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Sheshadri Chari




The next few decades of this Century promises to be Asian Century, signaling the shift of economic clout from the West to the East stimulating major regional economies. The beginning of this shift started with the growing economic strength of Japan followed by dramatic performance of the economies of South Korea, Taiwan, followed by the SE Asian ‘Tigers”. The most recent manifestation of this reallocation of power of course has been the phenomenal economic and related political and military rise of China whose over three decades of consistent double digit growth has seen that country emerge as the second largest economy of the world displacing Japan. China is now being joined by rapid economic rise of India in the region.  

In spite of this phenomenal economic growth and increase in trade and development, it needs to be noted that Asia is not yet a single political or even an economic entity or an organized group like the EU which could in the future seek equal global treatment and influence like America or Europe. Though geographically contiguous, Political Asia is divided and the process of rapid economic development may divide it further.

This is perhaps the first time in the history that there are three simultaneous growing powers in Asia; China, Japan and India. Asian consolidation and emergence of united Asia could have been feasible if these three worked in unison. The fact is that given the strong undercurrent of history and civilizational perspectives they do not work in harmony. Resultantly in all likelihood major Asian actors are likely to be pitted against one another and also other regional States jostling for strategic space, influence and resources.

From this point of view, it would be interesting to study the effects of the demeanor of the major powers in Asia to determine whether they cooperate, compete and or leverage power and relationships to shape their strategic space within the dynamics of politics and economics in their respective countries.

As an emerging regional benign economic power beginning from the reform era in the nineties and a vibrant democratic country in Asia, India, which shares similar culture, language, ethnicity, history, religion and heritage with its neighbours, is poised to assume political leadership to preserve peace and stability in the region.

This aspiration however, has not fructified due to India’s complex and frosty and at times not so harmonious relationships with its neighbours. Most of the countries tend to construe India’s emergence in terms of a hegemonic power trying to usurp their socio-political-economic identity. While such a perception tends to muddle up the bilateral relations between India and its neighbours, lack of a coherent neighbourhood policy based on common values and interests explains the inability of India to shape the destiny of this region.

Geopolitically India is surrounded by weak states that pose serious challenges to its national security as well as regional stability. Yet, it is the only country in the region which can bear the responsibility of steering the region to the path of political stability and socio-economic development. Moreover, its demographic advantage and economic robustness indisputably depict the resources at its disposal and potential for regional leadership. India’s past attempts to influence its neighbours at political or economic fronts have been perceived as a ‘Big Brother’ attitude. But, the neighbouring countries should realize that this attitude is more benign than the ‘Big Boss’ attitude of China. This leads one to the question – What kind of power can India project in this region- hard power or soft power or a combination of both? What are the consequences of these power projections vis-à-vis its neighbours?

As against some politically volatile and economically fragile neighbours, India presents a contrasting image in terms of economic prosperity, political stability and social integrity. India’s stated position of following a policy of non-interference in the internal affairs of countries in the immediate periphery has come in for sharp criticism and ridicule in some quarters as being conventional and absurd foreign policy in this era of economic liberalization and globalization where the challenges as well as opportunities are transnational. Moreover, the emergence of new transnational challenges such as terrorism, economic migration, environmental degradation and organized crime have ushered national governments to think and act regionally. In order to address these non-traditional security challenges India needs to actively engage with its neighbours at multiple levels.
A regional approach will provide the most feasible solution and it needs to be evolved based on mutual consensus among these countries through regular dialogues and proper institutional frameworks. Such approach can be applied in foreign policy strategy with less focus on military might and more emphasis on developmental efforts. 


