SUBMITTED TO: SUBMITTED BY:

M.A. ALEKSANDRA JASKOLSKA HARDEEP SINGH BHATIA

DEVELOPING COUNTRIES IN IR JANESH KUMAR

KARANVIR SINGH

SNIGDHA NAGASAMUDRAM

SOPHIA SHARMA

TANUJ KUMAR GUPTA

TARANDEEP SINGH

Political Situation

After getting independence in 1947, more than 200 parties were formed in India making it the most

among the developing countries. Right now there are 1866 registered political parties in the country.1

Some features of the political parties in India are that the parties are generally woven around their

leaders, the leaders actively playing a dominant role, and that the role of leadership can be

transferred, thus tending to take a dynastic route. The two main parties in India are the Bharatiya

Janata Party and the Indian National Congress. On the left-right political spectrum, the Indian National

Congress is the typical Centre-left party, whereas the BJP is the typical Centre-right party.

As in with other democracy, political parties represent different sections among the Indian society and

regions, and their core values play a major role in the politics of India. India has a multi-party system,

where there are a number of national as well as regional parties. A regional party may gain a majority

and rule a particular state. If a party is represented in more than 4 states, it would be labelled a

national party. Out of the 69 years of India's independence, India has been ruled by the Indian National

Congress (INC) for 53 of those years.

After becoming the prime minister of one of the largest liberal democracy, Mr. Narendra Modi on 26th

May, 2014 has formed somewhat stable government as he feels he has got his desired government

and people, and he can just focus on his work and career to move ahead in life. Presently India ranks

35th in democracy index among 167 democratic countries with an overall score of 7.74.2 In state

levels, most of the governments are quite stable and heading towards growth. In some states the

political parties are getting ready for next elections. Before May 2014, In India the political situation

is not supportive to people. The aim of political parties is not the growth and development of the

country but just to gain power for personal growth and development. Most of the corruptions, scams

and malpractices are happening at the cost growth and well-being of common man. In 2015, India was

ranked 76th out of 175 countries in Transparency International's Corruption Perceptions Index.3 Those

having power and their near ones benefit from the special provisions of the constitution like police

protection, free accommodations, travel, medical facilities, education etc. while these facilities are

getting farther from general public for whom they were meant to be. As India has improved its ranking

with ref. to corruption, we might expect a good shift by 2050. On 2nd October 2014, Swachh Bharat

Abhiyan was launched covering 4,041 statutory cities and towns, to clean the streets, roads and

infrastructure of the country. On 25th September, Make in India campaign was launched, that piped

India to become top destination globally for Foreign direct investment surpassing USA as well as

China.4 India ranks 118th with .3834 EGDI in E-Government index,5 to improve this Digital India

campaign was launched in 2015, we expect a good shift in future.

1 Election commission of India-http://timesofindia.indiatimes.com/india/India-has-1866-registered-political-parties-EC/articleshow/48410135.cms 2 Democracy Index 2015 – The Economist 3 Corruption Perceptions Index - http://www.transparency.org/cpi2015 4 Top destination for FDI - http://timesofindia.indiatimes.com/india/India-pips-US-China-as-No-1-foreign-direct-investment-destination/articleshow/49160838.cms 5 EGDI - https://publicadministration.un.org/egovkb/Portals/egovkb/Documents/un/2014-Survey/E-Gov_Complete_Survey-2014.pdf

Social Issues

The lack of homogeneity in the Indian population causes division between different sections of the

people based on religion, region, language, caste and race. This has led to the rise of political parties

with agendas catering to one or a mix of these groups.

The narrow focus and vote bank politics of most parties, even in the central government and central

legislature, side-lines national issues such as economic welfare and national security. Moreover,

internal security is also threatened as incidences of political parties instigating and leading violence

between two opposing groups of people is a frequent occurrence. For example, riots for reservation

like the Jaat-riots in February 2016,6 female foeticide, dowry etc. India ranks 130 out of 188 countries

in Gender Inequality index with GII value of 0.563.7

These issues can only be overcome by giving education for which several campaign were launched

since 2013 like Beti Bachao, Digital India, National Policy on skill development.

Law and Order

Terrorism, Naxalism, religious violence and caste-related violence are important issues that affect the

political environment of the Indian nation. Stringent anti-terror legislation such as TADA, POTA and

MCOCA have received much political attention, both in favour and opposed.

