The top priorities for 2017 should be to reset ties with China and take a balanced approach to Trump's America.
In India, 2016 was the year of Narendra Modi.
The economy, the Prime Minister's forte, kept its pace, growing at around a steady 7 per cent, while inflation fell significantly.
An intrepid traveller, Mr Modi sustained his hectic foreign visits, getting star billing from the Indian diaspora, drumming up support for investment in India and promoting collective action to cope with climate change.
Despite some high-profile Indian critics and consistent murmurings from sections of the Indian media, his popularity rating, measured by Pew's polling at above 80 per cent, remained high. And yet, Mr Modi's year closes on an uncertain note.
The demonetisation of currency notes valued at 500 and 1,000 rupees (equivalent to S$10 and S$20), his most risky gambit to date, has set off street protests, paralysed Parliament, galvanised opposition parties who have sensed an opportunity and led to dire predictions of a decline of growth by rating agencies. What might one wish India's Prime Minister and India for the new year, with new challenges such as major regional elections and changes of guard in Indian states like Uttar Pradesh and Tamil Nadu, and developments in China, the US, the UK, Germany, France and the Asean states?
RESILIENT POLITICAL SYSTEM
Mr Modi, India's key player, is no ordinary leader. His early years in office as Prime Minister have seen him gain the stature of a global leader. From "tea-boy to Prime Minister", Mr Modi has established that ambition, consistent organisational work, astute judgment and vision can help transcend humble origin.
His leadership has survived major electoral defeats in Delhi and Bihar following the resounding victory in the 2014 parliamentary polls. Just as his larger-than-life image has become a little shop-worn by the exigencies of everyday politics, India's institutions and stakeholders have also learnt to cope with this demanding and visionary Prime Minister. "Business as usual, only a little better organised and less corrupt than (that of )its predecessor" appears to be the most common mid-term verdict on the prime ministership of Mr Modi.
Which political assets can Mr Modi draw on? Beyond the global publicity that spectacular terrorist attacks and sensational reports of gang rape get, there lies the reserve of strength and resilience of India's political system.
A pattern of dangerous tit-for-tat has marked the entire year. The year is closing on a new low in India-Pakistan relations, with extensive casualties to armed forces and civilians from this violent, low-intensity war. Healing this bleeding wound by force and diplomacy should be a top priority.
It has emerged from the transformation of India's hierarchical and fragmented society into a political community, robust enough to accommodate radical ideologies. The arrival of Hindu nationalism in power in central government, and in half a dozen major states of India, has not upset this delicate political equilibrium. Instead, it has added new strength, purpose and connectivity.
This national resolve has led to the passage of the goods and services tax (GST) that would make tax rates over India's complex federal system more uniform, facilitating trade and mobility and enhancing productivity. The same resolve has led to a stoic acceptance of the bitter side-effects of demonetisation.
Some of Mr Modi's domestic policy initiatives have given the process of nation-building a boost. These include Jan Dhan Yojana (the people's banking scheme) - a plan under which millions of new bank accounts are created for the poor - and the Aadhar card, a unique identification for all. These have facilitated banking by the poor.
The Swachh Bharat Abhiyan (keep India clean movement) has spread the importance of a clean environment. The Nammi Ganga programme applies this idea specifically to the cleaning up of the Ganges - a key element of economic and spiritual sustenance of North India. The beti bachao, beti padhao initiative (protect the girl, educate the girl) has brought into focus the salience of women's welfare and empowerment.
These initiatives and a national effort to improve infrastructure, connectivity, skills and employment generation form part of other schemes such as Act East (extending India's diplomatic links and production chains to East and South-east Asia) and Make in India (encouraging foreign companies, through tax incentives, to locate themselves in India). They are intended to develop the domestic market and feed the appetite of India's growing middle class for world-class services, amenities and appliances, and to fight corruption while keeping the economy globally competitive.
TIES WITH CHINA, U.S.
What lies beyond? My wish list, in the order of priority:
Resetting ties with China based on mutual respect and appreciation of the urgent needs of both countries should be a priority. Indians of Mr Modi's generation still carry the scars of India's humiliating defeat in the border war of 1962 at the hands of a vastly better prepared Chinese army. Since Deng Xiaoping, the Chinese have moved on and shifted their attention to the assertion of national interests and growth. Indians have not. They need to follow suit and replace the traumatic memory of 1962 with the business-like approach that the Chinese understand and respect. That would bridge the trust deficit between the two Asian giants. Mr Modi, who as chief minister of the state of Gujarat opened up trade opportunities for his compatriots in China, and who has a good personal equation with President Xi Jinping, is best placed to take the initiative.
India's new opening to China should help develop a balanced approach to President-elect Donald Trump's America. Instead of being carried away by Mr Trump's anti-Muslim and anti-Pakistan campaign rhetoric, India should start hard negotiations to continue the availability of the H1B visa for Indians, which has been immensely helpful for Indian immigration. It would be unwise to give in to fantasies of a pro-India Trump administration. This is because whether isolationist or interventionist, the US will always need client states in the major theatres of the world. In Asia, they will need a bridge to China. India is too big (and inexperienced) to play a pivotal role between the United States and China. Pakistan, China's all-weather friend, on the other hand, has specialised in this role, and will make its intermediary services available, leaving a pro-Trump India high and dry.
An optimal location of India between China and the United States will help devise a new India-China-Pakistan front to fight terrorism. This will enhance Mr Modi's credibility on the Pakistan front, particularly at home in India. His initiatives of inviting Mr Nawaz Sharif, the Pakistani Prime Minister, to his swearing-in back in 2014, and "dropping by" to wish him "happy birthday" in person, have not yielded any spectacular results. A pattern of dangerous tit-for-tat has marked the entire year. The year is closing on a new low in India-Pakistan relations, with extensive casualties to armed forces and civilians from this violent, low-intensity war. Healing this bleeding wound by force and diplomacy should be a top priority. Here, India can count on the support of the United States and China, both of which have their own issues with terrorism.
On the home front, Mr Modi needs to continue the good fight against black money. This would be an effective slogan for the next general election in 2019, now that Mr Modi has reached the mid-point of the mandate. The pattern that links his campaign rhetoric to his battle against illegal money, bank accounts for the poor, digitalisation and demonetisation can be the new mantra. Showcasing this at home and abroad can enhance the viability of his candidature for a second term.
Mr Modi's India needs to keep lines of communication open with Asean and the Indian Ocean states before China becomes their only option. It is little realised in India that Singapore is actually the biggest source of foreign direct investment in India.
India's multicultural society is a great source of energy and creativity for the economy and India's global profile. The year 2017 should see Mr Modi as Prime Minister of "all Indians", and India as an inclusive society.
In these days of uncertainty, one realises how important it is to have a secure line of succession. Mr Modi should put his party organisation in order and institutionalise some of the gains from his charismatic leadership through power-sharing and internal accountability.
The writer is director, Institute of South Asian Studies (ISAS, NUS), and Visiting Research Professor at NUS.
A version of this article appeared in the print edition of The Straits Times on December 23, 2016, with the headline 'Modi's India in 2016 and a wish list for the New Year'. Print Edition | Subscribe
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