Context:
Global events can either act as headwinds that make things harder or tailwinds that open up new opportunities in the globalised world, where success and failure are not always limited by national boundaries. Similar turbulent geopolitical and economic conditions that are affecting the rest of the world will soon affect India. Policies that aim to boost the nation’s growth rate must take these factors into account.
Relevance:
GS Paper-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
Mains question
India is positioned to face geopolitical and economic difficulties akin to those experienced by other countries. What steps can India take to turn these obstacles into opportunities? Discuss (250 words).
The Human Urge:
- Probably one of the most intriguing traits of our species is the human urge to be able to predict everything.
- The inherent certainty of change, which has the potential to alter our plans and the results we expect, poses a challenge to this inclination.
- This phenomenon was exemplified by the most recent covid pandemic. We saw the unpredictable nature of some events and the immeasurable scope of their effects as the world came to a standstill.
- The pandemic did however also teach us the value of being watchful and conscious of the underlying currents that influence the world we live in.
- Although change and unpredictability are still a given, it is imperative for Indian citizens to understand the key trends guiding the modern world.
What Has Modified?
- The World Bank estimates that by 2020, trade will account for 52% of global GDP, up from about 25% in 1970.
- In addition to the expanding interdependence and interlinkages among regions, a prominent trend is the development of Asia and developing economies.
- Due to the expansion and spread of global value chains (GVCs), Asia is predicted to produce $22 trillion in new wealth between 2020 and 2025.
- Since the opening of the Suez Canal, the development of the shipping container, and Asia’s emergence as an industrial powerhouse, supply chains have undergone a significant transformation. GVCs account for about 50% of current global trade.
- Another phenomenon that has affected and will continue to affect not only the global economy but also our entire society is climate change.
- The warmest decade was from 2011 to 2020.
- The impact of digitalization has been felt across all facets of society, in addition to the shifting dynamics of the global macro economy and the effects of climate change, as the world faces the possibility of catastrophic weather events, food scarcity, poverty, and displacement.
- After the pandemic, this gained momentum.
What Steps Should India Take?
- In light of the situation, it is crucial for India to pinpoint its most promising opportunities.
- One such route is a strategic alignment with global value chains (GVCs). India can boost production by exchanging information with them, investing in them, and utilising global best practises. It can also increase exports by utilising underutilised resources at the subnational level by enabling local businesses to participate in GVCs profitably.
- Investing in resilient and sustainable infrastructure will benefit India. In low- and middle-income countries, investing in more resilient infrastructure could result in an average net benefit of $4.2 trillion, or $4 for every $1 invested, according to a World Bank study.
- India has the chance to lessen its carbon footprint, reach net-zero goals, and decouple emissions from economic growth by embracing renewable energy sources and incorporating climate change considerations into building design.
- The nation has quickly advanced to extraordinary levels of digitalization, despite the fact that there is still much to be done to improve the quality of our technical infrastructure.
- The nation has the chance to constantly advance its digital endeavours and serve as a role model for developing nations looking to improve their own digital infrastructure.
Conclusion
- Planning for growth is a difficult task for any country in a world with unpredictable trends.
- India will face several challenges similar to those affecting other countries, including rising debt levels, inflation, food and energy crises, and geopolitical conflicts.
- The covid pandemic has taught us the value of resilience, which has become a popular buzzword. Deliberate action across all socioeconomic domains is required to overcome these obstacles. Most importantly, a mindset change that accepts the inevitable nature of change is required
