Jagdish Bhagwati, the well-known trade economist at Columbia University, has raised two important points about India’s relationship with the United States in a recent report in The Economic Times, an Indian daily newspaper covering economic issues: (a) India’s budgetary debate about social policies versus pro-growth policies and (b) outsourcing from United States, social climate in the United States vis-a-vis outsourcing, and India’s outsourcing and foreign direct investment (FDI) dependent growth.
Mr Bhagwati is correct, especially given the recent Wisconsin Sikh temple massacre by a former Anthros employee of the Pentagon, that Indian-Americans and Indian-American lobbies are unable to fully grasp the anti-Indian social sentiment in the United States, especially given the dismal economic environment in America for the foreseeable future. US immigration quotas for Indians and Chinese which are significantly delaying immigrant visas for them are another example of the sentiment. At the same time, because of the low interest rates in US and EU, US and EU multinational corporations (MNCs) are going global, consolidating their reach in the emerging markets.
China’s and India’s response matters to alleviate the anti-Indian and anti-Asian social tensions. Such tensions are normal to American history having occurred with the Irish, and Italians, Germans and Japanese-Americans during World Wars I and II. Tensions with Japan continue but Japan’s handling of its relationship with the United States stands as a role model for India and China.
China and India, world’s third and fifth largest economies on a purchasing power parity basis, must fully float their currencies renminbi (or the yuan) and the rupee, and seek, in their bilateral relationships with the United States, to invest in the United States in their own currencies to create American jobs on American soil. In this also lays poverty reduction by both social policy and sustainable economic development for both China and India.