Many observers have commented that the 21st century belongs to India (and China). Since economics is increasingly becoming the currency of power this statement acknowledges the changing balance of power in the world and is a tribute to the growing economics muscles of India.

Since the 1990s India is on a new economic path. The forecast was that by 2020, its economy would treble and by 2050 it will leave US economy behind. That surely implies that India will by then be seated on the high table because with economic power will also come the political strengths. As a result courting of India by other powers has already begun.

Globalization, with new interconnectivity and fillip to trade through opening of markets, has brought new prosperity to India. Liberalization enabled India’s economic revolution to match the levels achieved by East Asian Tiger states.

The credit for the new economic momentum goes to Prime Minister PV Narsimha Rao. All subsequent Central Governments of India followed his lead. The years 2003-07 recorded a big surge in the economy which touched 9.4% of the GDP in 2006-07. Unfortunately, the subprime mortgage crisis of 2008 in the US has initiated a world recession which will drop India’s growth during 2008-09 to 7% or nearabouts. India’s economic fundamentals are now very sound which should enable India to get back to her accelerated growth by 2010-11 at the latest. But for this hiccup, thanks to the financial breakthrough achieved in the previous five years, Indian economy was expected to double every eight years. At this rate India was destined to become the 5th largest consumer market in the world. India’s status then would not be high just in Asia, but in the entire world.

The drawback was that the new prosperity was not reaching all sections of people in India. The rich were becoming richer, the poor remaining poor. Inequality between the urban and rural areas was widening. It is also going to have a spatial north-south divide with southern states and west moving far ahead of the rest of the country causing an imbalance that may move people towards these regions. Social and political changes were not keeping pace with the economic growth. Estimates were that in 2004-05, 33.6% of people were living on less than $ 1 per day. The state continuously failed to deliver to the people on basic issues of health, education, employment and infrastructure. In a sense the economic miracle was also creating transformational disruption. Naxalism which started as a revolt against the state for its political and economic policies from a village called Naxalbari in the Darjeeling district of West Bengal in 1965 has spread to 16 states affecting more than 150 districts. Lobbying for power on the basis of caste has fragmented Indian politics.

The Indian growth story is, thus, not a smooth process. India’s future trajectory on the power graph will depend upon how the impediments to economic growth get removed and with what success. Apart from societal ones, the impediments lie scattered in several sectors notably governance and regulatory. Corruption has consistently remained one of the main causes for failure of delivery.

The Government, however, is doing its best to surmount these obstacles so that economic growth could be sustained at the levels already achieved and the nation building programs do not falter. There is a heavy accent on expansion of education and infrastructure. New job opportunities are being created and it is hoped that in time, more people, employed presently in agriculture and related activities which are poorly paid will be able to join industry and businesses. What has been done and achieved still remains miniscule in comparison with what needs or remains to be done but there is hope and confidence in the air that India is on the march ahead. With that India is acquiring a new vision of itself vis a vis the region and the world.

This vision while keeping national security at the top seeks to develop a cooperative and friendly attitude with all countries of the world. India has no hidden agenda but it is well aware that other nations may not feel equally benign towards it. Its nuclear program was designed to forestall any surprises from the neighborhood as well as to seek recognition that India is on its way to becoming a leading power of the world. Slowly, India is building a blue navy with aircraft carriers and nuclear submarines which signify a high military status. It has the fourth largest land army in the world. It has a powerful and advanced air fleet for defense. With its space and lunar programs and recent successful orbiting of the moon, it has sent a message that it is seriously developing its credentials as a global power. Its quest for permanent membership of UN Security Council is to get the world accept its status which demography and economic growth entitles it to. In the field of IT its unique and worldwide standing has already been accepted.

