Modi's US visit: From persona non grata to guest of honour at White House

Narendra Modi, persona non grata earlier, as Gujarat CM, would now be a diplomatic guest of honour at the White House. Can both, Prime Minister Modi and President Obama find amicable solutions for impending issues between India and the US?


Prime Minister Narendra Modi would be completing his 100 days in office by the first week of October this year. In this short space of time, he has taken the opportunity to meet a large number of world leaders, during his visit to attend the BRICS meeting in Brazil, and followed it up with visits to both China and Japan. In fact, only a week or ten days earlier, he would have had some serious discussions with the Chinese President Xi Jinping, not only in Beijing, but in India as well. Modi has had discussions with all his neighbours. Only, UK and Europe are to be covered in the next few months.


Both US and India are successfully operating democracies, and have a lot in common. But the relations have not been as one would have hoped. In fact, a few years ago, Narendra Damodardas Modi, as chief minister of Gujarat, was not even a welcome guest to the US and he was considered "ineligible" for a visit visa! This persona non grata then would now be a diplomatic guest of honour.


PM Modi is scheduled to visit the country and is expected to meet US President Barack Obama on 30th September in the White House. No doubt, they both have a long agenda to discuss and settle. It will be mutually beneficial in the long run.


India is Asia's third largest economy. India is a nuclear nation and a non-signatory to the NPT – Non Proliferation Treaty, which as many as 189 nations have signed. This has enabled a few lucky ones to be in the NSG - Nuclear Suppliers Group, which was set up in 1975 to ensure that civilian nuclear trade is not diverted for military aims. But when the US sealed a nuclear supply deal with India in 2008, China and some others in the group found the action questionable, as Delhi was outside the NSG. There were long and contentious negotiations before India could get a waiver. China has shown its reservations due to its proximity and close ties with its ally, Pakistan. This is one issue that Modi is likely to have discussed with President Xi in Brazil as well as in Beijing.


In the meantime, India has recently ratified an agreement that allows the IAEA - International Atomic Energy Agency - to oversea its nuclear programme. It can now be assumed that during the talks with President Obama, this matter will be again raised and ways and means found to make India a member of the NSG. This is vital for national development.


India and US have had several defence deals in the past. India's import of weapons from US since 2007-8 has amounted to over $10 billion. In the last three years, for instance, India has imported Rs83,458 crore worth of weapons, out of which Rs32,615 crore was from the US, while Russia supplied Rs25,364 crore, France Rs12,407 crore and Israel Rs3,389 crore. In a recent visit of Chuck Hagel, US Defence Secretary, decisions have been made to revive the Defence Trade and Technology Initiative (DTTI) and also work towards the extension of 10-year Indian-Defence frame work.


Hagel met Modi, who stressed the importance of "technology transfer" and said India was keen to make further progress in bilateral ties. This included defence manufacturing in India. Both agreed to go in for co-development and co-production of weapon systems. No doubt, these would be raised again in the discussions between President Obama and Prime Minister Modi. During the meeting that Hagel had with his counterpart Arun Jaitley, it was brought to his notice that FDI cap has been increased to 49% from 26%.


However, there is the fear that US is not a reliable long term and high end defence supplier, given its spur of the moment reactions for imposing sanctions and stringent export control laws. India would be glad to work with the US, if such points can be settled amicably. Prime Minister Modi is likely to raise the issue of bringing up ground realities in asking for US support in restructuring global institutions like the UN Security Council and the International Monetary Fund (UNSC and IMF). In the case of UN Security Council, there is no longer any justification for India to be kept out; in fact, now that European Union is a reality, it would be unfair for both UK and France to have the membership of this august body. European Union should have one and it is up to them to nominate any member of the Union to be the permanent member in the Security Council.


When UNSC is restructured, it may have a total of five or seven members and, in such an event, Brazil, Indonesia and South Africa could be other suitable candidates. No doubt, during his meeting with President Xi Jinping, Prime Minister Modi would have raised these issues. Doubtless, he will take up the matter with President Obama so that this matter can be resolved permanently.


One other important issue that Prime Minister Modi is bound to raise relates to the US Immigration Bill. During his recent visit, John Kerry indicated that changes can be made. This will facilitate Indians.