Above perspective should however in no way undermine the tremendous significance of rising Asia in general and Asia – Pacific region in particular. Strategic significance of the region is underscored by the fact that it is home to almost half the world population, accounts for more than fifth of gross domestic product, almost 30% of world exports, and third of cross border capital flows. The region includes world’s second, third, tenth and fifteenth largest economies, in China, Japan, India and South Korea respectively. These countries hold the world’s largest foreign reserves, the significance of which is that these countries can no longer be held to economic ransom by the West. On the contrary there is increasing realization of their emergent economic clout signified by the growing credence of institutions like G–20 over G –8 and BRICS countries staking claim for the governorship of the IMF over European claims. Yet another facet of the Asian success story has been that the manner in which it has managed to raise the per capita income of its people. This has been achieved at much faster rate than both the US and UK. Whereas these countries took 50 to 60 years respectively to double their per capita income from takeoff period in the nineteenth century, China, Taiwan, and South Korea did this in the first year itself.


India’s neighbours occupy much of its attention in its overall foreign policy dilemmas. Except Bhutan, India is facing security challenges from all its neighbours. Most of these challenges are traditional in nature; however non-traditional challenges such as environmental issue are also prominently emerging in their security discourse. The foreign policy strategy of India is fundamentally aimed to protect its core national interests; safeguarding territorial integrity and sovereignty, and economic prosperity. Ensuring these interests has been the principal foreign policy agenda for successive governments post-independence. Though the tools and approach used to achieve the desired foreign policy objectives have varied.

Soon after Independence, under the leadership of Pt., Nehru India’s foreign policy thrust was influenced by Gandhian ideals of non-violence and non-alignment and Nehruvian socialistic values and the idea of “panchsheel”. This could also be seen as India’s soft-power projection in the region. Unfortunately, this neither changed India’s image in its neighbourhood nor did it help to secure a permanent membership in the UNSC. 

Realizing the fact that ethics and values serve little in foreign policy in a rapidly changing global security environment, Indira Gandhi tried a pragmatic approach towards the neighbours. The liberation of Bangladesh in 1971 through direct Indian military intervention and subsequent creation of a nation in South Asia demonstrated India’s ability to exercise hard-power in its foreign policy options. Since then, military power has been an indispensible component of India’s foreign policy even though it incurs huge drain on its overall GDP. But India’s national security challenges persist despite a strong military and show of strength, mainly due to foreign policy dithering.

The end of cold war, which heralded the rise of multipolar world order, dramatically altered India’s foreign policy priorities followed by rapid economic liberalization. Inspired by Joseph Nye’s idea of ‘Soft-Power’, India began to embrace its neighbours with soft-power skills which involved striking a common cord with neighbours on religion, culture, ethnicity and linguistic basis. This realisation was reflected in the famous Gujral Doctrine, the first official Neighbourhood Policy, which sets out five principles to guide India’s foreign policy towards its immediate neighbours.

The most convincing reason for this shift from hard-power to soft-power approach was the growing Chinese influence in its neighbourhood. Yet, the lack of a comprehensive neighborhood policy strategy and dearth of broad understanding of security challenges blurred India’s prospect to become an effective regional power. The big question now is how soft power works in India’s neighborhood policy?


Sri Lanka can be a best case to examine this question due to two specific reasons: India’s hard power approach towards Sri Lanka in the past had been unsuccessful and counter-productive and the new approach is focused on soft power resources. 

Most Indian foreign policy analysts today feel that any hard power approach vis-à-vis its neighbours in addressing political crises is counter-productive and are convinced that soft power approach will best serve its ends.  This realization came after an unsuccessful peacekeeping humanitarian intervention in Sri Lanka in 1989 which is allegedly seen to be the cause for Rajiv Gandhi’s assassination by LTTE.  Since then India has been reluctant to use hard power and as a result, India offered complete support to Sri Lanka’s political cause of eliminating the LTTE. 

Alongside, Sri Lanka also witnessed a tectonic shift in its foreign policy since President Mahindra Rajapaksa assumed office in 2005. His government adopted a realpolitik approach in their foreign policy, shifting away from the traditional Indo-centric approach. For instance, Sri Lanka exploited the strategic value of China’s role in South Asia and sought military and economic aid during the war. It also reportedly received considerable military equipments from Pakistan and Iran. The idea behind these tactics of forging closer partnership with other regional big players was obvious: to balance India’s possible political interference in its internal affairs after the war. In retrospect, it seems that Sri Lanka had deepened its relationship with China just because of mere anticipation of possible Indian military intervention during the war due to India’s domestic political pressure even though India supported Sri Lanka’s military campaign against LTTE. 

