The 'babudom' and India’s bad vibes with neighbours

Pratim Ranjan Bose

'No one loves a huge neighbour,” Sashi Tharoor said in “Pax Indica”.

In his words, India is the proverbial 298-pound gorilla on the beach, whose slightest step will immediately be seen by the skinny 98-pounders as proof of insensitivity, bullying or worse. 

True that is. But is that an explanation enough to describe India’s bad vibes with smaller neighbours? The question struck me again while travelling in Nepal last month.

Bully power

I don’t pay much attention to the bully perception. Neither am I concerned about the regular dose of political rhetoric from Kathmandu or Colombo. To me, it is part of realpolitik.

“An American president’s most important power is not the veto pen or the ability to launch missiles. It is the bully pulpit,” The Economist once said.

India is not America. But as one of the two major powers in the region, it should counterbalance Chinese influence.

Theoretically, such geopolitical stability actually works in the interest of the less powerful to ward off undue pressure from anyone.

Such power balance helped India to take sides of the liberation cry of Bengali-speaking Muslims in East Pakistan in 1971. In 2014, the Indian support helped the Seikh Hasina government in Dhaka to come back in power and continue its tirade against the 1971 war criminals, ignoring opposition from Washington.

The 'good' or 'bad' depends on which side of the coin you are.

Many in Dhaka welcomed Indian “interference” in 1971 as well as in 2014. But many others didn’t. Similarly, Nepal is now divided into two camps, those who are looking forward to Indian support to end political discrimination of Madhesis and those in favour of a status quo.

There is less of ideology and more of self-interest in this game. Positions keep changing from time to time, depending on the internal politics of a country. And, to what extent India or any power will engage itself in the affairs of another economy depends on the marriage of convenience.

Hasina is enjoying Indian support because her actions are ensuring peace on India’s North East. Nepal has links to a number of terror attacks in India and is a major source of cross-border smuggling of fake currency and narcotics. Delhi should break this design.

But in the changed world order, such interventions are expected to be nuanced and non-military in nature.

Economics first

Gone are the days when the region saw many military interventions. The complex investment trail and increasing economic interdependence between the nations make such policies redundant.

A Dabur India, ITC, or upcoming FMCG major Patanjali will not subscribe to an Indian strategy that jeopardises their investments and market access in Nepal. In today’s order, even rival powers like India and China have a vested interest to keep the relationships stable.

The point can be best understood from China’s complex relationship with its small neighbour Taiwan. Politically they are far from friends. But economically they are inseparable.

Taipei is fifth largest trade partner of Beijing and, Hong Kong is the fourth largest source of FDI in Taiwan. And that prevents politics from either side to rock the boat beyond the sustainable limits. An economic commentator described them as “frenemies”.  

Delhi doesn’t enjoy such all-weather relationship with any smaller neighbour.

To me, the question, therefore, is: Has India failed to push economic agendas ahead of politics? Did it fail to create a regional growth paradigm that will force neighbouring economies to keep glued to India?

The question is tricky. I don’t foresee India-Pakistan relationship to follow the China-Taiwan example in the foreseeable future. This is simply because, Pakistan is far from taking a ‘business first’ approach.

Way back in 1994, the P V Narasimha Rao government proposed regional electricity grid with Pakistan and Bangladesh. The one with Bangladesh became operational in December 2013. Pakistan is still pinpricking Indian agenda of common energy grid in SAARC.

I am sure, the much talked about Turkmenistan–Afghanistan–Pakistan–India gas Pipeline (TAPI) will attain this fate. I have been hearing about it for last 10 years. And, no one expects it to materialise in next 10 years. 

Overall, India has limited opportunities for economic engagement on the West in the foreseeable future. That necessarily takes Delhi to focus on the East.  But do we appreciate it?

Politics willing

Theoretically, the answer is yes.

Narasimha Rao rolled out the ‘Look East’ campaign in 1991.

Diplomatic links were established with Myanmar. In 1993, a Kolkata-headquartered Tractors India (now TIL) become one of the earliest foreign investors in the country.

