How Narasimha Rao reset India-US ties in the post-Cold War era
NOTE: In the first part of the series, we looked at the pre-Independent history of India-US ties (read here) In the second part, we explored
NOTE: In the first part of the series, we looked at the pre-Independent history of India-US ties (read here) In the second part, we explored bilateral ties during the Nehru era (read here). In the previous part, we traced the relationship during the Indira and Rajiv Gandhi tenures. Read here. If any year in India’s post-Independence history apart from 1947 can be called truly transformative, it would be 1991. It was a year when multiple crises and global shifts converged, forcing India to rethink its economic and diplomatic trajectory almost simultaneously. Read Full Story On the economic front, India was staring at an unprecedented balance-of-payments crisis. Foreign exchange reserves had dwindled to barely two weeks’ worth of imports, forcing the government to pledge part of its gold reserves to overseas banks to avert a sovereign default. The Gulf War had already worsened external pressures, and the crisis ultimately triggered a structural reset of the economy. It paved the way for the LPG (liberalisation, privatisation and globalisation) reforms, which dismantled the licence-permit regime and opened India to global markets. By 1995, US companies had identified India as a huge market for expansion. As per one estimate, total US investments in India rose from $32.6 million in the mid-1980s to $700 million in 1994. By March 2004, less than 13 years after opening up the economy, the United States became the second-biggest source of Foreign Direct Investment, with over 16 per cent share. At the same time, the global order was undergoing a seismic transformation. The collapse of the Soviet Union in December 1991 brought the Cold War to an end and left the United States as the world’s sole superpower.
For India, this marked the loss of its long-standing strategic partner and compelled New Delhi to recalibrate its foreign policy in an unfamiliar unipolar world. As author and commentator Sanjaya Baru has noted, India had to work hard to redefine its economic, political and strategic links following the end of the Cold War. US diplomat and author Dennis Kux famously described India and the United States as “estranged democracies” — a relationship that the 1990s would gradually begin to redefine. RECALIBRATING INDIA-US RELATIONS In 1992, the P. V. Narasimha Rao government made an unusual choice by appointing Siddhartha Shankar Ray as India’s ambassador to the United States. Ray was an eminent lawyer, veteran politician and former chief minister of West Bengal who had also served as governor of Punjab. Despite his distinguished political career, he had never held a diplomatic assignment. The appointment was widely seen as a political decision aimed at resetting India-US ties at a time when New Delhi was redefining its foreign policy and opening its economy. Rather than relying on a career diplomat, the government entrusted Ray with rebuilding relations with Washington by leveraging his political experience and stature. India became a declared nuclear weapons state after conducting the Pokhran-II nuclear tests, codenamed Operation Shakti, in May 1998. The tests, carried out on May 11 and 13 at the Pokhran test range in Rajasthan, included five nuclear devices, among them a thermonuclear (hydrogen bomb) and fission weapons of varying yields. Looking back, Ray’s four-year tenure is widely regarded as a success. He played a significant role in improving India’s image in Washington, engaging not only the US administration but also Corporate America at a time when India was presenting itself as an attractive investment destination.
The BriefWire