NonAlignment 2.0: A Foreign and Strategic Policy for India in the 21st Century (14 page)

The key benefit to having a culture with highly innovative
firms (particularly start-ups) in multiple sectors is that they are able to attract talent and provide high-paying jobs. Such an environment is inherently highly competitive, and thus a good environment for defence contracting because of their increasing sophistication. This also helps build a highly skilled workforce which can be readily tapped to cater to the needs of national security. But domestic start-ups are not in and of themselves sufficient: foreign firms must also be allowed to set up operations in India.

Opening a business in India is particularly complicated because of problems with long registration times, access to credit and complex taxation. Even larger firms face problems with labour laws, contract enforcement, closing businesses and property rights. Foreign firms are challenged even further by capital controls and mandatory partnerships with local firms (in many sectors). Despite these challenges, domestic firms have become world leaders. Further simplifying the environment for doing business will lead to firms being set up to serve the national security requirements. These firms will draw on resources from the rest of the economy, while generating spillover effects for the rest of the economy.

One factor constraining our hard power is the state of our defence R&D and defence production. This is a major strategic weakness that demands our immediate attention. India is supposedly a $100 billion arms purchase market, which is likely to surge to $120 billion in the next plan. The main challenge is to leverage India’s burgeoning defence market to ensure progress towards greater defence industrial self-reliance. The choice we face is between techno-nationalism and techno-globalism. We need to move from techno-imitation to techno-innovation by unleashing the power of private industry and energizing state-owned defence industry institutions.

The nub of the problem at present is the near monopoly maintained by the Ministry of Defence through the Defence Research and Development Organization (DRDO), defence public sector undertakings and the Ordnance Factory Board over these areas. The absence of competition and the seeming availability of all governmental resources have hindered these research, design, development and production agencies’ ability to innovate and deliver, and have instead mostly confined their activities to assembly-line capacity. The policies adopted by successive governments have prevented the
Indian private sector from unleashing its energies in this domain. These policies have also undermined attempts to form joint ventures with Indian and foreign firms. We need to urgently review and revise our current policies. An indigenous defence industry will be indispensable to the acquisition of credible hard power. The present system can at best absorb the existing level of technology but it cannot on its own develop the next generation. So, we keep going back to the need for transfer of technology, in an unending cycle of hope to meet our needs in this way. But the fact is that there are certain technologies which others are unlikely to give us, and so we also need to think creatively about enabling the DRDO to concentrate its expertise on developing technology that nobody will transfer to us. We should craft a defence technology strategy that combines global technology access with the creation of indigenous capability to innovate, coupled with an expansive subcontracting base.

The defence sector has historically had few linkages with the rest of the economy, but this pattern must change. For the volumes of procurement done by defence establishments, there can be large positive spillover effects into the rest of the economy. The Kelkar Committee report titled ‘Strengthening Self-reliance in Defence Preparedness’ has discussed some of these issues in more
detail. The Indian corporate sector should be provided a level playing field to compete with government entities. This will require substantial policy changes in several areas including the taxation and export control regime.

India is poised to spend over $100 billion on defence procurement over the next five years, making it one of the world’s largest buyers of defence equipment. This position of strength should be leveraged in procurement, driving strong competition among vendors. Historically, with large purchases, there has been technology transfer to set up indigenous manufacturing. Unfortunately, this has not transferred into new projects that continuously improve upon the state of the art. Much of the research continues to happen in public sector defence establishments, where performance and productivity are not transparent.

Much of the high-end procurement ends up happening from foreign countries, which benefits the economies and industries of those countries rather than India. There is always the lurking fear of malware in equipment procured from abroad. An indigenous ecosystem based in India, which designs and develops high-end products, is an ideal way to hedge such risks. Additionally, the use of open standards and open-source software as much as possible is another way to retain strategic control. The architecture of the Unique Identification Authority of India (UIDAI)
demonstrates that large-scale mission-critical IT systems can be built with open-source software, thereby reducing external dependencies.

