In today’s world of Globalization any change in geopolitical situation has an implicit and explicit impact on a country’s economy. But for the country like India which is the fifth largest economy in terms of Nominal GDP and third largest in terms of purchasing power parity the tremors of these tussles are felt even more.
For the past few months, the world and especially India has gone through a number of turmoils from the Pandemic of Covid-19 to souring relationship with its neighbour China which has also locked horns with the United States of America. Below are the few major global events and their impact on India.
Covid-19 Pandemic: Covid-19 pandemic has created havoc in world economy and India is not immune from same. It has almost halted the entire economy of India with MSME and Banking Sectors being the worst hit. The Tax revenue collections of state and union government took a nose dive. But at the same time it has provided the required push for the healthcare sector with increased Govt. spending on public health, decentralization of economic activities from few major industrial hub to different parts of country and states, a concentrated effort to revive the rural economy to check the rapid mobilization of population from rural area, are few of them.
Souring Relationship with China: The relationship between India and China to a U-Turn after the bloody skirmish between Indian Army and PLA. Making India another victim of growing Chinese aspiration and bullying tactics. However, India responded to on economic front by banning 59 Chinese apps, embargo on items imported from China debarring Chinese firms from bidding and participating in Government tenders. India has also started a renewed and aggressive campaigning for “Make-in-India” or “Atmanirbhar Bharat” to decrease dependency on Chinese product and increase indigenous production of the same.
US-China Trade War: India is considered to be the main beneficiary of ongoing trade war between US and China as it has compelled most of the US biggies operating from China to shift their production facilities to somewhere else. And India has been considered as their prime destination.
Changing equations in Middle East: With the exhaustion of energy reserves of Middle Eastern empires is forcing them to shun their orthodox beliefs and forge or strengthen relationship with non-traditional allies. But the same thing is causing indigestion or becoming unacceptable for their traditional allies. As a result, growing business relationship and investments of these countries in India and China or establishing diplomatic ties with Israel has firmed their policy of accepting the changing world orders.
US – Iran tussle: The ongoing US sanctions on Iran and elimination of top Iranian general by America has brought both the countries to the brink of war. This has placed India into a very difficult position with India is finding it very difficult to balance its relationship with Iran which is a strategic partner for India and hold good significance for India. Even though India has got waiver for Chabahar Port project but halted other economic co operation projects that are beneficial for both the countries.
Hence it can be concluded that current ups and downs in the Geo politics has caused a paradigm shift in the foreign policies of India as well the global order.