What India Needs To Do To Deal With the Consequences of the Russia-Ukraine War https://thewire.in/economy/india-russia-ukraine-war-consequences-impact Arun Kumar - 26 Feb 2022
India will face a far more difficult situation in the months ahead, given global uncertainty, than it might have expected after the impact of the COVID-19 pandemic begins to wane.
The pandemic was forcing the world towards a ‘new normal’ and that is likely to have newer elements due to greater deglobalisation and greater competition among the two blocs.
India will see an immediate impact on inflation (already ruling at high levels) with rise in fuel and food prices. Other prices will also rise as supply bottlenecks get aggravated due to sanctions and the war situation. The investment climate will deteriorate due to the uncertainty.
In the longer run, India will have to restructure its international relations in the new Cold War scenario and especially given the relations with China. That is India’s most important concern and not Ukraine. In fact in the last two years while facing the Chinese obduracy we only got lip service from the Western powers and silence from Russia.
With deglobalisation impacting growth in the world, trade, capital and technology flows, India will have to strengthen its economy on its own. The public sector will have to play an important role since the private sector will not be able to boost itself on its own when demand is short. The country will have to strengthen its R&D which will require putting its education sector in order and the disastrous NEP based on substituting teachers by technology will have to be given up. Actually no matter how good a Policy unless the milieu is correct it would not translate into reform and the NEP only strengthens the existing milieu.
Social sectors will have to receive a much higher priority so that the productivity of workers rises and their degrading living conditions improve. That will not only provide the market for growth of Indian economy but strengthen the country. We would have to resist the temptation of the rulers to turn more authoritarian because that would only dissipate the nation’s energies.