Talk Versus Walk

Updated: Sep 21 2004, 08:40am hrs
Thats not the way it ought to be. But prime ministerial visits to the US have often been associated with reform announcements.

The Americans will look towards FDI liberalisation, especially in insurance. But on this, there is no way Prime Minister Manmohan Singh can oblige. And not just because of Left obduracy.

Hiking FDI caps in insurance requires parliamentary approval. The most Dr Singh can hope to do is to announce the scrapping of Press Note No 18.

And since this was a deterrent more on paper than in reality as FIPB had the power to over-rule objections by the Indian JV partner the announcement will make little difference in practical terms.

To lend warmth, prior to the visit, the Americans have agreed to lift export controls on equipment for nuclear facilities and liberalise hi-tech trade, including in the area of space applications.

This is part of the ongoing movement on the strategic partnership initiative. While this will facilitate co-operation in commercial space programmes and also allow some exports to power plants at safeguarded nuclear facilities, it is premature to presume that co-operation on nuclear issues will be opened up.

In January 2004, there was a bilateral agreement to increase cooperation in civilian nuclear activities, civilian space programmes and high technology trade.

Since then, there has been a change of government in India and UPAs initial knee-jerk reactions were that NDA had taken India too close to the US. If Dr Singhs visit restores relations to where they were, that will indeed be welcome.

Operationally, the key word is civilian and with differing views on nuclear issues, it is doubtful that there will be agreement on the fuzzy dividing line between civilian and military matters.

For the record, many restrictions on dual use technology are of Pokhran-I rather than Pokhran-II vintage.

Quantitatively, a larger impact of improved economic relationships will be elsewhere, such as in cross-border movement of labour.

There is also scope to move forward bilaterally on the outsourcing issue. Or on social security taxes and mutual recognition and reciprocity in various services.

And if India is mooting free trade agreements (FTAs) right, left and centre, why not one with the US The WTO plus benefits of FTAs are likely to be more with the US than with countries that essentially possess complementary economies.

However, it is doubtful that the Left will stomach such proximity to the Americans. There is thus the danger the PM will do much talking and little walking on his visit.

Given the historical legacy of other prime ministerial visits, this will be interpreted as UPAs lack of commitment to reforms.