Nevertheless, the Pokhran nuclear test in 1998 and similar tests by Pakistan seemed to have restrained India from exercising any hard-power options in its foreign policy strategy towards its neighbours because any such move, it was believed, would have encouraged arms race and increased external powers’ interference in the region. In order to maintain its image as a responsible power of the region, India adopted a comprehensive foreign policy strategy including soft-power tools such as public diplomacy. 

The jury is out as far as the success of India’s soft power approach in Sri Lanka, especially after the war, is concerned. While the Tamil-Sinhalese issue remains unresolved, there is strong resentment to economic ties based on FTA and CEPA from the Sri Lankan business community, with Colombo remaining a mute spectator exhibiting helplessness, deliberate or genuine.

On the one hand, Chinese culture, goods, and even language are increasingly becoming popular among the Sinhalese youth, probably because of perceived increase in employment prospects for the youth amongst Chinese companies which are establishing their bases in Sri Lanka. On the other hand, India’s soft-power elements such as yoga, traditional classic dances, and other cultural artifacts are more appealing to Tamils because of their ethnocultural linkages. However, it is too early to conclude that India’s soft-power approach does not work largely due to the China factor rather what it does imply is that India’s soft-power tools are less attractive than Chinese in the new socio-politico-economic environment that has emerged after the war. 



SAARC, the South Asian Association for Regional Cooperation, continues to be an instrument for establishing better relations in South Asia and, despite its relatively slow growth in the past, has made progress in the last two years. There is an overall agreement on a South Asia Preferential Trade Arrangement (SAPTA) among six of the seven SAARC countries, the only exception being Pakistan. Even Pakistan subscribes in principle, but not yet in practice, to the substantial tariff reductions in relation to a large number of items that the other six countries have introduced. The same is the situation about the move from preferential trade arrangements to a South Asian Free Trade Agreement (SAFTA).

Given the geographical configuration of the SAARC area, arrangements for sectoral cooperation in different parts of the subcontinent are also being evolved. For instance, in the east, there can be economic cooperation among India, Bangladesh, Bhutan and Nepal; and in the south among Maldives, Sri Lanka, and India. Pakistan objects to this “sub-regional” pattern and even claims that this runs counter to the SAARC spirit. Others believe, however, that sectoral schemes are sound, and that there is no intention to “isolate” Pakistan. Gujral, whose doctrine was criticised by the Pakistani media, had declared that schemes for cooperation between Pakistan and the western Indian states of Punjab and Rajasthan would be most welcome.

India looks upon SAARC and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) not as competitive but as complementary organizations. Indeed, these two are seen as part of a chain that extends to the Association of South-East Asian Nations (ASEAN) in the east. As is well-known, India is a full dialogue partner of ASEAN and a member of the security-related ASEAN Regional Forum (ARF). The support for Indian membership of APEC, the Asia-Pacific Economic Cooperation entity, is growing.


Pakistan today is a picture perfect of chaos and confusion offering little solace to India as events in Pakistan have a tendency to spill over. At any given time there are three power centers in Pakistan; the army, the clergy and the political forces. The irony is the civil society has practically no role to play. The internal political turmoil forcing a faceoff between the civil society and the political dispensation, the highly radicalized army dangling the Damocles’ sword, the hyperactive judiciary, the warring armed terror outfits, the anti-democracy clergy, and the gun wielding Taliban itching to storm Islamabad; these are only some of the woes of Pakistan. The trouble is these are not just Pakistan’s problems; they are exported all over the globe like terrorism. So India has to deal with not just a failed state but a rogue state and a nuclear one at that.