President Obama may also seek India’s assistance in resolving some issues in the Middle East, relating to Iran, for instance, or even support in that area. It is in the interest of both the countries that efforts are made to support each other in ensuring peace and democratic traditions all over the globe.


Finally, Prime Minister Modi should take this opportunity to extend his personal invitation to President Obama to be the Chief Guest of Honour on the Republic Day celebrations on 26th January 2015. So far, Indian governments of the past have not bothered to do so, which is a shame. The US is the oldest democracy in operation and it should be a great privilege to have the President of that country to be the chief guest on such an important occasion. Modi should wipe out this black mark in our past governments' behaviour and correct the same.


In summing up, Prime Minister Modi needs to secure President Obama's support in:


(a) obtaining the permanent membership of the UN Security Council

(b) becoming a member of Nuclear Suppliers Group

(c) bringing changes in Immigration Bill in the US

(d) establishing transfer of technology and defence manufacturing in India

(e) encouraging educational institutions to set up their branches in India


No doubt, this will be a historic trip that will bring great advantage and progress to both nations.



Dr Anantha K Ramdas

2 years ago

Thank your Mr Shadi Katyal for your comments. From the beginning, our approach has been a "socialistic pattern of society",in the words of Late Pandit Jawaharlal Nehru. Which is why we leaned towards the Russians.

We must also not forget that Late President Richard Nixon wanted to tip the Indo-Pak war and lean towards Pakistan! All these things happen and politicians are considered as "strange bed-fellows". We do have to change, and we are in the process of doing so as the trade figures show.

Billions of dollars are spent by Indians studying in the US and as Late PM Indira Gandhi said: "India is for Indians" and we may take "sides" once in a while but our policy has been neutral, as far as possible.

As for leaning towards Russia in the past, and even now, our own INS Vikramaditya which was being refitted at incresing cost runs have run to billions of dollars, and, Russians are as unreliable as anyoneelse,when it comes to "transfer of technology".

As they say, we have to "grin and bear it", for the time being until we are able to stand on our own feet.

This is only possible when Indians themselves feel proud of being Indians and act in an exemplary manner - not stash untaxed wealth in Swiss Banks, generate black money in the country, hoard goods to hold the rest to ransom, and fan corruption at all levels.

I personally feel that the new government may try to improve the country in many ways - given the time and support.


shadi katyal

In Reply to Dr Anantha K Ramdas 2 years ago

Nehru took that step as he was not familiar with market economy and Russian system looked good to a Bolshevik which he was. So we have now PSU as biggest losers and no innovations of productions.
I suggest you should read all the anti west speeches by Nehru and his minions and tell us why such rhetoric was needed.
We were partners with Russia and it was cold war but what we Indians forget that USA did not come to help Pakistan as implied and USA had many pacts with Pakistan. Even the arms shipment was topped to both nations as per Congress rules. Can you and many who bel;ieve in this show any such military help?? Yes a ship was posted at Singapore to facilitate some of the Pakistan Army officers who moved safely through Burma leaving 898,000 POW. While repeating such misinformation we forget the goodwill of USA all these decades. I bet many of us have never heard or read about President Roosevelt's efforts for freedom of India and running battle between him and Churchill.
What a pity that for learning we have to pay fees and many have been on all kinds of scholarships and even the American students who pay the taxes donot complain as you are. You can complain about these intellectuals not returning as they have better opportunities in USA. Why have we failed to bring education stand rds up. Kindly donot quote me of IIMand IIT as those are service industries jobs known commonly as dot connecters but no INNOVATION AND INVENTIONS.
Russia is well aware that India is a good market and how to get as much as possible.When USSR failed and Ruble dropped to few cents, Russia saw to it that India paid through her nose on old exchange price instead of prevailing new exchange rate.She knew tht India will take a free burnout old carriers and when refurbishing it kept changing cost and time to deliver. Is this how one runs the defence. Modi asked like the UPA for technological help will never get and Russia should had been one to offer but why when one can fleece India.
It is our misfortune that while China was able to get all the technologies we kept begging for it and are still on same road.

