India’s Relations with West Asia: What Patterns and What Future?
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It is difficult to deliver high GDP growth without simultaneous growth in trade. Given that India sits in South Asia, one of the least integrated regions in the world, it would not have been unreasonable to expect India to lead the charge on regional integration both within the region and between South Asia and its neighbors.
While Modi has repeatedly spoken against rising protectionism at international venues, his domestic messaging and actions have been far more nationalist. Indian businesses largely argue that they face higher costs of production on account of inadequate and expensive utility and infrastructure and due to lack of structural reforms in land, labor and banking.
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Moreover, Indian politicians have resisted trade liberalization in the farm sector in the name of the small farmer. The policy status quo benefits large farmers and plantations, who are politically well-represented through state politicians.
The Indian economy is going through a structural change. The proportion of GDP from agriculture has been on the decline for decades; more recently, the proportion of workforce dependent on agriculture, though still high, has also been declining rapidly. At the same time, manufacturing growth has been anemic.
While foreign investment flows have improved, little of that has gone in creating manufacturing or low-skilled service sector jobs that can absorb the labor released by the farm sector. Several groups, such as the RSS and the Swadeshi Jagaran Manch, that provide electoral and other support to the ruling party are strongly protectionist themselves.
The above account paints a dismal picture regarding the prospect for regional integration.
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- India’s Relations with West Asia: What Patterns and What Future? | Middle East Institute.
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- India’s Relations with West Asia: What Patterns and What Future?.