Terrorism had effected politics India since its conception, be it the terrorism supported from Pakistan

or the internal guerrilla groups such as Naxalites. In 1991 the former Prime Minister Rajiv Gandhi was

assassinated during an election campaign. The suicide bomber was later linked to the Sri Lankan

terrorist group Liberation Tigers of Tamil Eelam, as it was later revealed the killing was an act of

vengeance for Rajiv Gandhi sending troops in Sri Lanka against them in 1987,

Law and order issues, such as action against organized crime are issues which do not affect the

outcomes of elections. On the other hand, there is a criminal–politician nexus. Many elected

legislators have criminal cases against them. India ranks 53rd with crime rate 46.59 and with safety

index 53.41.8 India ranks 59th with a score of .51 in Rule of Law index. 72 % of Indian citizen feel

freedom to express their opinions and to join any political party. But only 48% thinks that police act

according to law.9 After new government India’s rank in department of Order and security has taken

up an upward trend from lower middle income group, which comes with centralization of power and

single majority government that will boast Indian chances of superpower by 2050.

6 Jat Riots - https://en.wikipedia.org/wiki/Jat_reservation_agitation 7 GII - http://hdr.undp.org/en/composite/GII 8 Crime rate - http://www.numbeo.com/crime/rankings_by_country.jsp 9 Rule of Law report - http://worldjusticeproject.org/sites/default/files/roli_2015_0.pdf

Candidacy for Security Council

India has been pressing for permanent membership of the United Nations Security Council (as part of

the G4 nations). But with a clause that it won't exercise its veto for the next 15 years. It has received

backing from France, Russia, United Kingdom and USA10 but China officially expressed its support for

an increased Indian role at the United Nations, without explicitly endorsing India's Security Council

ambitions. However, recently China has expressed its support for Indian candidacy as a permanent

member of the Security Council if India revoked its support for Japanese candidacy.11

10 USA - http://www.nytimes.com/2010/11/09/world/asia/09prexy.html?_r=2&src=mv 11 China - http://www.thehindu.com/news/international/article2233806.ece

Economic Situation

Currently the Indian economy is the 7th largest in the world based on GDP and the 3rd largest based

on PPP.12 India is a developing economy with an average growth rate of 7% over the last two decades

and is one of the G-20 major economies. India's economy became one of the world's fastest growing

major economy from the last quarter of 2014. As India’s population constitutes majorly of young

people, the long term prospective of the Indian economy is positive. This would also comprise of low

dependency ratios, healthy savings and investment rates, and an ever increasing integration into the

global economy. India has the potential to become one of the largest economies by 2050.

The new world order in 2050

India’s economy at present is only over 40% as large as the U.S and Chinese economies. While India’s

growth has not been as strong as China’s over the past two decades, its growth rate is expected to

outpace China in the coming decades. To realise this potential, India will need to sustain its reform

policies and increase investment in infrastructure, education- especially for women- and have a better

governance. According to PricewaterhouseCoopers the Indian economy is expected to be about 2%

larger than the US economy by mid-century.

The main reason why India emerges as one of the leading economies of the world is due to its young

population. India has a higher fertility rate than most of the emerging economies. China introduced

one child policy in 1979 which reduced the population of the youth considerably. However, in India

there has been a stark rise in population over the years which can be beneficial in the long run. A

young population means that more jobs are created, innovation is the norm and that generally there

is more activity in the economy due to different needs catered only to the youth. The PwC report

stated that the Indian economy will expand by an average annual growth rate of 6.4% from 2014 to

2020, remaining faster than China in 2020 owing to its younger population and greater chance of catch

up growth.

In Fig 1 it can be noted that even though the average number of children per woman has fallen over

the years in India, as of 2010 India is leading with the average number of children at 2.5. India has one

of the fastest growing service sectors in the world with annual growth rate of above 9% since 2001,

which contributed to 57% of GDP in 2012-13. India has become a major exporter of IT services, BPO

services, and software services with $167 billion worth of service exports in 2013-14. The IT industry

continues to be the largest private sector employer in India.13

Apart from this India is also the fourth largest start-up hub in the world with over 3,100 technology

start-ups in 2014-15. These numbers are very encouraging for India as it implies that not only are there

enough individuals willing to take risks but that innovation is also occurring side by side as the

competition is strong.

