ANALYSIS/OPINION:
Like Michaela and Tareq Salahi, the party crashers who sneaked into President Obama’s first state dinner in November 2009, the Indian general election that begins April 7 and runs through May 12 threatens the Obama administration with a relentless string of unwelcome comparisons.
While America continues retreating from in front under President Obama, saddling our private sector with regulation and government interference, Indian voters are poised to enter a new chapter embracing their version of Ronald Reagan. Now struggling with Russia and with China, and having offended Brazil mightily, Washington is also closer to losing influence in India, just when our struggling businesses sorely need new customers.
In a contest sure to attract intense media coverage, the Indian electorate seems destined to choose Narendra Modi as prime minister.
Mr. Modi, a strong and forthright leader, is a controversial Hindu nationalist who takes an unambiguous, even ruthless stance against Islamic extremism that is much tougher than America’s and closer to that of Vladimir Putin’s Russia.
On economic matters, Mr. Modi, who sparked solid growth in the state of Gujarat, is definitely aligned with the thinking of Margaret Thatcher, whom the Obama administration pointedly snubbed at her funeral in 2013.
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Once elected, Mr. Modi is hardly likely to follow Mr. Obama’s lead on foreign policy and may decide to bring India closer in line with Russia politically and economically, rekindling deep historical ties and offering more counterweight to Western influence worldwide.
Peril and promise
President Obama and the Democrats argue that the gap between rich and poor in America is a national disgrace to be remedied through even more involvement by the federal government in daily life. Moreover, a magic cure for redressing persistent unemployment lies in channeling billions more dollars into infrastructure investment.
Statistics comparing the U.S. and Indian economies tell a different tale.
In 2012, the bottom 90 percent of the American population, on average, consumed $ 27,313 per person, an amount that was 10 times the average each person in the top 10 percent of the Indian population consumed.
There is no doubt that economic outcomes differ inside America, but the real inequality divide is far starker when comparing Americans to citizens in countries such as India. The comparisons on infrastructure needs are particularly sobering.
According to the CIA World Factbook, America had 5,054 airports with paved runways whereas India had 93, at most recent count. Put differently, each American airport with a paved runway served an average of 62,823 Americans. In India, the comparable figure was nearly 13.3 million Indians per airport with a paved runway.
If scarce global capital is to go into building and improving airports, surface-level comparisons suggest that India needs incremental investment more than America does.
The story is the same for roadways, railways, and electrical generating capacity, three more key infrastructure areas useful in modernizing an economy that hopes to trade with other nations.
Clearly, India needs infrastructure spending more than we do in America, where labor and attendant project costs are far higher.
An opportunity for Putin?
At a time when economic prospects seem dimmer in the United States than they should be following five years of extraordinary fiscal stimulus and unprecedented monetary easing, cooling relations with India augur poorly for the many American multinational corporations that could help India modernize while also profiting for the country’s investors.
There is an even greater danger: Russia under Mr. Putin could cement a dominant alliance with Mr. Modi, fueling the export potential and commercial promise of nations formerly part of and allied to the Soviet Union that now decide to confederate or work more closely with Moscow.
Investors in American-based companies have yet another reason to fear that growth prospects are dimming because of likely developments playing out now inside India.
• Charles Ortel serves as managing director of Newport Value Partners (newportvalue.com), which provides economic research to executives and to investment firms.
• Charles Ortel can be reached at ckortel@yahoo.com.
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