Mahesh S Bhatt

2 years ago

Educational reforms shall take time till our politicians get away from it.


shadi katyal

2 years ago

The article is more or less one sided. Why continue to bring Modi Visa as he never applied and thus a moot question. We continue to muck up and thus try to create problems. No nation is going to give up her sovereignty and Laws for another nation. We have been anti-USA despite her help in times of crisis and we still maintain Cold War mentality.
Russia had been our biggest supplier of $14 Billions but has she given us any technologies. Why not??
India increasing FID to 49 % is as poor and bad as 26%.When other nations can get all the business without any
FDI, why give one's R& D. Did we not learn this lesson as from day one we denuded cooperation and technologies and no nation ever offered or gave. Assembling MIG 21 in India or any other equipment is not transfer of technology.
As for UN seat there are many problems as India has lost the charm she had few years back in the world and Pakistan and some other nations will be the spanner in the spokes.
Let us take steps with not mindset as I find in this article but with open mind and leaving all the old skeletons back. Let us be pragmatic and move ahead

6 steps to move from cozy socialism and crony capitalism

Market economy is not something the government can “impose”  overnight. It requires social recognition, re-drawing of social contracts, probity in public life and ethics in relationship-based transactions


Three societies, namely China, Russia and India are struggling to become market-oriented economies from having been in different shades of socialist practices. Of course, China and Russia were hard core socialist economies with the state controlling most aspects of the economic sphere. India adopted the “socialistic pattern of society” wherein the commanding heights of the economy were controlled through state ownership.

Major companies in heavy and light industry, banking and insurance  were all State-owned. State ownership has in practice the following characteristics


  • • Senior executives are appointed based on political preferences

• Major expansion/location decisions are taken based on political consideration

• All major decisions regarding lending or waiving of loans are based on political considerations

The State begins to occupy a dis-proportionately large role in different aspects, not only  of economic activity but also other areas like art, literature and films. It distributes favours and it also gives out awards. Over a period of time a state dependent “Culture” gets created, wherein the answer to every problem is assumed to lie with the Government.

State acceptance is confused with 'social acceptance' and State awards or rewards are equated with excellence in the corresponding field.

Obviously, this creates  huge corruption in the system, where greasing palms slowly begins to fuel  the engine of any business decision. Substantial amount of time in doing business is spent in dealing with Government minions and worrying about regulatory compliance. Huge departments are created to satisfy compliance needs; business men have a major pre-occupation –namely managing Government. It starts as an art and ends up as science.

Knowing a minister or a bureaucrat connected with your business is more important than knowing your business. In such an atmosphere, innovation, customer care and service excellence take a back seat. Even sectors, like information technology (IT) in India shines due to its off-shore activities. Good numbers of capable youngsters vote with their feet and migrate abroad.

Bank lending decisions are suspect and no serious system of punishing defaulters or chairman for wrong or sometimes mala fide decisions. See an excellent write up that recently came out in this magazine --

In such an atmosphere, when you “open up” the economy, it means entry to large amount of foreign capital and encouragement is given to the same old group of business tycoons to expand their activities. Again, access to power centres is more important. Clamour for reforms ultimately ends up as clamour for foreign capital since that is the easy option to many business tycoons and Government.

Market economy is not something the government can “impose” on the society overnight. It requires phenomenal amount of social recognition, re-drawing of social contracts, probity in public life and ethics in relationship based transactions.

Moving away from socialistic pattern of society to market mechanism is not accomplished with a magic wand. Also, market mechanism need not be only the Anglo-Saxon model. It can be different one, based on specific cultural habits and traditions. Fortunately, in a country like India, in spite of all efforts by the Nehruvian socialistic pattern of society, except some 20% of the GDP, all others were generated by private initiative. But regulations and license permit raj have created a humongous corrupt bureaucracy and to come out of it is not easy.

Our innate ability to respect private initiatives has to be brought back. For that the following needs to be done...

1. Dismantle half the ministries at the Centre, which are mirror images of ministries at the State level

2. Dismantle more than half the ministries at the State level, which are mostly money making activities for the babu class

3. Strengthen municipal and corporation level activities by banning construction contractors and real estate barons occupying elected posts

4. Abolish most local regulations on shops and establishment Acts,  food and adulteration act and introduce swift and severe punishments for wrong doing

5. All courts to function in two shifts with enhanced pay for participants. At least criminal cases should be concluded within three years

6. Courts should be discouraged from giving adjournments

The central Government should basically focus on defense, foreign affairs and central taxes and state governments on law and order.

