An expanding interface

IT MAY BE premature to evaluate the long- term economic impact of the U.S. President, Mr. Bill Clinton's five-day discovery of India but what stands out is his categorical affirmation of the immense positive potential of enhanced cooperation between the two countries. Differences in political perceptions notwithstanding, the U.S. and India offer perhaps a unique model for economic partnership in a world which is increasingly being driven by information technology even though India is yet to come to grips with the full ramifications of a globally open economy.

Mr. Clinton's characterisation of IT as the world's newest and fastest-growing economy has indeed sounded as if the U.S. President is fully endorsing the vision of the new-generation of politicians in India typified by Mr. N. Chandrababu Naidu, Chief Minister of Andhra Pradesh, who seek to harness IT as the instrument both for transparent governance and for the empowerment of the poor. This does not, however, resolve the basic contradictions involved in the current stage of economic development of India where questions about the internet penetration rate are not as important as those which relate to availability of safe drinking water and basic road connectivity for the rural poor. Mr. Clinton's description of IT as the best weapon against poverty would sound somewhat utopian unless entrepreneurs in the U.S. and in India know how to forge effective collaboration for taking the benefits of IT to the large illiterate masses in the country.

It may be that the Clinton visit to India did not arouse ecstatic expectations of dramatic developments in economic collaboration between the two countries. The fact that the U.S. President's entourage did not include the stalwarts among the CEOs of FORTUNE 500 companies perhaps served to moderate exaggerated speculation about how much U.S. Foreign Direct Investment (FDI) would begin to flow into this country as the direct outcome of Mr. Clinton's visit. All this has not dampened legitimate ardour among the Indian captains of industry and their American partners who signed several business agreements on Friday in Mumbai relating to IT, finance, energy and environment with a total envisaged investment exceeding $2 billions. President Clinton himself has reckoned that his visit has resulted in business commitments in India totalling $4 billions on the part of U.S. investors apart from a likely $1 billion assistance package from the U.S. Exim Bank. A flurry of hurried Memoranda of Understanding (MoU) of the kind signed in Mumbai in the presence of the U.S. Commerce Secretary, Mr. William Daley, on Friday, need not necessarily provide the window for the vast scope for industrial partnership between U.S. companies especially the Medium and Small Enterprises (MSEs) and their counterparts in India which need to overcome the challenges of globalisation.

President Clinton's interactions both with the policymakers in New Delhi and elsewhere and with Indian entrepreneurs in the IT and ``the brick and mortar'' sectors could undoubtedly serve as the springboard for more effective joint ventures in the future between American and Indian enterprises. The belief that India will figure far more as an investment destination for U.S. investors in the future can, by no means, be regarded as ambitious provided India's tryst with economic reforms persists with greater political consensus. Given the fact that the U.S. investments approved since 1991 have not translated into projects even to the extent of 40 per cent of the investments involved and that vast areas of infrastructure in India are crying for long term investments, the scope for an expanding economic interface between the two countries is indeed enormous.

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Section  : Opinion
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