- October 3, 2022
- Posted by: Anish
- Category: Feed
Inflation-Recessionary world, Ukraine-Russia War, and Climate Change are making the World a bit grim. The World Bank painted a gloomy picture of the global economy heading toward deep recession (in 2023), as central banks across the world simultaneously hike interest rates to combat persistent inflation. However, Oil prices continued to plummet, plunging to their lowest levels since January 2022 and continuing weeks of decline as fears of a looming global recession mount.
The impact of Russia’s invasion of Ukraine, which caused energy prices to skyrocket, has served to buffer oil prices against recession fears, though these fears now appear to be the key force driving the market. Ongoing strict Covid curbs in China, the world’s largest energy consumer, have also pushed demand down.
All the uncertainty has brought India to a unique position. Russia and Ukraine are fighting, but both want to be friends with India and have a degree of appreciation for its position on the war. The global South sees India as a voice of reason which can highlight the consequences of the war on the big power stage that they have little access to. And the top United Nations (UN) leadership is keeping India briefed on developments and sees India as a valuable partner in its efforts to lower the temperature.
On the other hand, China’s focus of political goals like Covid Zero over economic objectives is making the country less appealing to European and American companies as a place to invest thereby worsening supply chain turmoil. The drought in southwestern China has also had ripple effects for global businesses. It drastically reduced hydropower production in the region, requiring power cuts to factories and scrambling supply chains for electronics, car parts and other goods.
Recent Chinese policy decisions mean the country is now seen as “less predictable, less reliable and less efficient” according to the report published Wednesday by the European Union Chamber of Commerce in China. This has led to a loss of confidence in China and firms are increasingly looking to shift planned or future investments to other markets that are seen as providing greater reliability and predictability.
The report from the European firms is another sign of how the image of China as a good place to do business has declined, with the US-China Business Council saying last month that American firms’ optimism had fallen to a record low.
This month, India will celebrate Dussehra or Vijayadashami, one of the most important festivals in Hindu tradition. It is an auspicious occasion, and it signifies the victory of good over evil.
Prime Minister Modi has initiated $1.2 trillion mega project called PM Gati Shakti — Hindi for strength of speed to attract manufacturing and factories to India – thereby creating a digital platform that combines 16 ministries. The portal will offer investors and companies a one-stop solution for design of projects, seamless approvals and easier estimation of costs.
Significantly, US secretary of state Antony Blinken hosted a dinner for Indian Foreign Minister, Mr. Jaishankar recently to exchange views about the state of the world (and the China challenge could not but have come up) before their formal engagement, the commerce department appeared to be actively willing to nudge American businesses towards India and cement a place for Delhi in supply chains of key materials.
This is just a sample of recent voices on India but put it all together and it is clear that India finds itself in a sweet spot. China makes India indispensable in the American strategic calculus, but the relationship goes far beyond it now. The desire for friends and economic and security engagement makes Delhi vital for Moscow. France likes India’s tradition of strategic autonomy and has clear security and economic convergences. Delhi’s disapproval of the war is music to the ears of the Central European, Baltic and Scandinavian countries. Japan and Australia are friends. Ties with West Asian countries and Israel have never been as good. India’s ability to scale up its development model and export it to parts of the world is making it attractive to the global south. India’s cultural links make it popular in the Caribbean, Africa and Pacific Islands, as do Delhi’s enhanced resources and capabilities. And the size of its market, edge in tech, soft power adds to its overall weight.
If Austria, Estonia and Finland lauded Prime Minister Narendra Modi then Australia hailed India’s engagement in Quad, Libya wanted India to get more engaged in the country’s messy transition and reopen its embassy in Tripoli. If Bolivia wanted to invite India to participate in projects to tap lithium, Southeast Asian nations, quite firmly entrenched with China economically, wanted India to play an even more proactive role to bring a sense of “balance” to the region.