India has always wanted an important role in the world. When the South Asian Association for Regional Cooperation (SAARC) was mooted India was quick to join it hoping that promotion of trade, business and cultural interaction would bring harmony and raise living standards of the people in the region. But deeply held animosities within the region have come in the way of encouraging mutual dialogue beyond a threshold. In the meanwhile the Association of South East Asian Nations (ASEAN) had been established (1967) as a forum for dialogue to prevent the compromise of the members’ national interest by what appeared to be predatory powers in the neighborhood, China and Japan and across the Pacific, the USA. Regional togetherness has made ASEAN countries close knit. In 1993 a new entity, the Asean Regional forum (ARF) came into existence which includes India as a member. The purpose was to keep taking stock of security related issues of the region but the group has so far refrained from discussing any contentious issues. Yet another organization, the Shanghai Cooperation Organization (SCO) came up in 2006, pointedly for looking into issues of regional terrorism and Islamic extremism. India has an observer status with SCO. East Asia Summit, set up in 2005, is the latest new entity with sixteen members including India. It’s not yet clear what East Asia Summit is set to achieve but one thing is clear: the emergence of these organizations signifies that the Asian countries increasingly feel the need for a collective identity to forge cooperative common policies which will keep in view the interests of each nation. In time it may lead to the constitution of an Asian Union on the lines of European Union but right now, given the mutual rivalries, fears and aspirations, the prospects are nowhere in sight. By being accorded a place in all these bodies, either as a member or observer, India’s role as a leader get fairly well established. A place in the East Asia Summit gives it a voice on affairs of the region.

India’s rise has attracted US attention, which consequent to the shift of economic and political power to Asia, is seeking to establish a new security architecture in Asia as well as the world. In the new geopolitical situation of today, US prowess remains supreme and is likely to remain so at least for 20 to 25 years more. And yet, emergence of prospective power centers principally in Asia and growth of Islamic terrorism makes it feel vulnerable, causing it to look for new friends.

In March 2005 the US announced that it welcomes and supports India’s growth to a great power status. US shift towards India represented a fundamental and strategic shift of an exceptional nature, soon confirmed through the civil nuclear agreement between the two countries whereby, without having to sign the Nuclear Non-Proliferation Treaty, India was to be made eligible for supply of nuclear fuel and equipment to augment its civil nuclear energy resources. Another agreement in June 2005 provided for a joint defense framework which laid the foundation for a ten year project to promote a military relationship between the two countries.

The shift clearly signifies that the US was seeking India’s cooperation in dealing with a resurgent China which might challenge US's preeminence in Asia and the world in future at sometime. In US calculations India’s democratic system was a big plus point. Japan and other smaller countries of East Asia had a similar understanding which had led to India being welcomed to join East Asia Summit. Japan had been indifferent towards India earlier but is now seeking strategic cooperation, keeping in mind the historical bitterness with China. A new alliance of democracies seems to be in the offing between US, Japan, India and Australia that China perceives as targeting it directly. Already a joint naval exercise has been held between the navies of these countries and Singapore in the Bay of Bengal of 2007. However it is not easy to make a firm assessment about Japan’s commitment to India yet as its policiea have appeared wobbly at times.

However, coming together of US and India is just in the nature of a strategic partnership and is not a strategic alliance. Globalization has led to a great deal of economic interdependence with mutual trade and investments but relations between states will also simultaneously remain mutually competitive for access to resources from outside. Sometimes competition may bring forth a military threat, or geopolitical rivalry. In such times policy making becomes a complex exercise. The present tilt in US policy towards India is just a product of current circumstances of US. If the context changes, so can this tilt.

How true can this be is amply illustrated by the policies of US towards Pakistan. During the 1990s when the US desperately needed Pakistan to be on its side to prosecute the war against the Soviet Union in Afghanistan, it completely closed its eyes to Pakistan’s proliferation of nuclear materials to North Korea, Libya and Iran. Though the US knew India to be the target of Pakistani nuclear weapons development program, it never shared any information about this program with India. More recently, Pakistan’s campaign of terror against India was never condemned by the US in terms that would have required Pakistan to change its ways. Taking all this into consideration, it would be wise to treat US’s current interest in India as arising out of compulsions of its own national interests and no more. Any power trajectory that India may aspire to build in future will have to be on its own, not on any closeness to US. US objectives to get India to cap, rollback and eliminate its nuclear weapons program will not be given up. US will mount pressures again the moment it judges it to be the right one.

The country which India has to be most wary about is China. It views India as a threat to its preeminence in Asia, which can engage in fierce competitions for scarce resources, political influences and friends. It will like to deny India strategic space in Asia, Africa and Latin America and to see India confined to South Asia as a regional power. In such a relationship some tension will always be present. As years pass by, tensions could rise. Another war, like 1962, may be unlikely but can not be ruled out altogether.

