The Future Perfect India

Geopolitical power is a combination of hard and soft power — and the ability of a nation to project that power. India has traditionally punched below its weight. Britain and France in contrast continue to punch above their weight.

What are the factors that determine geopolitical power?

In my trademarked annual Geopolitical Power Index (GPI), I rank 10 selected countries on 11 parameters. These include quantitative parameters such as the economy and military as well as qualitative ones like religion and culture.

The GPI shows how well — or poorly — countries project hard and soft power. In the latest GPI, the US retains its top spot. China stays at No. 2, while the UK edges out India for third place. France is at No. 5, followed by Germany, Russia, Japan, Brazil and South Africa.

The 11 parameters that determine the GPI rankings are: Economy, Development, Military, Governance, Innovation, Geography, Population, Culture, Religion, History, and Diaspora.

Each parameter has five sub-parameters. For example, to assess the economy of each country, the sub-parameters analysed are: per capita income based on purchasing power parity, GDP (again on purchasing power parity), business competitiveness, forex reserves, and fiscal deficit.
For the development parameter, the five sub-parameters are: human development index, poverty levels, literacy rate, civic infrastructure, and education (primary and secondary).

Each sub-parameter is assigned a weight. For example, to arrive at the ranking for the economy, the weights are as follows: per capita income 25 per cent; GDP 25 per cent; business competitiveness 15 per cent; forex reserves 15 per cent; and fiscal deficit 20 per cent. The country rankings are arrived at mathematically using a proprietorial methodology (see table).

For example, the Chinese economy has a rating of 9 with a negative (-) bias, indicating slowing GDP growth. India has a rating of 7 on the economy but with a positive (+) trendline.
The geopolitical environment is currently turbulent. Uncertainly looms over the US presidential election. Multiple wars in the Middle-East have changed geopolitical equations. Russia, despite Western sanctions and low oil and gas prices, is an increasingly dominant force in the Middle-East even as it ends its military campaign in Syria and peace talks gather momentum.

Britain, divided over an impending referendum in June about exiting the European Union, is at an historical inflection point. It has western Europe’s fastest growing economy, but public spending is getting squeezed, leading to deteriorating infrastructure and stagnating wages among the middle-class.

India is already the world’s third-largest economy ($7.5 trillion by purchasing power parity). It scores well on soft power (culture, religion, diaspora), but does poorly on hard power (military, development, governance). Civic, bureaucratic and institutional governance remains hobbled by corruption and sloth.
Brazil and South Africa have done especially badly in the past year. Brazil’s economy is in a shambles, while South Africa is struggling with a slew of corruption cases and poor governance.

Japan has began to move up the GPI rankings. Under Prime Minister Shinzo Abe, its economy has stabilised though growth remains anaemic. On the fifth anniversary of the devastating accident at the Fukushima nuclear plant, the surrounding area remains toxic. Local people are allowed by the authorities to enter the region for just five hours a day. But the return to a semblance of normalcy underscores the strength and resilience of Japanese society.

The US tops the GPI rankings despite political turbulence because of its economic and military power as well as its global leadership in innovation. The world’s most recognised brands are still American — from the century-old Coca Cola and Ford to Google, Apple, Microsoft, Facebook and Amazon.

At a recent event, chief economic advisor Arvind Subramanian said India cannot aspire to annual GDP growth of 8-10 per cent unless exports increase and services are given equal importance as manufacturing.

Subramanium, who like the Reserve Bank of India governor Raghuram Rajan and Finance Minister Arun Jaitley manages to introduce a negative train of thought even while seemingly praising India’s economic policies, in the process sounding like mentor P. Chidambaram, is being disingenuous.

Services already contribute 60 per cent to India’s GDP. Obviously services growth is imperative. But manufacturing, which contributes only 17 per cent to GDP, needs greater nurturing. Without that India will remain the world’s call centre, back office and IT body shop. China has become an economic superpower on the back of manufacturing. As its economy cools, it is now turning to services. India must likewise now turn to manufacturing without losing sight of growth in services.

The future clearly lies in geo-economics. India is well placed here. It has excellent economic and military ties with the US, Russia, Britain and France. It is extending its maritime footprint to the South China Sea in partnership with China’s bête noire Vietnam.

Religion, culture and spiritualism add to India’s soft power. Yoga now has an international brand identity and Indian actors like Priyanka Chopra have given India’s image a global makeover. The Indian diaspora is meanwhile beginning to have a real impact on American and British politics. As British Prime Minister David Cameron said during Prime Minister Narendra Modi’s UK visit last year, an Indian-origin British prime minister in the next decade is a real possibility.
In the United States too, Indian-origin politicians, entrepreneurs, venture capitalists and professionals have transformed India’s national brand equity. Indians are America’s highest earning ethnic group with rising political and business influence.

If New Delhi plays its cards well, the combination of hard and soft power will finally allow India to punch at its true geopolitical weight. If it does that and learns to project its influence with greater self-confidence, India could well emerge as a pivotal power between the declining West and the emerging East.