India needs to insulate her internal security apparatus from the terror machine of Pakistan and at the same time prepare for a regional peace arrangement after the badly bruised US quits Afghanistan. The region cannot be left to the mercy of Taliban, good and bad, and the ISI. India has to take a lead in stabilizing Afghanistan and keep the area sanitized enough to avoid violence and internecine warfare.



In sum, India needs to learn from its past experience which suggests that the use of hard power vis-à-vis neighbours is counter-productive in the long-term. Moreover, the concept of soft power needs to be refined within the larger South Asian regional context. While embarking into any regional leadership role India has to bear in mind that the political stability and economic prosperity of neighbours are indispensable for its national security and stability. 


Foreign policy perspective of a country is the sum total of events and experiences of the past and the geo-political realities of today. While neighbourhood remains an important element in foreign policy formulations, the global strategic discourse has changed to building multi lateral and intra-region and inter-region strategic architecture. India’s priority should be; (a) ensure regional security, stability and peace, (b) strengthen the economic structure in the region, (c) fine tune regional organizations to interlink the region, and (d) keep India’s strategic importance relevant.


India’s strength lies in her size and continuity of the policy of being a ‘benign and non-interventionist power’. But such an approach alone will not serve its purpose anymore. If the US can intervene in Iraq and Afghanistan without sharing any border with them, India cannot be expected to remain unconcerned with the events in the immediate periphery nor could we afford to see our neighbours through a US prism. While the region needs to be out of bounds to foreign powers, the collapse of the Soviet Union and the emergence of China as an economic power have introduced a new dynamism in our foreign policy conduct.


Economic engagement has made it mandatory for India to recognize the importance of networking with regional powers with global anchorage. The Indo-Pacific region has developed into an important and strategic area of great influence. India needs to work out a strategy for closer cooperation with Japan and increase its strategic presence in the area.



The most significant challenge for India is the issue of regional imbalance and military asymmetry in the region. With globalization and interlinking of world economic blocks, India does not have the luxury of keeping the foreign policy initiatives under wraps any longer. Circumstances have forced us to constantly adjust our policy to suit the demands of situation without compromising with our core principles.

Developing effective mechanisms in the near term for regional cooperation on non-traditional security issues may yield rich dividends in the long term and allow India to move towards resolving some of the region’s long-standing chronic security problems. There is an urgent need for an in-depth and comprehensive study that will examine opportunities for cooperation on shared non-traditional security concerns as potential building blocks toward developing a viable regional India centric security architecture.


Chari Talks

North East votes for development

Sheshadri Chari



 The BJP’s spectacular victory in the recently held elections in three states of North East reiterates the faith people have in its development agenda. The victory also underlines the need for BJP to take the electoral victory seriously and develop North East so as to be the gateway to South East Asia.
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Chari Talks

India-Iran come closer

Sheshadri Chari



Iranian President Hassan Rouhani’s three day India visit reiterates New Delhi’s commitment to assist Afghan peace process and build the Chabahar port as an alternative approach route to the energy rich Eurasia. The two oldest civilisations have come closer to chart a new course, create new history and probably a new geography too.
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Chari Talks

Budget focus on rural economy and agriculture

Sheshadri Chari



Agriculture and rural sector have been the backbone of any economy in the world and more so especially in India. The revival and dominance of the Chinese economy started with the strengthening of the farmers. Even developed economies of the world give special and protectionist treatment to agriculture. Reviving and strengthening the agriculture sector and rural economy have suddenly become very important for the present government given the fact that elections are increasingly being influenced by the rural voters more than the urban voters. Even from sheer economic prosperity point of view, Indian economy depends on a robust rural and agricultural growth more than probably the industrial production and service sector. Little wonder, that the Finance Minister has more than once emphasized that agriculture will be the prime area of focus.

