[Mr. Biden’s trip is
part of a long-term effort to convince India’s officials and people that the
days when Pakistan, India’s longtime rival, was the United States’ favorite
friend in South Asia are over. Mr. Biden’s trip is the first by an American
vice president in nearly 30 years, and it comes one month after Secretary of
State John Kerry traveled to New Delhi, the capital, to discuss climate change and diplomacy.]
 |
Adnan Abidi/Reuters
U.S. Vice President Joe Biden and Sushma Swaraj, a leader of India's main opposition Bharatiya Janata Party, met in New Delhi, on Tuesday. |
NEW DELHI —
Vice President Joseph R. Biden Jr. held a parade of meetings on Tuesday with
India’s top political leaders, but the most important part of his trip to India
will begin Wednesday, when he is expected to discuss with India’s business
elite in Mumbai the growing concerns about India’s economy.
Mr. Biden started his
trip Monday afternoon with a visit to a memorial in New Delhi to Mohandas K.
Gandhi, who is considered India’s founding father. Mr. Biden wrote a tribute to
Gandhi in the visitors’ book, calling Gandhi “one man who changed the
world."
On Tuesday, Mr. Biden
held meetings with Prime Minister Manmohan Singh, President Pranab Mukherjee,
Vice President Mohammad Hamid Ansari and Sushma Swaraj, a leader of the
opposition Bharatiya Janata Party. A banquet in Mr. Biden’s honor was scheduled
for Tuesday night, after which he was scheduled to fly to India’s financial
capital, Mumbai.
Mr. Biden’s trip is part
of a long-term effort to convince India’s officials and people that the days
when Pakistan, India’s longtime rival, was the United States’ favorite friend
in South Asia are over. Mr. Biden’s trip is the first by an American vice
president in nearly 30 years, and it comes one month after Secretary of State
John Kerry traveled to New Delhi, the capital, to discuss climate change and diplomacy.
But Mr. Biden is
expected to deliver more than just happy talk about the growing strategic and
cultural ties between the United States and India. While in Mumbai, he is
expected to express growing concerns about India’s economy and its openness to
foreign investment before leaving for Singapore on Thursday night.
Investors from the
United States and around the globe once flocked to India, drawn by its rapid
economic growth, gradual economic liberalization and huge population. But in
the last decade, many American companies have found the going far tougher than
expected, and their complaints are beginning to resonate in Washington.
The problems that
companies confront here — endemic corruption, shifting government rules and
poor infrastructure, among others — seemed less dire when the Indian economy
was growing at a blistering rate. But growth has slowed to 5 percent over the
past year, and those issues have become far greater irritants.
Mr. Biden’s complaints
about India’s investment climate are likely to be greeted with some sympathy in
Mumbai, since even Indian companies have begun looking for growth outside their
country’s borders. Investments by foreign and domestic companies have fallen
over the last five years to 31 percent of the country’s gross domestic product
from nearly 38 percent, said Subir Gokarn, director of research at Brookings
India, with crucial sectors like manufacturing and mining doing especially
poorly.
The prime minister, Mr.
Singh, acknowledged in a speech to a prominent business group here on Friday
that the nation’s economy was under stress.
“We, like most other
countries, are going through a difficult period,” Mr. Singh said in a barely
audible whisper. “I know that business is deeply concerned about the slowdown
in our economy.”
The Indian rupee has
lost about 9 percent of its value against the dollar in recent months, a
decline exceeded only by the Brazilian real among major emerging-market
currencies. India has substantial budget and current account deficits, and
inflation is running at nearly 10 percent annually.
The country’s central
bank has the difficult task of defending the currency by trying to raise
short-term interest rates without pushing up long-term rates, which would
further slow growth. But the Reserve Bank of India took the unusual step last
week of withdrawing a bond sale after investors insisted on interest rates that
were higher than the government’s bankers wanted to pay.
Ajay Shah, a professor
at the National
Institute of Public Finance and Policy in New Delhi, said these
problems guaranteed that India’s era of rapid economic growth would not return
for many years.
“There’s been a
tremendous collapse in confidence,” Professor Shah said.
India’s government has
taken steps to put its fiscal house in order by reducing fuel subsidies, a
hugely expensive program that largely benefits the rich. Last week, the
government announced a loosening of restrictions on certain foreign
investments.
But national elections
scheduled for next year are likely to mean that the government will be loath to
make additional cuts to popular welfare projects, said Sreeram Chaulia, a
professor and dean at the Jindal School of International Affairs. A new food
security bill could even expand such social spending significantly.
“Right now, this
government is concerned about winning the next election,” Professor Chaulia
said.
Mr. Biden also intends
to push India for further defense cooperation and more arms purchases from the
United States, according to a senior Obama administration official.
India has long resisted
becoming too close to the American military. But recent border tensions between
India and China have jangled nerves in New Delhi and made officials here strive
to improve India’s defense manufacturing abilities, something the United States
has said it can help achieve.