It is essential that an ecosystem that includes exports be created, which achieves these objectives as part of an integrated strategy for long-term national security. In particular, international purchases and their related offset policies should be used to kick-start a domestic ecosystem. A combination of this with an open procurement procedure should be enough to encourage a local defence industry. And one of the big advantages of this is that there is two-way spillover from such work. Military technologies can benefit from innovations in civilian technology and vice versa.

Threats to national security can no longer be addressed by simply having more armed forces and buying more military hardware. National security is deeply and intricately linked to the knowledge society and the knowledge economy, which at its core is multidisciplinary and highly collaborative. An ecosystem approach will encourage collaboration within government, and make it possible to leverage the assets in the rest of the economy for achieving
progress in education, research, technology, cyber security and defence production.

Today, government tends to operate in silos, and with hierarchical structures, with little collaboration across government agencies. We may note that the United States, until the 9/11 attacks, operated in a similar way. However, in the face of adversity, it reorganized itself to be much more collaborative. This was evident in the mission carried out in Abbottabad by Navy Seals with support from the Central Intelligence Agency and other intelligence agencies.

The transformation of governance to meet India’s coming challenges will require an administration that is porous to ideas and people. Government will need to be able to draw talent and expertise from corporate firms, academia, think tanks, professional communities (lawyers, economists, accountants and project managers), NGOs and the media. Government must enable these diverse communities of knowledge and expertise to share information and ideas, and to work in collaborative ways, so that an end result is achieved where the whole is greater than the sum of its parts.

The strategic options of any state are determined by its capacity and internal legitimacy. The Indian state is, in many ways, enormously sophisticated and very complex. Indian democracy also has deep roots. But both are now at an important crossroads. Our ability to manoeuvre strategically will depend on how we navigate these crossroads.

The capacities of the Indian state are rising, giving it new opportunities to act. If India’s economy can achieve growth rates of around 8 per cent a year on average for the next decade, it will lead to an unprecedented expansion of resources available to both the state and society at large. India has, by comparative standards, a relatively low tax to GDP ratio. This will rise with growth, with improved collection and deployment of technology and with new architectures like an integrated goods and services tax (GST). The GST will also help achieve one of India’s strategic objectives in terms of domestic economic
architecture: an integrated internal market. There must be a consensus on augmenting India’s resource base. But resources are not likely to be as binding a constraint for the Indian state as they once were.

In many respects, these resources are already being redeployed to expand the state in crucial areas. A rights-based welfare state—that promises its citizens full nutrition, education, health and housing—is being constructed. If it can deliver these public goods adequately, there is no stopping India. Infrastructure too is being expanded. The state now has the capability of deploying technology to acquire the attributes of stateness: through the identification of its citizens. A combination of resources and technology presages a new era in Indian state building.

This is also a time when there is considerable experimentation with new institutions. A whole range of laws like the Right to Information Act, new practices like social audits, new performance contracts for state employees, the creation of new regulatory institutions, several initiatives at the state level to better deliver services, devolution and decentralization—all provide a unique opportunity to reconfigure the Indian state and enhance both capacity and legitimacy.

And yet, despite augmented resources, technology
and willingness to institutionally experiment, there is still considerable scepticism about whether the Indian state will be able to take full advantage of this unprecedented historical opportunity. Most citizens still find it difficult to access the state without feeling alienated and subject to unpredictable responses from the state and its agents. The delivery of crucial social services by the state is at best mixed. The perception that rent-seeking is high is creating an internal legitimacy crisis. And even where there is no rent-seeking, the procedures and protocols of decision-making are out of touch with the demands of the time. The state seems to be riddled with all kinds of perverse internal incentives that hinder decision-making. The identity of the state is driven more by adherence to archaic processes than concern with achieving outcomes.

Further, the Indian state is still searching for the most effective scale and size at which to operate. While much of the attention of economic reform focused on getting the state out of certain areas, there was much less attention to areas where the state needed to get in—to expand its presence. In crucial domains where the state needs to exercise its sovereign functions like law and order, justice and welfare, it is relatively understaffed or inadequately staffed. Even the quality of data available to the state to make informed decisions is under question because of
the decline of its statistical services. State capacity should be understood in terms of both the quality of human resources and decision-making processes. Both need serious reconsideration and enhancement. These specific aspects of the state, more than anything else, are likely to be big factors that will hold India back and constrain its options.