12 Purchasing Power Parity 13 The agricultural sector is the largest employer in India's economy but contributes to a declining share of its GDP (17% in 2013-14)

Fig 1 – Average number of children per woman

Projected shifts in global economic powers by 2050

According to the PwC report, much of the growth taking place within the E714. As shown in Fig 2, China,

India and U.S are pegged to be the largest economies in 2050. However, there could still be a relatively

large gap between India’s GDP in PPP and MER15 terms by 2050. This means that India’s price level in

2050 could still be below the advanced economy levels of that time indicating its relatively low

incomes levels at that date.

14 The group of 7 countries with emerging economies which includes India, China, Brail, Indonesia, Mexico, Russia and Turkey 15 Market Exchange Rates

Fig 2 – Relative GDP at MERs and PPPs in 2050 (% of US levels)

When it comes to GDP per capita in PPP terms, US sits at the top whilst large emerging economies like

China and India still sit at the bottom. However, the gap between the top and the bottom is expected

to narrow significantly giving India a scope to catch up. The reason that a gap remains is that these

average income divergences have built up over the past 250 years, so they will take much more than

35 years to completely close again. Therefore, despite the rising middle class of emerging economies

such as China and India, the consumption powers of an emerging economy will still be considerably

smaller relative to a developed economy with around the same population. Fig 3 below shows the

GDP per capita in PPP terms.

Fig 3 – GDP per capita in PPP terms for the G7 and E7 economies

Companies will need to take these figures into consideration while developing their growth strategies

in the E7 economies.

Make in India

Make in India is an initiative launched by the government of India to encourage multinational as well

as national companies to manufacture their products in India. It is expected that India would emerge

as a top destination globally for foreign direct investment, surpassing the U.S.A and China. This

initiative attracts a lot of foreign players into the Indian market while encouraging innovation

domestically.

This initiative, however is still in its nascent stage. Though there have been some breakthroughs mainly

in the electronics sector,16 the Make in India campaign still needs to show promise. However, with this

initiative India is attracting a lot of key foreign players willing to invest in the Indian economy as the

results are very favourable and hence help India in becoming one of the economic super powers in

2050.

16 Between September 2014 and November 2015, the government received ₹1.20 lakh crore (US$18 billion) worth of proposals from companies interested in manufacturing electronics in India

Relations with neighbouring countries

Afghanistan, Bangladesh, Bhutan, China, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are the

adjacent nations to India and are affected by each other’s policies and actions at the global level. With

regard to Pakistan, the question posed is: how will Pakistan’s internal situation finally pan out and how

will it impact India? With regard to China, it was important from the policy makers’ point of view to

understand the impact of China’s rise on Sino-Indian relations. Sri Lanka is embarking on the path of

high economic growth. Hence the question being posed here is: Will this be sustainable, and how will

it impact Indo-Sri Lanka relations? Other questions being looked at in this study are: Is there anti-

Indianism in Nepal? If so, how will it impact relations with India? How climate change would impact

migration from Bangladesh and how India would cope with it? Likewise, in the case of Maldives, the

issue was climate change, its impact on the country and relations with India. The Myanmar chapter

seeks to look at the need for infrastructure development in India’s North-Eastern states and Myanmar,

the rising influence.

Afghanistan

Most short-term scenarios for Afghanistan predict instability and even civil war. The foreign forces are

leaving Afghanistan without having stabilised it. With an open up the field for the return of the Taliban,

the prospects of national reconciliation are also not too bright.

India, which has contributed significantly to Afghanistan’s reconstruction, will face the question of

whether to continue with these programmes if and when the Taliban return to power and instability

increases. In the 10-year scenario, India should maintain contacts with all sides in Afghanistan, deepen

people-to-people contacts but remain cautious about getting bogged down in the country. The

prescription is wait and watch. An unstable Afghanistan will also have a destabilising impact on

Pakistan whose Pashtun-dominated areas will become more restive and lawless.

China

Most scenarios envisage the inevitable rise of China to superpower status. China has already

overtaken Japan to become the second largest economy in the world. However, a more nuanced look

at China’s internal dynamic raises uncertainties about its rise. Will China be able to sustain its rise for

the next 20 years or will its economic growth falter? Will China’s one party system face internal

challenges? Will Han nationalism in China accommodate the aspirations of the minorities? While

fraught with uncertainties, political and social instability in China accompanied by economic decline

in the next 20 years cannot be ruled out altogether.