China is feverishly upgrading its military forces and space capabilities. In 2007 it surprised the world by shooting down a satellite with a missile. Its military budget of $ 45 b in 2007 was twice that of India and has for the past ten years been recording a double digit rise. Growing at this rate the Chinese armed forces will become a formidable machine. It is also developing a blue navy with nuclear submarines and aircraft carriers that will enable it to project power in distant seas like the Indian Ocean.

Specially worrisome to India is the ‘string of pearls’ it is creating all around the sub continental India, a deep sea port at Gwadar off Baluchistan coast in Pakistan, a road from Yunnan in China to Bay of Bengal, surveillance facilities in islands of Myanmar and ports in Myanmar and Sri Lanka. It has arms supply relationship with Nepal and Bangladesh.

The most damaging anti Indian action by China has been to setup Pakistan as its Israel. The Pakistani nuclear weapons program which is India specific was guided, nurtured, equipped and overseen by China. In 1990 it tested a Pakistani nuclear bomb at its test site in Lop Nor. China is unlikely to unravel the problems of borders in Arunachal Pradesh and Aksai Chin as it does not believe that a compromise will turn out to its advantage. It has gone back on an understanding that any border adjustment will not upset settled populations. The issues remain mired in procedures, far from substance. It may be noted that officially backed Chinese think tanks have even talk of retrieving Arunachal Pradesh by force. China had opposed India’s’ access to Nuclear Supply Group in 2008 until forced by the US. On the Mumbai terrorist carnage by Pakistan, its scholars and media, all state controlled, expressed doubts about Pakistani complicity, placed the blame on internal contradictions in India, and called it a major blow to India’s big power ambitions. Thrice China had blocked UN efforts to have Jamaat-ud-Dawa, the Pakistani organization behind the outrage, declared an international terrorist organization in 2006.

Chinese antagonism against India emanates from its uneasiness about sturdy Tibetan nationalism and the fact that the Tibetan spiritual leader Dalai Lama has made India his home along with 1, 00,000 other Tibetans. China has taken great pains to pacify Tibet through development, colonization and redemarcating its borders with adjoining Chinese provinces. Tibet seems to be firmly under Chinese control but the religion based Tibetan identity is not dead nor the power of Buddhist monasteries in Tibet to serve as magnetic centers for mobilization. Choosing a successor to Dalai Lama on his death can prove to be an explosive event. The Tibetans would want to make the choice themselves but the Chinese government is unlikely to grant this privilege to them. If civil commotions break out in Tibet over this issue that find an echo in the diaspora abroad, relations between China and India can nosedive.

Relationship with Pakistan belongs altogether to a different category: intensely problematic. It has been so from day one when Pakistan came into existence. The problem began with Pakistani covetousness for the J&K state. Four wars have been fought between the two countries and a proxy war continues. Single minded antagonism to India led to the emergence of the Pakistani nuclear program. The Pakistani Establishment has been itching to employ the arsenal on India. There have been four occasions in the past when they come close to it US discovery of their intentions thwarted them the last three times.

The first time was in 1982-83 when Pakistan suspected that India, aided by Israel, was planning to bomb out Kahuta where the Pakistani nuclear weapons program was taking shape. The last three were linked to Indian Brasstracks exercise in 1987, commencement of Pakistani inspired insurgency in J&K state (1990) and Kargil (1999).

Meanwhile, new developments have occurred which have altered Pakistan’s strategic objectives. The Pakistani state has greatly weakened and grown unstable. A good part of its North Western region has become Talibanised. Sizeable sections of the security establishment including its intelligence and paramilitary forces subscribe to the Islamist ideology. It is an easy transformation from Islamism to Jihadism. As Talibanisation creeps into the hinterland and nearer Islamabad and Rawalpindi the probability of the security establishment donning the colours of Jihadism becomes somewhat real.

The Jihadi aim is to set up India as an Islamic Caliphate. They count on Islamic injunctions to assume, not proven so far, that large sections of Indian Muslims will aid and support them.

