Economic Highlights

New Delhi, 20 March 2023

Queer Global Moves

INDIA ON RAZOR’S EDGE

By Shivaji Sarkar

It is a queer world. Politics and economics are contesting each other almost globally. In the country, Parliament remains paralysed this week. India engages with Taliban in training them on finances. Supreme Court expresses concerns over Governors’ role in state politics. Export and import targets contract amid global headwinds. Market turmoil puts rupee to slide to Rs 82.61.

Additionally, Reliance Oil shifts its oil trading centre to Dubai may be opening up conduit for its product processed of cheaper imported crude even as international oil prices, Brent crude, slump to $75 a barrel. Inflation in India continues to rage over Reserve Bank of India tolerance limit 6.4 per cent. And Rajya Sabha is told that metro rail companies in all eight cities, including Delhi, Kochi, Maharashtra and Noida are in losses.

Stocks plunge all over amid banking crisis leading Indian stocks to touch a five-month low. And India makes waves as it wins two Oscar awards, one for a song, Naatu Naatu, and the other for a documentary the Elephant Whisperers.

Global bank collapses lead to speculation of a rate cut. In a routine manner banks are collapsing triggered by the SVB. Three regional US banks Silver Gate, Silicon Valley went down the count. A fourth, First Republic, explores possible sale. The Swiss Bank, Credit Suisse, woes spook volatile European market.

The US-Europe-NATO engagement with drone attacks on Russia increases even as Ukraine continues to be battered. Economic and political tension mounts the world over amid Chinese support to Russia.

Parliament paralysis during the peak budget session has raised many questions. Has Rahul Gandhi become so significant that the BJP should take it to this high pitch whether he speaks here or Cambridge? Parliament is for parleys even if one speaks anything unsavoury, they can depend on the short public memory amid too many high dramas.

On the reverse, is the ruling party promoting the Opposition, a new in Indian dynamics? Not less interesting is politics amid economic challenges in the neighbouring Pakistan. Security forces sent to arrest its former Prime Minister Imran Khan, after a march against the government, were beaten back by his supporters. As political drama reaches a pitch, Khan now playing the role of a political insurgent, is milking the maximum. Pakistanis question whether it is Sharif government way to divert attention from the economic crisis as forex reserves fall to $2.9 billion and its bid to have $1.1 billion with IMF drags on.

The G20 chain of events has drawn world attention. India is showcasing itself for exhibiting its march to $3 to 5 trillion economy. Consensus language on Ukraine has fallen away at G20. India is focusing on to de-hyphenate its relations with Russia from China’s belligerent support. The joint declaration after foreign ministers’ meet could not be signed. India is aiming at balancing. But the West, Russia, China conflict is leading the next level of their struggle to the global South, suffering from severe financial and humanitarian woes. India is harping on Africa and the deprived nation. May be if India succeeds it can take the leadership of many erstwhile non-aligned nations.

The deep concern is evident from India engaging with the Taliban through a workshop at the Indian Institute of Management, Kozhikode as India Technical and Economic Cooperation Programme (ITEC) on its culture, legislation and business climate. Reservations apart, strategically located Afghanistan cannot be ignored for India’s security and stability. Such programmes are virtually continuation of its pre-Taliban Afghanistan, when it was having series of such programmes. The present outreach may be a part of the overall Indian engagement in G20, West-Russia-Ukraine developments. It is long-term approach in the overall gamut.

Coincidentally, the US has selected its ambassador to India, Eric Garcetti, after 20 months. But the US may say it has nothing to link up with other events. President Joe Biden’s White House has not appointed envoys in 40 countries, including Saudi Arabia, during the last two years, and one year of the Russian invasion of Ukraine. The war is intensifying!

May be. The Pentagon releases video of Russian planes harassing and eventually damaging a US military drone that crashed into the Black Sea. Simultaneously, Poland announces sending MiG 29 also to Ukraine at this juncture. Poland is sending four vintage Soviet-era fighters. Slovakia on Wednesday announced to dispatch MiGs. More countries may send aircraft to Ukraine.

The geographical gap between Ukraine and Taiwan is becoming geopolitically blurred. China’s 12-point peace proposal for Ukraine was heavily slanted. It seemed more at pleasing Russia and Chinese takeover of Taiwan. The G 20 has yet to find the solution. Its escalation would impinge on India as closer home the international arms engagement increases. India itself is emerging as the biggest arms purchaser, strategic necessity, impacting its development as financing becomes expensive with high debt of over $172 billion. An unstable Sri Lanka, Pakistan and Nepal add to its burden.

But debt seems to run the world. Banks in the US borrowed heavily, says Bloomberg, over the last week from two federal facilities. Data published by the US central bank showed $152.85 billion in borrowing from the discount window—the traditional liquidity backstop for banks—in the week ended March 15. It was a record high and a staggering increase from the $4.58 billion borrowed the previous week. It was $111 billion during the 2008 Lehman burst.

Credit Suisse survives with $54 billion credit from the Swiss National Bank. The Swiss government is mulling breaking up the bank to takeover. How long the world can subsist on debt and not properly manage the private sector that virtually now for decades has been living on subsisting itself with people’s bank deposits everywhere from the US to India.

Interestingly and apparently, only the banks in Russia are not hit. Is the western model of private economy failing? Wherever that model has been adopted siphoning of funds has been routine. No country is an exception. It triggers a new move whether banking itself should remain in private domain or not.

It is too complex a world with war, diplomacy, banking, economy overlapping. India being the leader of the South has much to feel concerned as also care for its economy walking the razor’s edge.---INFA

(Copyright, India News & Feature Alliance)