PM has failed to outline our priorities

Three important regional summits were held recently in which the prime minister outlined India’s diplomatic priorities. He called for joint action on climate change and expansion of regional trade at the SAARC summit held in Bhutan. He focused on global cooperation against terror and regional trade at the India-Brazil-South Africa (IBSA) summit at Brasilia. He stressed the need for a joint strategy on climate change and regional trade at the Brazil-Russia-India-China (BRIC) summit also held at Brasilia. The prime minister’s priorities are clearly regional trade, climate change and terror. All these are important issues. But do they match our national priorities?

This writer made a search on Google with key words ‘India problems’ and studied 25 web pages. The problems mentioned most frequently were corruption, poverty and inequality, health and education and, lastly, terror and Naxalism. Each of these problems has an international dimension to it. Corrupt officials and ministers diligently stash away their ill-begotten wealth in Swiss banks and tax havens where they have security cover thanks to secrecy laws. The problem has assumed astronomical proportions in many African countries where independent judiciary and oversight agencies like our Comptroller and Auditor General do not exist.

Officials of the African Development Bank told this writer that the entire monies received for making roads and other works are transferred to the Swiss bank accounts of leaders. Not a rupee is invested. This practice grows by the day because the receiving countries do not disclose names of account holders and details of deposits made. The developing countries can join together to demand disclosure laws from these stations of ill-begotten wealth. Many multinational companies are involved in similar corrupt practices. Developing countries could set up an independent oversight agency like Transparency International and blacklist these companies.

Second priority of the Indian people is poverty and inequality. The prime minister often speaks of the need to foster inclusive growth at international forums. He has taken a huge initiative in NREGA. But the problem is inter-related with espousal of free trade. The objective of free trade is to secure higher standards of living of the people by making available to them cheap goods produced in foreign countries

A free trade agreement between BRIC countries would ensure availability of cheap goods made in China to Indian consumers more easily. This is the plus side of regional trade. There is a negative side. The logical result of free trade is that wages in all member countries will move towards the lowest player. Say, a Chinese manufacturer pays Rs 4 per toy to his workers. The Indian manufacturer will not be able to pay more than Rs 4 to his workers. His goods will become expensive if he does so and he will be priced out of the market. The developing countries should make a common policy. They have to push wages to a level total receipts are maximum.

Wages below a certain level will lead to less wage payment. Wages above a certain level will make goods expensive, reduce demand and again lead to less wage payment. The trick lies in determining the optimum level. Developing countries participating in a regional trade pact should adopt policies to push domestic wages to this optimum level. Free trade will be beneficial if such a wage policy is put in place.

The international dimension of health problems arises mainly through patent laws which enable multinational corporations to charge exorbitant prices for patented drugs. About 10 years ago it was agreed in WTO ministerial meeting that developing countries will have the right to suspend patents on drugs in case of public emergencies. There is a need to take this forward. The ground reality is that western countries own most patents on drugs as well as other commodities. Developing countries are paying huge royalties on these goods. Part of the monopoly profits earned by the corporations is invested in research. This leads to invention of new products that ultimately provide benefits to the developing countries. There is a need to make a careful assessment of the benefits and cost of the patent laws to the developing countries. The benefits from new products in future have to be set off against the costs borne by payment of high prices today. My assessment is that on the whole patents are harmful to us. The prime minister could demand removal of the TRIPS agreement from WTO in these international forums.

The fourth priority of Indian people is terror and Naxalism. One reason for this is religious fundamentalism. The other reason is increasing inequality fuelled by economics of consumerism. This inequality fuels anger among the people and pushes them towards Naxalism. The developing countries should call for re-examination of the consumerist paradigm. The prime minister singularly failed to raise above issues in global forums. Instead the prime minister focused on issues that are close to the developed countries. They want us use climate change to browbeat economic challenge from India and China. I am not denying the relevance of climate change. But not one website mentions this as the pressing problem of the country.

The developed countries have cleverly split the developing countries into two warring groups by advocating this military approach. India and Pakistan are fighting with each other on who is responsible for terror instead of cooperating with each other in removing domestic inequality which is the main cause of this terror. The call for greater regional cooperation in trade is welcome. But this should be combined with demands for dismantling of banking secrecy laws, removal of patent laws from the WTO and the need to challenge the consumerist paradigm.

bharatjj@gmail.com