Context

As Mahatma Gandhi’s nation, India must be a committed and relentless apostle of peace and non-violence, both at home and in the world.

How the Russia-Ukraine conflict is reshaping the world order

• Ever since the fall of the Berlin Wall in 1989, a paradigm of free societies, frictionless borders and open economies evolved to be the governing order in many nations.
• This catalysed freer movement of people, goods, services and capital across the world.
• India too has benefited enormously from being an active participant in this interconnected world, with a tripling of trade (as share of GDP) in the last three decades and providing vast numbers of jobs.
• Such tight inter-dependence among nations will lead to fewer conflicts and promote peace, was the established wisdom.
• The Russia-Ukraine conflict has dismantled this wisdom.
• Mutually beneficial to mutually harmful: If inter-connectedness and trade among nations were mutually beneficial, then it follows that its disruption and blockade will be mutually harmful.
• Global Village was built on the foundation of advanced transportation networks, cemented with the U.S. dollar as the reserve currency and fenced by integrated payment systems.
• Any disruption to this delicate balance runs the risk of plunging the ‘Global Village’ into disequilibrium and derailing the lives of all.

Trade opportunity for India

• Trade with other nations should and will always be an integral cornerstone of India’s economic future.
• A reversal towards isolationism and protectionism will be foolhardy and calamitous for India.
• As the western bloc of nations looks to reduce dependence on the Russia-China bloc of nations, it presents newer avenues for India to expand trade.
• It presents a tremendous opportunity for India to become a large producing nation for the world and a global economic powerhouse.
• However, to capitalise on these opportunities, India needs free access to these markets, an accepted and established global currency to trade in and seamless trade settlements.

Suggestions for India

1] Bilateral currency agreements are unsustainable

• The American dollar has emerged as the global trade currency, bestowing an ‘exorbitant privilege’ on the dollar.
• But a forced and hurried dismantling of this order and replacing it with rushed bilateral local currency arrangements can prove to be more detrimental for the global economy in the longer run.
• We had an Indian rupee-Russian rouble agreement in the late 1970s and 1980s, when we mutually agreed on exchange rates for trading purposes.
• Now, with India’s robust external sector, a flourishing trading relationship with many nations and tremendous potential to expand trade, such bilateral arrangements are unsustainable, unwieldy, and perilous.

2] Avoid discounted commodity purchases from Russia

• In the long run, India stands to gain more from unfettered access to the western bloc markets for Indian exports under the established trading order than from discounted commodities purchased under new bilateral currency arrangements that seek to create a new and parallel global trade structure.
• It entails a prolonged departure from the established order of dollar-based trade settlement or jeopardises established trading relationships with western bloc markets, it can have longer term implications for India’s export potential.

3] Non-disruptive geo-economic policy

• India needs not just a non-aligned doctrine for the looming new world order but also a non-disruptive geo-economic policy that seeks to maintain the current global economic equilibrium.
•  By the dint of its sheer size and scale, India can be both a large producer and a consumer.
• To best utilise this opportunity, India needs not just cordial relationships with nations on either side of the new divide but also a stable and established global economic environment.

4] Social harmony is a must

• Just as it is in India’s best interests to balance the current geo-economic equilibrium, it is also imperative for India to maintain its domestic social equilibrium.
• Social harmony is the edifice of economic prosperity.
• Fanning mutual distrust, hate and anger among citizens, causing social disharmony is a shameful slide to perdition.

Conclusion

The reshaping and realignment of the world order will be a unique opportunity for India to reassess its foreign policy, economic policy and geo-political strategy and don the mantle of global leadership.

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