Superpowers Rivalry Offers India An Opportunity – Burning Issues – Free PDF Download

Context

• The current IMF projections suggest that India will have the highest growth rate in the world this year
•  Allegations for Spread of Covid 19 Virus results to USChina Rivalry.

 Where World Stands Today?

1. The global economy is set to lose close to $10 trillion because of the “self-induced coma”
2. The preceding global financial crisis (GFC) has exhausted the efficacy of monetary tools.
3. Corporates globally are leveraged to the tune of $12 trillion.
4. Accompanying oil price collapse (beginning due to a spat between producers Saudi Arabia and Russia) has been compounded by a precipitous slump in demand.

US v/s CHINA

1. Tensions have escalated into a full-scale superpower crisis after the virus spread.
2. Since 2010,USA is concerned about CHINA’s rise.

US v/s CHINA

3. Reason for Conflict : China’s Foreign policy w.r.t technology and technology standards.
4. Virus Smashing US’s Economy and effecting 1,184,490 people with 68,407 Deaths in Election Year.
5. China is Considered as first enemy by USA.

global coordination

• Multilateral agencies, especially the WHO and UN, suffer a complete loss of credibility.
• No wonder then that at a time when the world yearns for global coordination, there is almost none — in healthcare responses and economic coordination.

Health

•  Ministry of Health and Family Welfare has done well to stem the spread of the infection.
• Ministry sensitised the public and introduced the concept of social distancing and isolation in the most challenging situations.
• Now it must test at scale and isolate.

Economy

• Large number of our population live on HAND TO MOUTH basis, so Indians cannot afford to stay locked for long.
• Economic activity will be subdued in the near-term, but it must be “unlocked”.
• The current IMF projections suggest that India will have the highest growth rate in the world this year.

Economy

• Collapsed Oil prices is really helping India’s balance of payments.
• Our food stocks are plentiful, the rabi crop has been good, and the prognosis for the monsoon is positive.
• Low inflationary pressure. This, together with the fact that aggregate demand is down, will dampen inflationary impulses.

Economy

• The “new RBI” has acted boldly and strongly. Prompt actions taken to reduce rates, increase liquidity, adjust prudential norms, allow moratoriums, and protect financial entities.
• The weakened rupee will help our exports and with a debt to GDP ratio of about 73 per cent, along with better growth prospects, India is relatively better placed than several other countries.

Economy

•  Therefore, not unduly worry about our credit rating. This both allows and actually requires the government to act on the fiscal front. Economy
•  Further to spur the economy, Government needs to implement 4 Steps -:

1. To “printing money” given the moderated inflation impulses.
2. To provide additional direct benefit transfers of Rs 2,000 every month for three months to jandhan accounts + release of food grains from FCI, to the tune of around Rs 65,000 crore, so that people’s miseries can be alleviate.

Economy

3. To Protect MSMEs by providing them working capital (with an RBI backstop). 4. To launch a massive public works programme outside the Budget. (fund should be earmarked for infrastructure and not less than Rs 200,000 crore)

Economy

• Taking advantage of the crises government should push through much needed pending reforms in agriculture-especially those pertaining to APMC), power-pricing and discoms, banksgovernment ownership at 30 per cent and bad banks.
• Can Generate Revenue from private gold, Given the paucity of tax revenues, the government can make an appeal for private gold from people and temples.

Geopolitical

• India can come out ahead if we act now.
• Super-power rivalries will create an opportunities to replace China as a major supplier to the US and Japan.

• Therefore The battle to deal with the corona disaster has to be fought on many fronts. India must form a strategy and act on various front i.e. health, economic and geopolitical- to be victorious at the end.

Latest Burning Issues | Free PDF

Sharing is caring!