An astute Indian economist has noted that India has a trade surplus of more than $20 billion with the US and a deficit of a larger amount with China, and the net difference of this triangle is $7 billion. The numbers have an uncanny similarity with an earlier episode, and given their strategic significance, we could delve into them as long as we are conscious of the adage that history can repeat itself also as farce. In 1988, the South Koreans sent a high-level emissary to the Prime Minister, saying that they wanted a top-level interface with India on economic strategies and policies. The then PM asked me to go, accompanied with Montek and Otima Bordia, then industry secretary. Montek couldn?t go, so Otimaji and me went. When we reached Seoul, the brief we got was that South Korea had a balance-of-payments? surplus of $27 billion with the US and a deficit of $20 billion with Japan ? a net surplus of $7 billion. This was an unstable situation and they wanted to diversify their economic relationship. India, they said, was the emerging economy and the 1990s was to be India?s decade. They wanted us, therefore, to be acquainted with Korean strategic reform processes. South Korea, since, has emerged as a major investor in India.
Some of us had written early pieces on the turnaround of the Indian economy and the factual inaccuracies in the Srinavasan-Bhagwati critiques of Indian stagnation, and found this contra-factual thinking to the then Bretton Woods line on India intriguing. I made friends with the powerful secretary of the South Korean Planning Board, the Korean economist Hak Chung Sooh. He later became vice-president of the ADB and organised a meeting on newly emerging economies as contrasted to NIEs and asked me to write that story for India. In that paper published by the ADB, I also wrote of my meeting with Governor Park of the Korean Central Bank, who on being asked how they planned their industry on comparative advantage, told me that it?s best to ignore those who give lectures on comparative advantage so long as you do a good job of whatever you do. To a strategic self-reliance-wallah at heart, this was powerful advice. That quotation from my ADB paper was used by Robert Wade in his classic Foreign Affairs article on East Asia?s success as a strategic policymaking episode. That paper had 101 quotes, and the first and last were references to my India paper, which Devesh Kapur, now one of the more astute observers of India outside the country, and then his student, had brought to Wade?s attention.
The more important issue is that the Koreans were facing all the problems we are facing now. They were accumulating dollars and gold as a strategy. We have too little discussion of the viewpoints that the RBI governor and his team keep talking about in the staid language central bankers use, especially on global volatility. Governor YV Reddy even slips into the language he must have used as a collector, especially when he talks of policies concerning those given to wild speculations on the rupee. Having said that, my own gut-feeling is that we can take risks in globalising even faster now because we have the advantage of size. The advantage of being India.
The diversification of our trade and investment basket and our markets, energy and material sources on a global plane, also needs a strategy that should find articulation in the Eleventh Plan. Triangles, as anyone who has loved a woman knows, are seductively enticing but extremely demanding. India can easily build concentric circles of influence on a global scale. Pursuing your own interest, and being globally friendly in a practical way, would be a win-win situation, as the late Rajiv Gandhi reminded us, in the 21st century for a country known for its strategic approach to world affairs.
?The author is a former Union minister for power, planning & science, and was vice-chancellor of JNU.
Email: alagh@icenet.net