US Turning Protectionist, But Modi Is A Globalist: Frank-Jürgen Richter
Frank-Jürgen Richter, Chairman of Horasis, is a former director of the World Economic Forum. He advises various governments, across the globe. He spoke to BW Businessworld’s Suman K. Jha on the India growth story.
Excerpts:
Why do you think India (along with China) can be a torchbearer of globalisation now that the world is increasingly turning protectionist?
Presently African nations still have messy geo-politics while India (with its democracy) and China (being centrally managed) have managed to focus more on growth based on their own labour, skills and above all, globalisation. The apparent increase of protectionism is in fact a real issue as many nations have ramped up their tariff and non-tariff regulations recently. And now the US is leading the way into a global trade war.
So India, from a lower economic base than China, will both aid and support Asia in becoming the powerhouse of future global economic growth based on a new globalisation. Both China and India have a resourceful labour force and are integrated in global networks of part-finished and finished goods, integrated service industries, and knowledge exchange through their diaspora. The US trade war might find it completely isolated, not doing any good for the global economy, and taking it back to its 1930s isolationist stance. Meanwhile, both India and China will uplift their globalised trade with the rest of the world.
Indian PM Narendra Modi, through global platforms, has committed to globalisation, but critics say at home he’s turning protectionist. What are your thoughts?
The internal geo-politics of India are difficult. The central government has to exert control and persuasion upon its citizens through regional parliaments and via governors who often have local aims. Certainly, each state has different needs and different inclinations. Thus Modi can seem to be both a globalist and a protectionist advocate.
On balance I feel Modi is a globalist as he is opening up India’s old Licence Raj mentality to recognise a new pan-India rule-set. This is seen in the demonetarisation policy and the Goods and Services Tax which has become a leveller between regions. As an aside, GST is a haven for consistent data collection, meaning Big Data analytics will become more and more possible to help shape government policy across India.
Do you consider Modi as a bold reformer?
Yes indeed. He showed his hand as chief minister in Gujarat and while New Delhi became a much more cumbersome task he has persuaded reluctant officials to think clearly about the future and the many interactions between parts of government policy. The whole will never be fully evolved as events constantly change, but having positive direction paves the way for more difficult reforms.
How would you compare Modi with former PM Manmohan Singh in terms of economic vision?
PM Singh opened India towards modernity but faced many resisting and powerful regional leaders (one of which was Mr Modi). Apparently, Modi is ‘on wings’ as he visits distant lands listening first-hand to overseas leaders — so surely that aspect will inform his decision making.
PM Singh began a very difficult task in opening up India with novel economic reforms after decades of malaise in which it never really threw off the burden of the English guidance. In a sense this is why India lags China in absolute terms. The latter was slightly lucky to follow Deng’s ‘opening up’ to a quite simple concept — make the objects the world wants, and will pay for. India was more idealistic and inward looking — searching for a new ‘India identity’ through the Singh and then the Modi reforms. Now it is well on its way.
