Giants of Asia in Silicon Valley

Prime Minister Narendra Modi and President Xi Jinping have just made back to back visits to the United States. In keeping with the times both began their tours from that Mecca of our age —Silicon Valley. Thereafter their paths diverged because Xi was on his first state visit to Washington DC, whereas Modi, on the annual pilgrimage the Indian PM makes on the occasion of the UN General Assembly, had a brief meeting with Obama in New York City.

PM Narendra Modi and Chinese President Xi Jinping both are visiting the US at a time when they have important political preoccupations back home. FIle pic/AFP
PM Narendra Modi and Chinese President Xi Jinping both are visiting the US at a time when they have important political preoccupations back home. FIle pic/AFP

Both were competing with yet another international star for the attention of the American media—Pope Francis. But for both Xi and Modi, the real target was not the US but the audience back home.

The reason is that the other thing that unites the two Asian giants is that both are visiting the US at a time when they have important political preoccupations back home. It is not just the Bihar election that demands Modi’s attention in India, it is the failure of his government to take concrete steps to make India a more business-friendly destination. True, the Indian economy is one of the few in the world that is growing and that FDI to India has gone up in the past year. But it is also a fact that a slew of measures to make high economic growth sustainable remain to be taken. The government has abandoned plans to pass a bill to ease land acquisition, a Goods and Service Tax (GST) is yet to be implemented, statutes to end retrospective taxation and ease labour laws is yet to reach Parliament.

As for Xi, the recent stock market crash and the bungled response of the government has taken away some sheen from China’s economic growth story. Meanwhile he is finding it difficult to push the reform of state owned enterprises (SOE), the key to rebalancing the Chinese economy. A proposal to reform the SOEs was unveiled on the eve of the Xi visit but they have proved to be a damp squib. A proposal for drastic reforms of the Chinese military was expected to be unveiled on September 10, but that, too, has not happened.

The economic troubles could well lead to the Communist party leadership taking recourse to nationalist displays, as manifested by the huge military parade to celebrate the 70th anniversary of the defeat of Japan in World War II. This was clearly intended to burnish Xi’s aura. In the US, Xi signed an important agreement with the US committing both sides not to undertake cyber espionage. In the context of the forthcoming Paris Conference on Climate Change, President Obama gained an important commitment from Xi on China’s commitment to take drastic measures to limit emissions.

This said, actually even host America is in a somewhat distracted state. President Obama is lame duck and the 2016 Presidential election campaign has more or less begun. The state of American politics is parlous, with outliers like Donald Trump and Bernie Sanders leading the Republican and Democratic fields respectively. The anti-establishment mood is so strong in the country that it has led to the resignation of US House Speaker John Boehner who was fed up by the actions of the hardliners in his party who are infuriated over their inability to push their anti-Obama agenda.

In all fairness, it is early days for Modi, he has just about finished the first year of government and all said and done, India’s economy still remains on the growth track. The Prime Minister remains personally popular and his party is expected to win the Bihar state assembly elections scheduled for next month. In contrast the Opposition remains divided and uncertain and its biggest party, the Congress, remains directionless.

But even so, there is need for Modi to understand that grand-standing in the Silicon Valley and supping with American CEOs will not bring India American investment. That will only happen when things happen on the ground and India moves up in the list of ease of doing business. That, in turn, is a task that cannot be achieved by Modi and his PMO alone, he needs to galvanise his government and its ministers who as of now are a bunch of faceless men and women who even the average newspaper reading person will not be able to mostly recognise.

All said, the Modi government needs to move from its penchant for event management and exhortation, to delivering on what brought them to power in the first place — the promise of a economic transformation of the country.

The writer is a Distinguished Fellow, Observer Research Foundation, New Delhi

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