The initiative to do things should be left to individuals and the state should only be a regulator stepping in when things go wrong. It is not an easy task to build a proper market-based economy when most businesses are unfamiliar with it.

Crime will lead to punishment is the only mantra, which can make systems function with probity. Last, but not the least, political leadership must show maturity and probity and a willingness to accept that networking and Sifarsu-based system is no good.

Are we ready?

P.S. Intriguingly, an e mail-released today by Jet Air says that it plans to merge its Konnect type services with main airlines, which -among other things- means providing meals to all passengers. The note says subject to Government approval

(Views expressed in this article are personal)
(Prof R Vaidyanathan , Professor of Finance and Control, has taught at IIM Bangalore for over three decades and is consistently rated as one of its most popular teachers. Prof Vaidyanathan has coined the term 'India UnInc' for the largest component of the Indian economy comprising small entrepreneurs, households. Prof Vaidyanathan sits on the advisory boards of SEBI and the RBI.)



Sankar Amburkar

2 years ago

"Are we ready?" - if this is a question to the (paid) readers of moneylife, the answers most likely to get is an resounding "YES". If this is question for the entire country then probably NO.

We have heard the political circle and pundits talk about various reforms in many forums. What is required now is action. There are some who are ready for it and there will be many who will oppose. The question I have is "How do we implement these changes?"

Mahesh S Bhatt

2 years ago

Professor its good to give gyan from IIM B but challenge is we defeated Anna who was fighting for Bhasmasura Corruption across boards.

To get permission for Sports Complex we need Sports Ministry, HRD & scores of respective sports body.

This is global so what are the real challenges.

We had extreme socialism failing extreme Capitalism making world stare at World Biggest recession.

Inculcate Values for Vision & Wealth.preview Mahesh


2 years ago

Who will bell the many cats? Sixty Seven years of India's grotesquely evolving Animal Farm constitution, where "all animals are equal, but some are more equal than others", "four legs good, two legs bad" and "farmer Jones is coming back" have surfaced a neta-babu-milard-cop-kleptocracy and ensured that the sina-qua-non of power and wealth is corruption, cronyism and abuse of power. The very raison de etre of the Indian Republic is to apply the resources of the Nation to personal pelf, pomp, pleasure and perpetuation.

shadi katyal

2 years ago

The article does shows the way for such changes but will the bureaucrats let it change as they donot wish to kill the golden goose of bribery.
As for the public mindset has to be changed and after the liberalization people found the freedom and quality products yet we did not go all the way.
Permit Raj has to be dumped and I fully agree that lot of ministries must be abolished. We are still tied to the apron of colonial days and thus too much interference of Govt in every aspect of investments and industrial polices.
Our greed drove INTEL away from India to Vietnam despite INTEL wish to build a $2 Billion plant.
We have certain anti-industry social elements who try to block any progress. POSCO is a good example.
Govt must get rid of all PSU and let the private management take over as senior Govt officers are a hindrance and live in the cocoon life of VIP. Many export industries had been
destroyed because of highhandedness and undue interference.
Nation did not fully liberalized and thus now we are confused.
The Russian model of Nehru does not suite but Anglo SAXON will do better as it is a tested one.
Can new Govt do it????

Abhijit Gosavi

2 years ago

From some recent alarming tweets on twitter, it appears that RBI hires are also based on connections. Perhaps, RBI was always like that (I honestly don't know), but with the new govt. in place, there was great hope that things would change and that merit would supersede connections.

If merit/due process of interviews in hiring are ignored, then, nothing will change, and that makes me v. sad. Honestly, I am appalled that economic policies do not appear to be changing. Elderly people like my parents did not stand in long lines to vote for a continuation of UPA policies. And I say the following from the bottom of my heart.

Prof. Vaidyanathan, whose excellent book (India Uninc) I am currently reading, is undoubtedly an expert on the Indian economy. Homegrown experts like him have a superior understanding of the problems there than people studying these problems from miles away. What they say needs to be taken far more seriously than someone who even had released questionable data about the Gujarat model.


2 years ago

Professor Vaidyanatha , is a well respected person and his opinion will surely count.

