019. “While the prosperity and security of Indians, both at home and abroad, is of paramount importance”, she added, “self-interest alone does not propel us”. This kind of commitment is no small feat at a time when the liberal democratic world order and its multilateral institutions are under threat from a growing number of actors including, alas, their principal architect. Despite these times of global uncertainty, India is undeniably on the path to becoming a regional and global power. What kind of global power does it want to be? Its commitments have made this fairly clear, although only time will tell whether it will be able to put those commitments into practice in its actions, legislation and response to change. One thing, however, is sure: no success comes without challenges; and for India challenges abound, old and new, at home and abroad. Long haunted by endemic indigence, India has lift- ed hundreds of millions out of extreme poverty since 1990; but even now one in five Indians is poor, the country is plagued by massive – indeed growing – inequality, and low-income states are home to almost half the population. With ten to twelve million new job seekers a year over the next decade, the govern- ment faces a huge challenge in terms of job creation, education, and training. New Delhi will also need to ensure a healthy and sustainable future for the people, and the socioeconomic inclu- sion of rural India in a country where, despite rapid urbanisa- tion, 60% of the population are expected to still be living in rural areas in 2030. As India’s rise on the world stage progresses, the country also has to face a whole new set of regional and international challenges. In addition to the ever-present tension with neigh- bouring Pakistan and the international terrorist threat, China’s growing assertiveness in the region poses a new and increasingly complex problem for India. This is especially true as Beijing 10 India’s Global Challenge steadily expands its influence in South Asia and the Indian Ocean, an area which India has traditionally considered part of its own sphere of influence.

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