2020: India’s Year of Reckoning

The year that is now approaching its end, passing by in a frightful daze for most of humanity, may very well be considered by future historians as India’s year of reckoning. In 2020, longstanding infirmities related to national security and the economy, as well as deeply-held public beliefs, not always so glaringly visible, came into sharp relief. 

In particular, the ongoing military standoff with China in Ladakh made it clear to the Indian government, if not the public at large, that years of soft-pedalling a direct military threat from the north, and a relatively lackadaisical attitude toward hard security, have been bad bets. At the same time, the Narendra Modi government’s recent policies framed around a “self-reliant India,” along with an increasingly hostile regulatory climate for foreign firms, confirmed to many what they have long suspected: Economic protectionism, veering toward autarky, is sine qua non when it comes to India, irrespective of pieties around free markets. 

Finally, Modi and the Bharatiya Janata Party’s (BJP’s) political prospects look sound as ever – showing that nothing has gotten in the way of the Hindutva juggernaut, not a major public health emergency, nor a deepening recession, and certainly not what looks like the most serious military threat India has faced in decades. 

A longstanding – and much analyzed – puzzle when it comes to India’s defense posture is how Pakistan remains firmly fixed as the primary threat to the country even when India’s military power differential when it comes to China has dramatically widened over the years and Beijing’s territorial revisionism has become clear. Despite this, successive Indian governments, including Modi’s, have viewed China in grand terms, framing it as a long-term strategic competitor even when they have sought to engage it economically and politically. 

Even as India’s mandarins watched Chinese transgressions in the Western Pacific, it didn’t quite occur to them that China might actually attempt to do something similar closer to home, especially considering the fact that almost all of the 3,488-kilometer border between the two countries remains disputed. The singular assumption behind this curious omission was that India’s very being – in terms of its economic and diplomatic heft, not to mention diplomatic niceties when it came to China – was sufficient to hold Beijing at bay. Fundamentally, and unlike Pakistan, India could “manage” China, through supping together in talk shops such as BRICS, RIC, and the SCO, if not by hosting literal sumptuous dinners for the Chinese president, the unstated assumption went.

And if China was not a direct military threat keen on grabbing Indian land – as it has now done across a large frontage in Ladakh – the Indian military could continue with its old ways, with the Indian government misspending on personnel at the cost of building a robust conventional military deterrent with the People’s Liberation Army in mind. 

Unfortunately, those assumptions now lie demolished, as New Delhi wakes up to the possibility of a serious military competition with Beijing, if not an outright war with the world’s second most powerful military some point in the near future. 

Something analogous has also transpired on the economic front. For years, analysts in India and across the world had pointed out structural problems with India’s factor markets that, left unaddressed, would land the Indian economy in dire straits, as governments neglected to take hard and politically expensive decisions in terms of reforms required to push its manufacturing sector. Instead, successive governments assumed that India could directly leapfrog from an agricultural economy to one based on high-end services, predominantly driven by information technology. India’s manufacturing base corroded and became uncompetitive, all the while with the Indian polity and public at large transfixed with the idea of their country as a youth-driven “IT superpower.”

Even before the pandemic, warning signs abounded that the whole façade was about to come crashing down. Last year, India’s unemployment figures reached a 45-year high as economic growth started to sputter. But once the pandemic – and the associated lockdown – happened, there was no turning back. For the first time in Indian history, the country is in a recession (defined as two consecutive quarters of contraction). An August Asian Development Bank and International Labor Organization report notes that the pandemic will cost 4.1 million jobs for India’s youth this year; economists have estimated in the past that India needs to create about one million jobs a month for new entrants to the work force. 

The much-vaunted demographic dividend India has banked on – with lots of young people driving the country’s economy in the decades ahead – is quickly looking like a looming nightmare.

What has been the Modi government’s reaction to what looks like a calamity? Protectionism, of course. Judging by India’s inability to conclude free trade agreements with large competitive economies as well as periodic bouts of regulatory obstructionism that predate Modi, it is clear that when it comes to economics, every political party in the country – irrespective of their ideological orientation – is on the left. But Modi, who many imagined would be the man to complete India’s transition to a world-class free market economy, doubled down on India’s latent autarkic instincts under the cover of the pandemic, with a nebulous scheme for a “self-reliant India.” Recently, his foreign minister launched a peculiar attack on globalization and free trade which economists have derided as advancing a political agenda, ungrounded in economic facts. 

Despite deep strategic and economic challenges, Modi’s own popularity – and the BJP’s electoral prospects – remain intact. The recently-concluded Bihar elections attest to that. Modi’s own approval ratings remain sky high, with 30 percent of those surveyed in a recent poll rating his performance as prime minister as “outstanding,” and another 48 percent noting it as “good.”

This bring me to the third way by which 2020 was a year of reckoning for India: Hindu nationalism, far from being an ephemeral tick on India’s body politic, is actually a permanent organ many had chosen to overlook before now.

It is almost a truism to assert that this year was the one that would change the world irreversibly. But when it comes to India, the year will continue to shape the country long after the novel coronavirus has receded into the background.