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Even With Biden: Trend Against Globalization Is Dampening India’s Prospects, Headwinds Will Only Increase – OpEd


New Delhi needs to note that China’s estrangement from the US is not as serious as the one with India.

By Manoj Joshi

It is now conventional wisdom to say that 2021 will be better than the year gone by. Don’t bet on it. The pandemic rages around the world and its aspect remains ferocious. Vaccinations have begun, somewhat fitfully though, in the country that is suffering its worst ravages — the United States. Just when vaccinations will actually alter the global trajectory of the pandemic is not clear, not only because it will take time to vaccinate enough people to create herd immunity, but because of the malevolence of this particular virus whose effects are even now not fully understood.

Beyond the course of the pandemic is the challenge of dealing with its consequences, as much social-psychological, economic and geopolitical. The global economy has been grievously hurt and the trendline of the future remains blurred. The immediate preoccupation of the incoming US President Joe Biden will not be China, Russia, climate change or the Indo-Pacific, but to heal the consequences of the pandemic in his own divided country.

For New Delhi, which has to bear, in addition to the pandemic, a political and military confrontation with Beijing, the United States is an irreplaceable element. No other country has the heft, and the ability, to intervene in the South Asia-Indian Ocean Region. Whether POTUS would be inclined to do so in light of the domestic problems he confronts, is another matter. Even though the gap between India and China’s comprehensive national power has widened, India doesn’t seek US military intervention. What it and many other countries want, is a greater clarity and sense of purpose from Washington in dealing with Beijing’s wayward ways.

New Delhi needs to note, however, China’s estrangement from the US is not as serious as the one with India. This is despite the tariffs and technology restrictions imposed in the Trump years, and the more active South China Sea stance of the US. In contrast to what India is seemingly attempting, decoupling is not an option for the US. The Biden administration is likely to retain the tariffs and technology restrictions and the forward posture in the South China Sea and then negotiate a rollback of tariffs in exchange for Chinese cooperation in a range of areas like climate change, pandemics and international trade. Don’t underestimate, either, the attraction of the Chinese market for US corporates who are thirsting for revenues in the post-Covid world, and who have strong political equity in the incoming administration.

Despite turning on the screws on domestic dissent and alienating a large part of the world, China is positioned to enter 2021 in better shape than its putative adversaries. It became a post-Covid economy in mid 2020 itself. Though there are signs of weakness in certain sectors of its economy, it cannot but gain from the creation of RCEP and its recent trade pact with the largest economy and trading bloc in the world, the EU. Its own outreach, the BRI may have lost a bit of lustre, but for many countries it remains the only game in town. Even without new crises intervening, the Biden administration will have its hands full in slowing down the geopolitical consequences of these developments.

As for India, headwinds will only increase in the coming years. The chance of becoming a $5 trillion economy by 2024 had receded before Covid hit. No amount of statistical jugglery or brave exhortations will change things. India has many things going for it — primarily, in the current context, being the “non-China.” But it is still some way from demonstrating that it has figured out its path to sustainable high economic growth. Changes in the farm laws and the relaxation of labour regulations could have made the difference, but the trend against globalisation is dampening India prospects. Meanwhile there are bigger questions about a polity that wants to go back socially to the medieval age, even while claiming that it wants to advance forward to build a modern economy.

This commentary originally appeared in The Times of India.

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ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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