Congressional Research Service report says BJP campaign run on Modi’s popularity

Prime Minister Narendra Modi disembarks from a plane as he arrives at Kansai airport in Izumisano city, Osaka prefecture, on June 27, 2019 (Getty Images).

WASHINGTON D.C. — The Congressional Research Service (CRS), in its first report to U.S. lawmakers after the recent Indian elections, has said that since the BJP campaign was run largely on Prime Minister Narendra Modi’s personal popularity and not on any particular or explicit policies, the implications for U.S. interests are unclear, at least in the near term.

The CRS, considered the Congress’ own think tank, in a report circulated to members of Congress late last month, said, “Because the BJP campaign was run largely on Narendra Modi’s personal popularity rather than an explicit policy platform, it is unclear how Modi will use his mandate going forward.”

While acknowledging that since 2014, “the Modi government arguably has realized some foreign policy successes compatible with U.S. interests — sustaining the partnership with the United States, solidifying the partnership with Japan, strengthening ties with Israel while making new outreach to key Persian Gulf states such as Saudi Arabia and the UAE, and articulating a vision for the Indo-Pacific region that tracks well with that of the United States,” it said Modi has not elevated India to that of a major power in the region, which the U.S. has always pushed for as a counterweight to China.

The CRS report, titled, “India’s 2019 National Election and Implications for U.S. Interest,” authored by K. Alan Kronstadt, its longtime specialist in South Asian Affairs, said, “Modi has successfully projected India as the world’s next big economic opportunity after China, but critics argue that he has mostly squandered an opportunity to move India into great power status, with a lack of strategic vision harming India’s position vis- à-vis major powers and smaller neighbors, alike.

“Given India’s myriad domestic problems, and still-limited capacity to project power, some American observers are skeptical about its near-term potential to play the role sought for it by the U.S. Congress and successive Administrations,” it added.

The CRS is an independent research appendage of the U.S. Congress, and it regularly prepares reports on a range of issues for members of the Congress on the request of particular lawmakers or committees, or of its own volition to help Congress to take informed decisions to help in the formulation of legislation. But CRS reports do not reflect the official view of the Congress —either the House or the Senate.

The report said that “the Modi/BJP victory has empowered the Indian leader domestically and this may provide Modi and India new opportunities on the global stage,” and predicted that it’s possible “given Modi’s reputation for favoring a ‘muscular’ foreign policy, he may now be more willing to resist Chinese assertiveness and move closer to the United States.

“Yet troubles with the United States also could loom,” it said, and noted that “many Indian strategic thinkers say their country’s national interests are well served by engaging not just with the United States but also with Russia and Iran, which could limit to New Delhi’s willingness to abide what some Indian observers describe as ‘America’s short-term impulses.’”

According to the report, “While New Delhi generally welcomes the U.S. ‘free and open Indo-Pacific (FOIP)’ strategy, Indian leaders continue to demur from confronting China.”

With regard to U.S.-India trade and economic ties, an integral and growing part of bilateral relations, the report referred to the “recent challenges,” and pointed out that the Trump administration takes issue with the U.S. trade deficit with India and “unfair” trade practices that restrict U.S. exports to and investment in India.”

It said that some U.S. policymakers and businesses have been disappointed that, during Modi’s first term, India did not move forward with market- opening reforms as they had hoped, and instead increased tariffs and trade restrictions.

“For example, recent tariff hikes by New Delhi on cell phones and other products have elevated longstanding U.S. concerns about India’s tariff regime, and President Trump has called India the “tariff king.’”

Other U.S. concerns include inadequate intellectual property protection and enforcement, and restrictive new rules on e-commerce and localization of certain financial data flows — which affect major U.S. companies, such as Amazon, Walmart-owned Flipkart, Visa, and MasterCard. The United States and India also often have opposing stances on multilateral trade issues in the World Trade Organization. 

The CRS warned that a Special 301 investigation against India could raise the risk of protracted bilateral trade tensions and tit-for-tat escalation of tariffs across many economic sectors.

The Section 301 of the U.S. Trade Act of 1974 authorizes the President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified.

India imposed retaliatory tariffs on 28 U.S. products, including almonds and apples after Trump revoked its preferential General System of Preferences (GSP) trade)trade privileges on June 5.