In 1992, India took the first step in implementing a two-decade-old agreement with Bangladesh to remove border disputes. Since then, politics, both at the national and the regional levels, has increasingly shown keenness in ensuring better ties with the Eastern neighbour.

In 1996, former West Bengal Chief Minister Jyoti Basu mediated the Ganga water-sharing pact with Bangladesh. Tripura Chief Minister Manik Sarkar put his weight behind the free trade agendas for last one and a half decades. He also lent crucial support to the cross-border electricity trade and, the recently concluded regional (BBIN) trade and transit treaty.

Even the mercurial West Bengal Chief Minister Mamata Banerjee, who foiled former Prime Minister Manmohan Singh’s plan to implement the LBA in 2011, turned 180 degrees. The pact was signed in 2015 bringing an end to a perennial source of political dispute.

At the national policy level, Atal Bihari Vajpayee (1998-2004) was an ardent supporter of stronger economic ties with neighbours.  Manmohan Singh (2004-2014) brought down the trade barriers. And, Narendra Modi made it the priority.

Having assumed power in May 2014, Modi started his overseas tours with Bhutan and sent his foreign minister to Dhaka.

In August 2014, when Modi visited Kathmandu – the first Prime Minister to do so, in 17 years – his speech to Nepali Parliament was exemplary. Economics, he said, would henceforth be the driver of bilateral relations.

Not much on ground 

Yet, India has little business ties with neighbours.

Delhi sources barely 0.5 percent of $447 billion (2014-15) merchandise imports from SAARC countries but earns five percent of the $310 billion export revenue from the region.

Narrow road. Customs office on right. Pathetic infrastructure at important Jogbani (India)-Biratnagar border with Nepal. 2015  

The trade imbalance causes a lot of heartburns among neighbours, especially the Eastern neighbours - like Bangladesh and Nepal - sharing two-third of India’s exports to SAARC.

The reason behind the one-sided trade can be traced in low business-to-business (B2B) relations in the neighbourhood. Indian companies invest (FDI) over $ 30 billion a year across the world. SAARC gets barely one percent of the total, that too is mostly (80 per cent) directed to Sri Lanka.

The Eastern neighbours sharing land boundary with us gets peanuts. Bangladesh that shares over 4100 km boundary with India and, is growing at 6 per cent for last one decade, received 0.09 percent ($ 28.5 million) of Indian FDI in2012-13. 

Wide roads, Better customs infrastructure. Nepali side of the Biratnagar-Jogbani border is more orderly

How does it affect trade? Simple, as someone told me American solar equipment crosses seven production stages. Four of them are shared by China and Taiwan. It means there is no one-sided export or import. A Taiwanese import from China is often converted into its exports to China or other countries.

Beyond SAARC, our trade interest is stagnant at a mere $ 2 billion with Myanmar. One of the top investment destinations in the region, Myanmar shares 1700 km boundary with India’s North East.

Last year, Beijing emerged as the top source of FDI to Myanmar by virtue of $14.5 billion investment by 87 Chinese companies. India doesn’t figure in top-10 investors’ list. 

Neglecting neighbours

I am not comparing Taiwan with a Bangladesh that has a little industrial base.

All I am saying is, our trade lacks depth. In the absence of B2B ties, politics of either country can afford to be reckless. The temptation will always be higher on the part of Dhaka; as they have little to gain from the ‘Indian growth’ story.

True, the ultranationalist Bangladeshi politics historically lacked aspirations. It is also true that they failed to emerge as a popular investment destination. But, then how do I count the success of Indian diplomacy? Was India merely doing narrow politics there? And, if they blame Bangladesh or Nepal for lack of aspirations, how will they defend the failure in Myanmar?

Immigration officers sit in a hut at Changrabandha border post with Bangladesh. 2015

There are few answers to these questions. But, as one of the few journalists who have travelled the majority of India’s land trade points with Bangladesh, Myanmar and Nepal – stretching over nearly 7500 km – I have a different take to this phenomenon.

All across, I noticed, India lacks in infrastructure creation. In comparison, the smaller and poorer neighbours did better. To me, it is a perfect indicator of the importance that India attaches to trade and commerce with its neighbours.