There have been several proposals to reform the Indian state. Various reports of the Administrative Reforms Commission, reports on specific sectors like the police and numerous studies of accountability structures do provide useful material. Our brief discussion here claims to do no more than highlight one critical fact: that the accomplishment of India’s strategic goals is bound up with the capacities of our state. We must ensure that these strategic goals do not founder because of any weakening of these capacities.

In fact, we need to dramatically strengthen these capacities. Reform of the state must be shaped by a clear sense of the knowledge architecture which modern states now depend upon. In the contemporary world this architecture must incorporate several features. First, knowledge is in a constant state of flux, so that states have to be nimble and able to move swiftly and effectively to grasp new knowledge domains and clusters. Second,
given the speed of knowledge change and creation in today’s world, it is inevitable that young minds, youthful researchers and practitioners, have a greater comparative advantage, and will be at the forefront of innovation and creativity. It is therefore vital that the state’s decision-making structures and authority hierarchies should reflect this, and not remain wedded to hierarchical structures whose only rationale is bureaucratic stasis. It is also the case that knowledge innovation often occurs today by the combination of existing knowledge and expertise into new forms. This is particularly true of the kinds of knowledge that figure in strategic planning and decision-making.

Third, as we have seen in this book, virtually every fundamental strategic issue is interdisciplinary in its substance and requires the mobilization of different, cross-cutting skill sets. It follows that decision-making processes must have the ability to recognize and mobilize all appropriate skills, with a willingness to encourage unconventional combinations and conjunctions of knowledge domains. Fourth, it also follows that the design and reform of institutions must be focused by function and by solutions to the issues at hand; therefore the creation of knowledge and implementation teams must be problem led rather than constrained by institutional precedent and inertia.

Fifth, even as new and powerful knowledge forms emerge through connections across fields and by interdisciplinarity, we have also to recognize that we live in an era of hyper-specialization, even within disciplines: people within ostensibly the same fields are often quite unable to communicate with one another. Sixth, it follows that the burden of synthesizing and analysis is thus even greater: since the sources of knowledge are so diverse, government systems need to be devised that can break down the barriers between ‘insiders’ and ‘outsiders’ and allow constant turnover. The state must become more systematically open: porous both to expert knowledge and to those who can synthesize and interrelate what otherwise remain ‘silo’ domains.

The design of state institutions needs to assimilate these broad principles. This is especially true of the decision-making structures at the highest level: the Prime Minister’s Office, Planning Commission and National Security Council. Their capacities to perform rigorous integrative and synthesis functions in the face of diverse knowledge fields and newly emerging challenges will need to be scaled up quickly and effectively.

These principles must also guide any reforms in the key security and intelligence agencies of the state: such as the Research and Analysis Wing, the Intelligence Bureau and
the National Grid. The security domain also raises very specific practical and normative dilemmas, especially acute for a state like ours which rests on democratic legitimacy. The nature of security threats we face requires the state to accumulate evermore information; and technology has made it much easier to do so. But there are inevitable difficulties here: of informational overload, and of the ability of decision-makers to synthesize and draw actionable conclusions from the mass of information. Solving these problems will require careful design. At a normative level, the state’s search for an accumulation of information and data about its citizens raises thorny questions about citizens’ rights and civil liberties, and particularly about the increasingly sensitive domain of privacy. We cannot hope to address such basic issues merely by perfunctory discussion or by relying on supposed technical or administrative fixes. The questions at stake go to the heart of what it means to be an open and free society such as ours. It must therefore be a strategic goal to develop ways to give the state the necessary surveillance capacities, while preserving its legitimacy in the eyes of the citizens whose lives it aims to secure.