India, from the inception of the GSP several decades ago, had been the biggest beneficiary of this U.S. program designed to help developing countries sell their products to American consumers bereft of any duties or tariffs.

The report also said that while economists and investors “appear to view Modi’s reelection as a net positive for India’s economy, especially by providing a level of stability that a coalition government could not,” and that “controlling inflation and reducing corruption are seen by many analysts as areas of success,” yet India’s economy “is widely seen to be underperforming, and the 2016 demonetization effort was deemed broadly harmful for India’s poor.

“Allegedly insufficient attention to the rural economy fueled anti-government protests by farmers and, since 2014, sluggish job growth, falling wages, and slow and poorly implemented institutional reforms have elicited significant criticism,” it said, and recalled, “When official employment data were finally leaked to the public after years under wraps, they painted an alarming picture, with unemployment in 2018 at a 45-year high of 6.1 percent, triple the level in 2012 when the Statistics Ministry survey was last conducted.”Thus the report warned, “A shortage of jobs for India’s booming population may yet transform the country’s ‘demographic dividend’ into a ‘demographic debacle.’”

On defense and security ties, the CRS prognosticated that “continuity in India’s leadership may lead to continued rapid development of U.S.-India security cooperation, with U.S. leaders hoping that increased Indian capabilities will provide greater net security regionally and worldwide — in spite of some U.S. concerns about New Delhi’s ties with Moscow.”

It recalled that “President Obama and Congress recognized India as a ‘major defense partner (MDP)’ in 2016, a unique designation allowing India to receive license-free access to dual-use American technologies.”

The MDP designation was created in large part to carry over a presumption of license approvals into the new U.S. administration. It was linked to India’s joining the four major multilateral export control regimes to become eligible to receive licensing for the most advanced defense systems the United States exports.

In mid-2018, India received Strategic Trade Authorization Tier-1 status, putting it on par with NATO allies, and the two countries concluded a long-sought Communications, Compatibility, and Security Agreement (COMCASA), a military- to-military “enabling agreement.”

The report said that defense trade is also a leading facet of the bilateral partnership and India is now a major purchaser in the global arms market and a lucrative potential customer for U.S. companies and pointed out that two nations have signed defense contracts worth about $15 billion since 2008, up from $500 million in all previous years combined.

It said however that while “India broadly endorses the FOIP strategy pursued by Washington, and it benefits from the higher visibility this strategy provides for India’s global role and for its immediate region, “Yet India has not fully relinquished the ‘nonalignment’ posture it maintained for most of the Cold War — more recently pursuing ‘strategic autonomy’ or a ‘pragmatic and outcome-oriented foreign policy.’

“Thus, Modi has articulated a vision of a free, open, and inclusive Indo-Pacific, and India remains wary of joining any nascent or potential security architectures that could antagonize Beijing,” the report added. 

It also said, “Additionally, India maintains a wariness of U.S. engagement with Pakistan and intentions in Afghanistan, with Islamabad presently facilitating a U.S.-Taliban dialogue and India counseling against a precipitous U.S. withdrawal from Afghanistan.”

Meanwhile, on human rights issues, the report said that while Modi and the BJP “have long sought to emphasize development and good governance, the 2019 election cycle revolved around nationalism and other emotive issues, with many observers arguing that Hindu majoritarianism is a threat both to India’s religious minorities and to the country’s syncretic traditions.”

It pointed out that according to “the U.S. State Department and independent watchdogs, India is the site of numerous human rights violations, many of them serious and some perpetrated, or at least tolerated, by state actors,” and added, “Many observers are concerned about the impact of growing religious bigotry and Hindu nationalism on human rights. The report noted that “human rights nongovernmental organizations and social service groups have seen their Indian operations constrained in recent years, and observers are watching closely for signs that the Modi/BJP mandate will lead to renewed efforts toward Hindu nationalist goals, and some of these — including laws preventing religious conversions and cow slaughter — continue to cause sparks in U.S.-India relations.”

Thus, it warned, “Future moves by the Modi government on other ‘Hindutva’ policies could increase national divisions and lead to further international opprobrium.”

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