Such designs and the nuclear arsenal of Pakistan, make it today the most dangerous spot in the world. If another 9/11 hits the US, most western intelligence believe the source would be Pakistan which has provided refuge to the Al Qaeda leadership. Pakistani duplicity of masquerading as a US ally in the fight against international terror while giving covert support to Talibans in Afghanistan against the US stands exposed. The US has now warned Pakistan that if does not move against the Al Qaeda leaders hiding in Pakistan, its ground forces will enter Pakistan to finish the job themselves. Such an event if it occurs will exacerbate tensions between Muslims and non Muslims all over the world. A collapsed Pakistan may be good for India but India may face unpredictable consequences.

Japan is another country to watch. The three greats in Asia in times ahead will be China, Japan and India, each engaged in a furious economic competition with the other two. But while Japan is unlikely to cease regarding China as an abiding threat for reasons of history and quarrels over territory in East China Sea, its attitude towards India is changing from indifference to active strategic cooperation. The largest quantity of Japanese aid now flows to India not China. In the new balance of power politics in Asia, the Japanese support will be a plus factor for India provided one can count on it.

India’s relationship with most of its immediate neighbors has not been happy. This includes besides Pakistan, Nepal, Bangladesh, Myanmar and Sri Lanka. Part of the reason is India’s size as compared to that of the neighbors, which gives rise to misplaced suspicions of hegemonism. In response, neighbors have permitted or promoted terror against India and given shelter to leaders of insurgencies fighting India. Such an environment allows easy access to Chinese interests into these countries. Lack of mutual trust becomes a cause for impeding growth of economic and trade relations. In the Saarc region, India’s trade with its neighbors is no more than 3%. Perhaps Saarc has no future and our best hope may be to revert back to bilateral relations selectively.

Thus, there are multiple challenges for India in its neighborhood. The way to deal with Myanmar will be not to waste too much time on the character of its Government which is authoritarian and undemocratic but to concentrate on trade and economic relations which should include investments and aid to development. In Bangladesh a new window of opportunity has opened up with Hasina, the recently elected new Prime Minister who has already indicated a firm resolve to eradicate terrorism from its soil. Bangladeshi infiltration into India poses another primary security problem. Bangladesh is also a land of grinding poverty. Indian attitudes need to be governed both by compassion and concerns for national security. Nepal has just run through cataclysmic changes with internal stability still elusive but Nepalese Maoists have definitely chosen to be embourgeoised. A new chapter is waiting to be opened in Indo Nepal relationship which can heal existential animosities and suspicions. The new relationship should abjure the military dimension and be predicated entirely on how economic and cultural benefits can be secured for both the countries. The Nepalese Maoists have generally kept themselves away from the Indian Maoists with the latter considering the former revisionists. It is unlikely that the Nepalese Maoists will aid their Indian counterparts against Indian interests. Sri Lanka appears to have succeeded in destroying the LTTE but it does not end Sri Lankan Tamil nationalism. India would need to insist with the Colombo government to give a fair deal to the Tamils within the overall unitary structure of the country.

The most obdurate challenge would remain terminating Pakistan’s proxy war. Right now the Pakistani political scene is enveloped by an impenetrable haze that makes difficult deciphering who commands the shots, President Zardari or Prime Minister Gilani though the Generals will always have the last word if it comes to a crunch. The US is a powerful factor in Pakistan and it appears to be on the side of Zardari. Both want democratization to strengthen, Islamic extremism to be uprooted and the military to be confined to the barracks. The unknown factor is the degree of Islamism in the Armed Forces. If it has reached high levels the probability of this section of the forces, Islamist and extremist groups and the Talibans including Neo Talibans in FATA, NWFP AND Afghanistan, making a common cause can become high. Presence of a nuclear arsenal in Pakistan makes the environment infinitely more dangerous. A whole galaxy of scenarios is possible. Indian interests will be served best by working with the US and as many countries as possible, the Security Council and the General Assembly to get Pakistan to eschew terrorism and, to have Pakistan declared a terrorist state if it does not fall in line.

The way ahead for India is not going to be smooth even as it most certainly rises to regional and global eminence. Its economic potential and its transparency will serve as magnets to propel it to that destiny. Still to be counted in the equation is the demographic dividend which a combination of improving education standards and growing young population will secure for it. Fortunately, India has moved out from the mode of idealism to one of pragmatism. National Security is, therefore, expected to remain its highest priority.

Article published on dated 16th August 2010
Author is former Chief of RAW