For India, the main consequence of China’s rise will be two-fold. First, India will have an unpredictable

superpower at its borders. Cooperation and friendship with China cannot be taken for granted

although that is the direction in which India’s policy should move. The differential between India and

China’s national strengths might increase. This will restrict India’s options in dealing with China. For

instance, India will need to ensure that it does not get entangled in a military conflict with China. At

the same time India will have to resist pressure from China on settling the border on unfavourable

terms.

If Tibet gets restive after the present Dalai Lama’s exit, a new situation in Sino-Indian relations might

arise. India will have to be on watch to see whether the post-Dalai Lama situation in Tibet offers any

opportunities for India in dealing with China.

On the whole, India will be compelled to increase its own economic and military strengths while

improving governance in the areas bordering with China. Both the countries have taken precautions

to declare that they are in favour of developing a cooperative relationship. However, China’s recent

assertiveness vis-à-vis India cannot be ignored. There have been some incidents on the un-demarcated

border; China’s position on J&K appears to be changing; Chinese presence in Pakistan Occupied

Kashmir (PoK) is increasing; China has expressed its disapproval regarding the presence of Indian oil

companies in the South China Sea; it routinely describes Arunachal Pradesh as South Tibet; and its

position on the diversion of the Brahmaputra waters is ambiguous. It has undertaken massive

modernisation of infrastructure in Tibet and has constructed railway routes and airfields close to the

borders with India. In the context of uncertainty within China, it would be fair to expect the recurrence

of crises in Sino-Indian relations over the next 20 years which will have to be managed by both sides.

The game changer within China could be a slowdown of economic growth leading up to internal

instabilities and changes in foreign policy behaviour. Likewise, the exit of the Dalai Lama could usher

in a new phase in Sino-Indian relations as the Tibet issue assumes greater salience. Second, with the

rise of China, its influence in South Asia will grow. This is already visible, particularly in Nepal, Pakistan

and Myanmar. India will come under pressure to restructure its neighbourhood policy to ensure that

India does not get drawn into an unsavoury competition with China.

Pakistan

Most scenarios paint a bleak picture for Pakistan. Instability in Pakistan is likely to increase further.

A section of the Army might get radicalised reflecting the broad trend in the society. Parts of Pakistan

might become ungovernable. The escalating violence in Karachi and the inability of the government

to control it is a symptom of the deeper malaise in Pakistan. The military will continue to play an

important role in Pakistan’s governance.

India will need to develop policy options to deal with such a Pakistan. The danger of terrorist attacks

on India might increase. India’s Neighbourhood is growing dissatisfaction within Pakistan over the way

the country has been misgoverned in the past 60 years. But whether such disaffection translates into

more rational approach towards India is still a question mark. The Pakistan government’s decision to

accord Most Favoured Nation (MFN) status to India is a positive step forward, but there are indications

that spoilers are at work to stifle, if not reverse, the process of trade liberalisation with India.

If India is able to stabilise its own part of J&K, the salience of Kashmir in Indo-Pak relations might

diminish, making it easier for India to deal with Pakistan. What are the game changing scenarios that

can be envisaged? In the context of Pakistan’s internal situation, the division within the Pakistan Army

would radically change the internal situation in Pakistan. Pakistan’s Army may not remain a monolith.

A part of it may be radicalised. Will a section of Pakistan’s Army favour rapprochement with India?

The scenario has low probability but if it materialises, it would have a major impact on Pakistan’s

internal dynamics.

Likewise, for Indo-Pak relations a direct or indirect dialogue with the Pakistani military could change

the trajectory. The key adjustment in India’s policy will require dealing with different segments of

Pakistan’s society and polity at both the official and the non-official level. India must deal with Pakistan

beyond the government-to-government framework; India will need to build and nurture friendly

constituencies in Pakistan.

Regional and global influence

As predicted by PWC in its report that India will become the second largest economy in the world with

the projected GDP at around US $42,205 billion.17 It would draw much more focus towards it.