Take the case of Nepal that imports goods worth $3.75 billion (58 percent) from India and sources entire third country imports through India.

Indian customs infrastructure isrudimentary along the 1700 km border. 

Nepalese importers are left at the mercy of most inefficient Kolkata Port. Delhi denies them access to the efficient privately-run deep-sea port at Dhamra, in close proximity of Kolkata. They cannot use even a more efficient government port like Vizag or Paradip down South, because Indian Railways lacks capacity or intent, or both, to serve the trade.

And when it comes to roads, theoretically India has wider and better National Highway network than any of its neighbours on the East. But visit any prominent gate and you will realise, we barely have the last mile connectivity.

Infrastructure rots

Who bears the brunt of such poor infrastructure? Obviously the importing country- there trade cost goes up. It is no surprise therefore that Kathmandu accuses Delhi of acting like an economic bully - using the geographical advantage to force Nepal to trade with India.

Similarly, except at Akhaura (2013) in Tripura; the Indian infrastructure at any border gate with Bangladesh is pathetic. You may puke at the condition of the largest land customs point at Petrapole. And at Changrabandha you will not get a toilet to pee. It is shameful that the customs and immigration officials of world’s third largest economy, in terms of GDP, sit in thatched huts while their Bangladeshi counterparts enjoy cool chambers in sprawling office space.

Travel to the northeast on Myanmar border of Moreh and, the condition of the National Highway will remind you of sub-Saharan Africa. The irony is: The same Indian government built a beautiful road on the Myanmarese side of the border.

It is a pity that two decades after India spotted trade opportunities with Myanmar through Zokhawthar (Mizoram) border and more than a decade since Delhi approved a plan to set up a land customs station there; Zokhawthar hardly has any infrastructure. 

What does all this prove? It proves Delhi never felt the urgency in projecting the image of a trade facilitator to its neighbours.

A country that spends billions of dollars, to offer aids or soft loan, to Nepal and Bangladesh, doesn’t have a mere $12 million scanner that helps quick clearance of import-export cargo at border gates. It speaks a volume about our priorities. 

Zokhawthar-Champhai road on Myanmar border is under construction

And, whom should we blame for this monumental neglect? Should it be politics – the favourite whipping boy of Indian commentators? Sorry, my vote goes to babus –  the bureaucrats and diplomats of the country.

As the only continuity factor in the administration of a democratic nation, babus enjoy tremendous power without much accountability. And, it is they who are the biggest stumbling block in improving ties with neighbours.

Babus failed India

A former bureaucrat who served in Delhi in the 1980’s told me a story about the power of bureaucracy.

It was during former Prime Minister Rajiv Gandhi’s visit to Russia. My friend requested a senior bureaucrat in Gandhi’s office to sensitise the Prime Minister about a particular trade issue that is of extreme importance to the plantation sector, during the visit to Moscow. But the senior bureaucrat was against his Prime Minister to talk business. What happened to the trade issue is anybody’s guess.

The world has changed a lot since then. The reforms in 1991 forced bureaucracy to talk business. But, there has not been much change in its character.

In August 2009, Bangladesh (and parts of West Bengal in India) was devastated by cyclone Aila. The then finance minister (now President of India), Pranab Mukherjee was quick to respond to Dhaka’s request for supply of food grain to Bangladesh, ignoring an export ban.

The timely gesture turned into a major bi-lateral embarrassment with food grain shipment held up for months due to bureaucratic hurdle. The issue was finally resolved through the personal interference of Mukherjee, in October 2010 but the image of India was damaged.

Chaos unlimited at Panitanki border with Nepal. 

This what a popular Bangladeshi news portal reported in October 2010: "Though several months have passed since New Delhi responded to Dhaka's request and agreed to sell rice and wheat to Bangladesh, the shipment had been delayed – first due to differences between the two countries over grain prices and then due to procedural delays by different wings of the Indian government". 

If you are in need of more relevant examples, let's go back to a 2008 framework agreement between India and Myanmar that proposed setting up a port at Sittwe and connecting that with Mizoram through multi-modal transport. The proposal was a win-win for both countries and, Myanmar agreed to it.

