There is no denying that India’s economy, as of now, is not exactly in the pink of health. Our economic growth rate is down and is being periodically revised. It is now only around 5.6 per cent. Likewise, our industrial production has also suffered a setback, and there has been an worrisome decline in productivity in recent months. To add to our woes, the government seems entirely incapable of controlling our inflation. All said and done, it is quite possible that we could have a phase of stagflation in the coming days. The sharp rise in fuel prices has only served to exacerbate the situation. It is quite possible that with the pressures of the Lok Sabha elections in 2014, the government will feel obliged to announce another hike in the salaries and allowances of government servants that will only serve to stoke further inflation.
Whatever our economic situation, it is an internal matter for a sovereign state. There is no room for heads of other states either to make comments on the state of our economy or to tell us what we should be doing by way of economic reforms. And yet, this is precisely what President Barack Obama of the United States has sought to do. On Sunday, he complained that India had prohibited foreign investment in too many sectors such as retail trade. He expressed concern over the deteriorating investment climate in India and advocated another “wave” of economic reforms. No sovereign state can take kindly to interference from other states in its internal matters. Unfortunately, the United States has a record of going much beyond mere interference. Two of President Obama’s predecessors had unleashed two wars on Iraq. Both of them were serious encroachments on the sovereignty of that country. The second one was triggered off by unsubstantiated charges of Saddam Hussein having amassed weapons of mass destruction. Investigating teams of the United Nations found nothing to substantiate these charges. Nevertheless another war was waged against Iraq, and Saddam Hussein was tried and executed by the United States. The attempt to interfere with our economic policy may not be a war against the country, but it does constitute a serious act of interference in our internal affairs. Most people will see President Barack Obama’s comments about the need for permitting foreign direct investment in India in sectors like retail trade as an attempt to plead the case of Wal-Mart at a time when the presidential elections in the United States are around the corner and multinationals like Wal-Mart are expected to contribute handsomely to party funds. The well-meaning chief ministers of India have rightly decided against permitting foreign direct investment in the retail sector. Such investments will wipe out small retailers in India and lead to many more suicides stemming from desperation that we saw among farmers.
However, this is not all that there is to opposing highly discriminatory foreign trade policies that First World countries expect from India. Far more disturbing than the proposal to permit foreign direct investment in retail trade are the slogans of globalization and liberalization that are doing the rounds at the behest of the United States and the multinationals. It will not do to forget what Glasnost and Perestroika did to break up the Soviet Union. Globalization and liberalization threaten to destroy the indigenous technologies of all countries that do have such technologies. After all, the indigenous technology of any country is a mix of what is learnt, bought, borrowed, stolen and improvised by a country. The end product is the indigenous technology of that country. Countries that have no technology of their own need not worry about the impact of globalization and liberalization. But countries like India that have their indigenous technology can be affected very adversely if they get too enthusiastic about globalization and liberalization. The countries that are most vocal about these mantras are the ones that are themselves most reluctant to be liberal about their trade policies and their tariffs. For them it has to be a one-way traffic with developing countries or their doing without question what the United States and the multinationals have in mind about the economic colonization of developing and undeveloped countries.
Given this scenario, one has reasons to be happy about how Union Commerce Minister Anand Sharma reacted to US President Obama’s comments about the need for another “wave” of economic reforms in India. Sharma rightly asserted that policy-making was the sovereign right of our country. “We would rather urge the US to demonstrate leadership in bringing down barriers, encouraging capital flows and trade in the world, which is good for every economy,” he said on Monday. “The US should be leading the fight against protectionism and take forward the stalled Doha development round of the WTO to a meaningful conclusion,” he added. For once, the Union government has shown itself to be capable of telling the United States (a) to mind its own business and (b) not to preach to others what it does not practice at home. It will be recalled that the government and industry have been protesting several US protectionist measures, including a hike in visa fees that has affected IT firms like Infosys and TCS. The United States has levied a two-per-cent fee on the import of goods and services and an additional fee on certain categories of visas to fund the free medical treatment of workers suffering from illness contracted while clearing the World Trade Center debris after the attack. The fee hike is expected to add another $200 million a year to the cost of Indian IT firms. This, coupled with the tariff hike on Indian goods, is likely to be a major setback for India-US economic ties. It was time someone had the guts to tell the US President that he should practice at home what he preaches to other countries and stop interfering in the internal matters of other sovereign countries.