Historically, India was one of the founding members of Non-Aligned Movement, and had good

relationships with Soviet Union and other parts of western world. It played regional roles in South

Asian affairs, e.g. its use of the Indian Peace Keeping Force in the Bangladesh Liberation War and in

Sri Lanka. It took a leading initiative to improve relations between African and Asian countries. India

is an active member of the Commonwealth and the WTO. The evolving economic integration politics

in the West and in Asia is influencing the Indian mood to slowly swing in favour of integration with

global economy. Currently, India's political moves are being influenced by economic imperatives. New

Delhi is also being observed to slowly, cautiously, and often hesitantly, step into the unchartered role

of becoming one of the two major seats of political power in Asia, the other being at Beijing. Some

enlightened thinkers from the subcontinent have also envisioned, over the long run, of a South Asian

version of free trade zone and even a Union, where the South Asian nations relinquish all past

animosities and move to make economic growth a pan sub continental phenomenon. Now India has

got all 5 votes (France, Russia, United Kingdom, China and USA) to become permanent member of

Security Council of United Nations. The UN's role in international collective security is defined by the

UN Charter, which gives the Security Council the powers to Investigate any situation threatening

international peace, Recommend procedures for peaceful resolution of a dispute, Call upon other

member nations to completely or partially interrupt economic relations as well as sea, air, postal, and

radio communications, or to sever diplomatic relations, Enforce its decisions militarily, or by any

means necessary, The Counter-Terrorism Committee is a subsidiary body of the United Nations

Security Council in all India will have greater global influence.

The Indian Armed Forces plays a crucial role in anti-terrorist activities and maintaining law and order

in the disputed Kashmir region. India has also participated in several United Nations peace-keeping

missions, currently being the largest contributor to UN peace keeping force and is the largest

contributor to the United Nations Democratic Fund. India is one of the largest arms importer in the

world with cracking deals with USA, Russia, Israel and EU. India boast the third largest Army, fourth

largest Air Force and fifth largest Navy in the world. India is upgrading its arsenal day by day for e.g.

deal with French fighter Dassault to purchase Rafale fighters as well as its technology, making its own

light combat aircraft HAL Tejas to curb dependency on import, India and Russia signed a pact to

develop fifth generation aircraft with the help of Sukhoi and HAL. India is considered to have blue-

water capabilities with sophisticated missile-capable warships, aircraft carrier, minesweepers,

advanced submarines and the latest aircraft in its inventory, along with a significant use of state of the

art technology that is indigenously manufactured. It operates two aircraft carriers and also plans to

induct the INS Vikrant by 2018 followed by a larger INS Vishal.

17 https://www.pwc.com/gx/en/issues/the-economy/assets/world-in-2050-february-2015.pdf

Population

By estimates of almost all analysis, India will cross China and become the world’s most-populated

country by the middle of this century and even by the safest estimates, India will reach China’s size

long before the 2020’s will end. It is even said that the two biggest nations would swap positions at

the top of the population table sometime after just 2022. By 2022,18 both countries are expected to

have approximately 1.4 billion people.

Right now, these two Asian giants jointly represent almost 40% of the world’s current population,

standing at 7.3 billion people.

But most surprisingly and fortunately for the two countries and the world at large, the acceleration in

both countries’ populations is expected to stall after 2050, with China shrinking to 1 billion people by

2100 and India to 1.6 billion.

The country is already lagging to meet the needs of a rapidly ageing population, it needs to prep up

its preparations. The current health and social care systems are already under-developed and under

great strain and could get worse before starting to improve. These UN projections ought to act as a

further warning.

18 Latest projections, released by the United Nations on Jul 29, 2015

The population growth is one of the biggest contributors to many of country’s biggest problems.

Population growth is creating pressure on nutritional needs, housing and public services, the

environment, the climate and wildlife.

In India, the efforts at birth control, with the most lethally active government programmes carried out

in the 1970’s have failed to check the country’s baby boom. On an average, women in India each have

between 2 to 5 children. Even now, only 56% of women use any form of birth control, with men lagging

far behind.

At present, India’s sex ratio is the worst among the ten largest countries in the world by population –

and it is only predicted to get worse in this decade and even the next and by most standards, the ratio

will stabilise and will certainly improve before 2050.

The high rate of population growth in India is also going to make it one of the five countries in the

world recording the highest emigration numbers, more than 100,000 people annually by the early

2040’s. The top countries receiving migrants from India include U.S., Canada, U.K. and Australia.19

19 ‘How India Will Start Shrinking After 2050’ The wall Street Journal, By Aditi Malhotra, Jul 31, 2015.

Bibliography

World Bank Data Bank

Ministry of External Affairs, Government of India

PricewaterhouseCoopers

Institute for Defence Studies and Analyses

International Monetary Fund

Business Insider

The Diplomat

Wall Street Journal

The Bloomberg