In Covid 19 we are witnessing something we have not seen in our lives. The World is locked down and global supply chains collapsed. Billions of dollars are being pumped in by nations in unprecedented stimulus packages to save lives and a global meltdown is imminent.
A greater depression than that of the 2007-2009 financial crisis faces the world, and at the end, the world will not be the same again. Irrespective of a China -centric world order, an Asia centric world order or regional powers and zones of competition and chaos, the period when it is over will lead to deglobalisation. Nationalisation will override with governments taking control of essential industries and imposing protectionist policies and strict border controls to shield domestic firms and workers from global disruptions. International organisations like the UN and civil societies will become relics of the past. Along with the changes in the world order, humans and societies could change in unfamiliar and unsettling manner that will redefine paradigms of security and safety and challenge traditional economic models.
The emerging socio-economic compulsions could well see a gradual shift to socialist or fascist economic models. Government spends will be reprioritised to scale up essential sectors as healthcare, sanitation, agriculture, pharma industries and digitalise economies and societies. Aviation, travel and tourism, automobile and other sectors with top lines on luxuries would be stripped of all gloss down to basic utilities. 5G with all its attendant health issues will be inevitable with work models shifting more indoors and less outdoors. The cyber space will assume significance that hasn’t been envisaged yet. On the human front rebalancing of priorities, work and consumption, reduced social interactions and social distancing could become the new normal.
All these will have a lasting impact on our national economic strategies and global politics. Recession is certain, consumption patterns will change and minimalisation may become a cult. A correction will happen across industries and the way we work and we will all have to realign our policies.
With the Indian economy down, the options before India are limited. But, with a large consumer base, and strong economic fundamentals, India has a good post-crisis opportunity to secure long-term growth if the Government re-focuses policy. It is now critical for both the Centre and the States to be cohesive and protect social harmony and have a minimum agreed path of growth which is sustainable and reduces dependence on international market forces. This is a golden opportunity for all Indians to arrive at the global stage.
With China facing emotional and economic backlash from all nations this could be our big opportunity in manufacturing. Japanese and Korean companies are keen to move out of China to India and the UP government has already readied a special package to investors eager to leave China. The US too, through the US-India Strategic and Partnership Forum has been in active talks for using India as a manufacturing hub for over 200 US companies. However, land acquisition rules, taxes, labour reforms have been critical hindering issues and the US have often requested India to accelerate the reforms and bring transparency in the decision-making process.
We need to now accelerate the reforms. Our existing advantage in pharmaceuticals should also be leveraged to reap from the imminent growth of the global health industry. With China facing a trust deficit we are strongly poised to become an alternative hub for bulk drugs. The falling crude prices will help us manage inflationary and fiscal pressure if we continue importing and filling up as much as we can. Entering into long-term contracts at negotiated prices with select supplier countries will lock in the current price of oil for the next few years and confer an economic advantage and also offer political leverage. Our Current Account Deficit could end in a surplus in FY 21.
We have also had a huge diplomatic win with all nations hailing India’s handling of the crisis and global support rendered. Australia and Japan are ready to welcome India as a leader of the Indo Pacific and the US leadership is more than eager to accommodate India. But while the US has initiated its part by making India the center pin of the Asia Pacific security apparatus by naming the entire region as Indo Pacific, India hasn’t played its role yet with it a tentative and defensive foreign policy towards the US. Now is the time for a more transactional relationship with the US. And we could do this while maintaining our strategic integrity, as now India would be critical to the US for recovering its position and we could negotiate from a position of equal strength.
Author: Cdr Sunil Chauhan (Retd.)
The Author is a defence and security analyst and is presently Director in Indra Sistemas SA India Pvt Ltd. The views expressed are entirely personal.