Somehow he seems to have truncated the article without going the whole distance in many critical aspects like real estate, forex convertability, stock exchange , food and distribution , education etc. All these areas have created massive corruption and utter disregard to talent and quality.

Also the suggestion that state be a ' regulator' should be replaced by 'facilitator'

Gopalakrishnan T V

2 years ago

The article is well presented and needs to be given a serious thought for implemetation of various suggestions to reap the benefits of socialism and remove the disadvantages of crony capitalism.In all our public policy documents,the intentions spelt out are really laudable but they provide lot of scope for corruption and no scope to arrive at the benefits derived. The need to have a social audit with persons of proven integrity with only social bent of mind is what is called for to ensure that the benefits intended under public policies are really derived and reaching the masses. Business run on political considerations, contacts and influence only damages the social amd moral fabric of the society and that is what is seen in our Public Sector Banks with staggering NPAs,dishonest and unskilled professsionals getting appointed as Board of Direstors, auditors lack of concern for ethics in dealing with public moneyetc. This article should serve as an eye opener and should help to bring the badly needed change in our system of Governance and management of Public Policies and institutions.

Bankimchandra Desai

2 years ago

Prof.R. Vaidyanathan's suggestions are known to all politicians and bureaucrats for long. Rajiv Gandhi with absolute majority could have done this. He did not. Now NaMo has a chance to do this. He will NOT do this. His very survival, political, will be at stake. Absolute political power at New Delhi was his dream, which he will not allow to wither away.


2 years ago

The Article is comprehensive and impresses directly those who want something better for the country and disown the current system of governance-corrupt to the hilt and incapable out and out. The principle and practice of market economy is clearly dependent on a nexus between Govt and private operators. PPP model means all resources like land, forest, water and minerals to be provided free by the Public and profit to be earned by the Private. Inefficient functioning by the Sarkari Babus and the Govt machinary must be brought under criminal code and made punishable under the law.Somebody should explain how and why Babus and most of the corrupt politicians are still not behind the bars when everyday we read of the proven stories of their incompetence.

Abhijit Gosavi

2 years ago

Several excellent policy recommendations. The govt. needs to read this.

MLF Seminar on Women & Money: Money Made Simple for Women

Women normally leave financial decisions to men – often at their cost. They can easily take charge of their finance. It’s not difficult, as this workshop showed


Moneylife Foundation recently conducted a workshop titled “What All Women Need To Know about Money”. This workshop was presented in association with the “Womentoring” programme at the National Human Resources Development Network (NHRD Network).

Sucheta Dalal, founder-trustee of Moneylife Foundation and managing editor of Moneylife, began the workshop with her session on the aspect of safety. According to her, women leave all financial decisions to their husband/father, without realising that these decisions can play havoc with their lives. “They are often made co-applicants in loans, and beneficiaries in investments and insurance, without their knowledge. They may then outlive their husbands, end up losing out on their own savings as well as the inheritance, only because of a lack of awareness,” she said.

What should they do? Ms Dalal suggested that women should use nationalised and large banks, and avoid dealing with cooperative banks. In terms of navigating the financial marketplace, she said, “Be careful while dealing with relationship mangers. You are targets for them and they will push harmful products because they know that women are soft targets. No matter what commitments they make, their targets are to sell you their products.” She also added that, if you knew financial products well, “You could use relationship managers to get your work done, but do not trust their investment advice.”

She covered topics from investment traps (such as chain-money schemes and guaranteed-return schemes), credit issues (such as credit cards, credit scores and loans) and also Will, nominations, etc.

During the second session, Debashis Basu, editor and publisher of Moneylife, spelt out various ways in which women can manage their money. Mr Basu emphasised the importance of saving regularly to deal with big expenses (such as children’s education) and, more importantly, ways of saving for retirement. His suggested a financial toolkit: just two to three mutual fund equity schemes, a few fixed-income products, a term life insurance, a health insurance plan and tax-saving instruments. “This should take care of 90% of your financial needs for a safe financial life. Tune out the rest and you will do much better,” explained Mr Basu.

Mr Basu explained which products to avoid and the products to invest in, with an idea of what is the right asset allocation. He went on to debunk myths about risk and explained that gold is a speculative product, not an investment product. He ended the session by saying, “What works in life also works with investments—simplicity, patience and a long-term view.”


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