The fourteenth Finance Commission recommended that there should be an increase in the states’ share of the total central tax collection. Accepting this recommendation as a step towards cooperative federalism and considering the fact that more than half the state governments are ruled by the BJP or their allies, the centre readily increased the state share. But correspondingly many central schemes were also withdrawn or their outlays curtailed. The states began allocating the central tax component to urban schemes like roads and water supply and other urban requirements. This considerably reduced allocation to rural and agricultural schemes. Rural economy, already witnessing a setback as a result of demonetisation and introduction of GST, was left cash-starved. As a result of this, the farm sector abandoned all new inputs in the sowing season. Naturally,  the agricultural production saw a drastic fall and consequential lower growth in the wholesale price of agro products. The anti-inflationary measures, much to the benefit of the urban population, kept the wholesale price lower but came as a dampener to the farmers.

Many of these factors have forced the farmers to take back very little from the mandis. The rural expenditure by the states was about fifteen percent in 2005-2006 and rose to thirty-six percent in 2014-2015 but came down drastically to an all-time low of about eleven percent in 2016-2017. The Finance Minister in his budget speech has recognised this fall in rural expenditure and promised to allocate more for the farm sector. Many of the reports prepared and released by the agriculture ministry highlighted the alarming figures pertaining to widening gap between agricultural production and income levels.

Realising the urgency of the situation and needs of the farmers, Finance Minister Arun Jaitley has provided increased institutional credit target for agriculture for the financial year 2018-19 amounting to Rs 11 lakh crore from Rs 10 lakh crore. This will allow the government to step up the efforts to ease availability of funds to the farmers and for the agriculture sector in general. The recent events have highlighted the discontent among farmers who have to increasingly depend on secondary sources such as local money lenders for small loans and accommodation money, highly detrimental for them as well as the rural economy.

The Finance Minister has reiterated the government’s resolve to treat agriculture sector as an enterprise. This means the farmers’ income has to go up in proportion to their land holding, crop pattern, and investments such as input cost etc. In a way, agriculture should be treated as an industry and subject to all the factors of production, sales, and consumption.

Keeping in view the importance that agriculture has assumed, the finance minister has carefully crafted this budget with maximum emphasis on rural and agriculture sector.

The proposal to implement MSP for all crops is a very encouraging one, especially for the farmers as most of them, depend on multi-crop farming. Besides, the MSP has been increased to 1.5 times of the production cost. This will immensely benefit the small and marginal farmers who account for almost 86%. But there are two issues here. One is that the system of determining the cost of production is a very cumbersome one and is usually decided by a set of people who are directly concerned with agriculture. Again they take a very long time, sometimes as much as six to eight months to decide the cost of production and the MSP based on it. Another factor is the multiplicity of produce. In these circumstances, by the time the MSP is decided and implemented, the market has changed and the demand-supply position would have altered.

The budget also proposes to upgrade Grameen Agricultural Markets and APMCs that are the lifeline of the agriculture. There are also incentives for Women Self help Groups to undertake organic farming. All over the world organic products have a good market. But this will also require tweaking of the pesticides and other inputs that go into organic farming.

The Budget has also allocated 2000 crores for building rural infrastructure mainly to assist in agriculture. This is no doubt a welcome step but the amount is woefully small compared to the requirement. Anything less than two lakh crores for rural infrastructure should be considered insufficient if one has to do a sincere and sustainable job.

The provision of ten lakh crores as a credit to farmers with 60 days interest waiver and an increase of NABARD fund to 40,000 crores is also a welcome step. The idea of setting up smaller Krishi Vigyam Kendra for soil testing and extending other advisory services to farmers will be seen as a very constructive step if they are implemented with all sincerity and monitored properly.

The proposal to set up dedicated micro irrigation fund under the supervision of NABARD with an initial corpus of 5000 crores is also a very encouraging step. This again will help in identifying and bringing non–irrigated land into the fold of arable land.

The first Budget after the announcement of GST has come as a huge relief to farmers and is expected to give a fillip to the rural economy and the agriculture sector which has witnessed many stressful years.

About the author:

The author is member of the National Executive Committee of the BJP and an expert commentator on economic and strategic issues

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