If the state is at a crossroads in terms of it resources, efficiency and capacity to make decisions, Indian democracy too is at a crossroads. Indian democracy
has genuinely deepened on many dimensions: it has empowered hitherto marginalized groups, there is considerable institutional innovation, and the basic framework of electoral politics seems robust. But there is considerable disquiet that representative government is not translating into responsive government. This disquiet can be expected to grow—as a direct result of the success of Indian democracy. Aspirations are rising. As people become conscious of their own power they are less likely to put up with a state that does not respond. This can lead to critical face-offs which sap state authority and can in time escalate into a genuine legitimacy crisis.

As Indian society changes—in large part an effect of the workings of democracy over seven decades—so too the Indian state will need to adjust to these changes. It will have to devise different models of governance, in the face of a society that is becoming both better educated and more determined to participate in its government. One evident way in which governance models will need to change is in the recognition of a greater diversity and dispersion of power centres—that, after all, is precisely what a democratic society that empowers its citizens, as India has been doing, creates.

The traditional way of governing was founded on an asymmetry between state and society. The state could
presume a fair degree of secrecy in its functioning. And the state often assumed that its actions would not be subject to detailed outside scrutiny: it believed in its own majesty. But recent legal instruments like the Right to Information Act, the explosive growth of India’s media including the spread of new types of digital social media and a rising sense of self-confidence in civil society make the presumption of state opaqueness and secrecy untenable. Many of the current battles are expressions of these underlying shifts: where the state still operates by inherited patterns, and where society is increasingly impatient and resistant. The state must get ahead of these changes that society is pushing for; otherwise it risks being caught on the wrong foot. In fact, the best way for the state to increase its own strategic space for manoeuvre is to make its operations more transparent and open to citizens.

The second assumption of the inherited pattern of state governance was that power would remain hierarchically ordered not just within the state, but also in society as a whole. It would thus also define the state’s relations to other centres of power in society. But in fact power is now deeply disaggregated across the Indian system, along many dimensions. It is disaggregated horizontally within the state, with different state institutions jostling for space. This can potentially be a source of strength in
as much as it provides for checks and balances. Power is also disaggregated across society: political parties find it increasingly difficult to sustain steady support from the electorate, and across the country new forms of social movements and organizations are emerging that are crowding the political space once dominated by political parties. New arenas of governance are being created, which are redistributing power from the centre and state governments to more local structures of governance, while civil society itself is highly fluid, with social mobilization and centres of power emerging and subsiding with sometimes bewildering speed.

India will therefore need to build a new architecture of multilevel governance. Part of the reason the aggregation of relevant interests is becoming difficult is that the apportionment of powers between different levels of governance remains suboptimal. Power is too centralized in some respects; and where it is devolved, not enough capacity has been built to handle the appropriate functions. Many of India’s conflicts, many of its state failures, can be traced to the inability to get right the distribution of powers and capacities that multilevel governance requires.

On the one hand, the disaggregation of power enables a vibrant, more inclusive democracy. On the other hand, the state will now have to function in a context where its
authority will be challenged from many directions. This need not be debilitating. But it will require the creation of new institutional arenas of negotiation, where the emerging contenders for power and authority can engage and arrive at compromise and consensus. It will also require agencies of adjudication to decide disputes, whose legitimacy will rest on the capacity to project impartiality. Again, this sort of extensive institutional reconstruction and innovation will need considerable strategic will: to evolve protocols of negotiation that do justice to the complexity of interests, and above all to create and sustain impartial forms of authority which all contending parties can respect and by whose decisions they will abide. In this respect, the next generation challenge for Indian democracy will be to move forward from a view of legitimacy as simply based on electoral efficacy to a view of legitimacy based on impartiality: impartiality both in regard to the hearing of all interests and in their composition into workable consensus on matters of national interest.

It follows that how government functions will have to change in many ways. For a start, government will need to engage much more seriously with the media and with arenas of public debate. In its relation to the media, government has in recent times become overly reactive—following rather than leading, and apparently uninterested
in conveying the finer points of policy, let alone setting the agenda for debate. Communications and continuous engagement with public opinion are not optional extras for modern governments: they are central to the successful pursuit of strategic goals by government.