Masala bonds, especially
Modi’s UK trip has been a landmark event at many levels, but reading too much into nine billion pounds worth of deals between British and Indian companies can be misleading. Cameron has been wooing Delhi since he took office five years ago. He even promised, somewhat ambitiously, of doubling UK-India trade by now – but the stats have barely budged all this while. And his attempts to tame Britain’s large, recession-induced deficit – of which leveraging Indian markets and investments were a crucial part – have not quite worked out.
There have been impressive novelties, though, which highlight the Indian economy’s growing international clout. The masala bonds, for example – rupee denominated bonds that will enable Indian companies to issue debt in London – will be watched carefully not just in the City, but also other fluid international financial centres. The military deals are also crucial. India has been diplomatically aggressive and militarily provocative since Modi came to power, and any major arms deals will have far reaching effects in the South Asian region.
The visit was historic at other, very important, levels also. Modi was greeted by hundreds of angry protesters gathered around Downing Street. BJP clearly enjoyed the immediate post-election euphoria. But in its celebrations it also miscalculated the reaction of allowing its extreme right-wing tendencies to overtake main political discourse. How quickly such positions started affecting Delhi’s internal and foreign (especially Pakistan-specific) policies has now clearly alarmed a large bulk of the Indian population – both at home and abroad. Billions of pounds worth of financial deals is a good thing, but how the first Indian premier to visit London in ten years was met with protests also sent a very potent message. On top of the reaction back home – where BJP has just lost the Bihar election and progressive, liberal Indians are speaking out against the central government – such developments ought to prompt some deep soul-searching within Modi’s kitchen cabinet. The ruling party will clearly need more than masala bonds to keep its momentum.