Everything in order on the Nepali side (Kakarvitta) on Panitanki border

Seven years down the line, there is complete silence about the project. Last we heard in January 2015, the river part of the project is near-complete. But construction the crucial road project was yet to start. Analysts in Naypyidaw blame Delhi. And, privately babus in external affairs department blame their counterpart in finance ministry for the logjam. Read this story for details. 

Feudal or lethargic?

But babus can make a difference if they so desire. India’s former ambassador to Nepal Shyam Saran was of that category. It was he who had set up a consulate at the main trade route of Birgunj and proposed upgrade of India’s trade infrastructure with neighbours.

Saran’s proposal caught the fancy of politics. And, the government immediately approved a scheme to set up modern integrated facilities (ICP) at nearly a dozen border check posts. 

Sadly, there are not many more Sarans in the government. So far only two of those proposed integrated check-posts are implemented. And, the first one to come up, in 2012, was at Attari on the Pakistan border – the country that has least trade relations with India. The ICP at Akhaura on Bangladesh was completed in 2013, courtesy largely to the insistence of Tripura government.

Poor infrastructure at Indian side of Petrapole border with Bangladesh

I am not critical of modern trade infrastructure with Pakistan. I am only pointing that in terms of trade, a Petrapole or Birgunj should have got priority. Petrapole handles half of the $ 6 billion Indo-Bangladesh trade. And, Birgunj accounts for 70 per cent of Nepal’s $ 7 billion foreign trade.

Sabyasachi Basu Ray Chaudhury, professor of the department of Political Science and Director of the Centre for Nepal Studies at the Rabindra Bharati University, in Kolkata, has a nice take on this. “How many of our bureaucrats or diplomats visited the East?” he asks.

He is right. Leave alone, border outposts, our bureaucrats rarely visit even a Kolkata, the only metropolis in Eastern and North Eastern India and the proverbial ‘gateway to the East’. As a Kolkata-based journalist, I can count how many times I have seen our bureaucrats or diplomats attended business meetings here over the last one year. Business is expected to fly down to Delhi.

Bangladeshi infrastructure at Petrapole-Benapole border is superior

In contrast, you will see ambassadors of the developed world visiting Kolkata too often to meet with business. I remember the US ambassador to meet the Coal India chief at the latter’s office, to discuss “business” on behalf of American companies.

The senior diplomatic staffs of foreign embassies are never tired of travelling down to the border areas of Mizoram, Nagaland, or Manipur. But, ask locals when was the last time they saw a babu from Delhi and, they may die out of heart attack.

Babus are pricey. They prefer travelling down to more exotic places on earth - like US, Europe and so on – at the drop of a hat.

Closed economy mindset

Before I end this long piece, here is an epilogue on the power or perceived power of babus.

A few days ago, I was writing a piece on the prospect of Bhutan-Bangladesh-India-Nepal (BBIN) trade and transit treaty that Modi recently signed. 

Manik Sarkar welcomed it with open arms as it would end the remoteness of Tripura and North East. West Bengal’s Mamata Banerjee is acting overtime to widen the highways in North Bengal to facilitate trade through West Bengal. In fact contrary to her anti-land acquisition politics, she didn’t mind acquiring land or removing encroachments for border trade projects.

Business in all the countries is bullish that such an arrangement will bring rich dividends. A top Indian company is reportedly busy preparing its investment plans in Tripura. Industry in Bangladesh and Nepal are expecting this arrangement to increase B2B ties between India and its Eastern neighbours.

Collected from facebook

The only thorn in the neck is some babus who are wary that such an arrangement might dilute India’s ability to arm-twist neighbours because Nepal can henceforth freely trade with Bangladesh or Bhutan that through Indian territory.

True, such an arrangement will bring revenues to India. Indian business will gain too. Our landlocked North-East can attract industries who will send goods through a Bangladesh.

But who cares, babus are still living in that closed economy era when they ruled the roost by managing supplies, not fuelling the growth.

Modi is keen to shift the course of India’s relationship with neighbours. He wants to see India as a trade facilitator. But to reach this goal, he may first have to break the babudom.

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