The Indian economy, and its future trajectory, is significantly influenced by a number of international developments, most notably the ongoing effects of the Russia-Ukraine War and the recent policy decisions of U.S. President Donald Trump, which have introduced new economic challenges.

Russia-Ukraine War

Russia invaded Ukraine on 24th February, 2022 due to some flimsy and unjustifiable grounds . Despite mediation attempts by Ukraine ,Turkiye, NATO, U.S.A. and virtually defunct U.N.O., its a no withdrawal situation so far. More than 3.7 years of mayheim continues, reminding us of the brutal holocaust of Adolf Hitler era during the Second World War.

Thousands of people have lost their lives and many families were compelled to relocate themselves in order to safeguard their basic interests and family needs.

Worst sufferers are the innocent children and womenfolk. Imagine the devastation caused month after month in Ukraine or Russia and the overall impact on their economy and psyche of the soldiers of two warrying nations.

Russia is already the biggest country of the world in terms of area, nuclear & arms manufacturing capability, scientific acumen and rich resources.Then why should it be in an expansionist mode ?

Indian Students, Nationals & Impact On Economy

The war has negatively affected economy of India by way of inflation owing to rise in prices of commodities, such as, crude oil, gas, edible oils and fertizers. It has also disrupted supply chains leading to cutting down profits of businessmen, increase in the household expenses and depreciation of Indian Rupee.Thus It has put pressure on overall growth of Indian economy, say by one percent.

As an immediate impact on Indian economy, supplies of some food grains were expected to be impacted but priority of Prime Minister of India was rightly to RESCUE Indians working in Ukraine and neighbouring areas and the students mainly undertaking Medical and Engineering Courses in different parts of Ukraine.

Four Ministers Team

In a rare initiative, PM Modi sent four Cabinet Ministers to four international border points of Ukraine, got arranged liasion with Ukraine Government offices through MEA on priority and rescue of thousands of Indians, Nepal and Bangladesh nationals was arranged first through trains (though a risky venture) and later through Air India and private airlines of India. So many Indians in such a large number have never been rescued and brought back safely to motherland, in history. Even a few Pakistani students took cover of Indians while crossing the border of Ukraine.

West Europe & Ukraine War

Ahead of Indian economy, West European countries were first to be affected due to stoppage and later infrequent supply of gas from Russia in particular. Supply pipe lines passing through Ukraine would fall in cross fire zone of two countries. Either supplies would be disrupted purposely or a manual leakage would be generated.

Initially, there was some hope for negotiation between Ukraine and impacted countries but after NATO taking more tough stand against Ukraine, situation deteriorated. Thus not only economies of weak and fragile West European countries began having tough time but economies of countries, such as, Germany, U.K., France, Spain, Poland etc too got negative signals to slow down.

More and more demand for arms & ammunition began taking place which was catered to, mainly by U.S.A, Germany, France, U.K.and Spain. The U.S., as such, looks for such fragile if not pathetic situations not only to strike but also to make room for serving its long term economic interests.

Even when Joe Biden was losing U.S. Presidency, the interim period provided an apt opportunity for Donald Trump to plan afresh U.S. strategy in respect of Russia-Ukraine ongoing conflict. Knowing his earlier tenure and background, he was getting ready for "arm twisting".

Even when V. Zelensky, Ukraine President was insulted in front of Trump officers and media and he had to walk off from his first meeting at White House, Trump did not give up. He kept on pestering Zelensky and ultimately managed a historic deal with Ukraine on using, rather exploiting its earmarked rich mineral resources on a long term basis. It was ostensibly, in return for continued supply of arms to Ukraine.

Here there is a catch: without bringing his West European allies, President Trump was in a position to fire shots vis a vis Ukrain. So global developments once again had a certain bearing on economies of the concerned countries.

As far as India is concerned, as indicated, our supplies of wheat, pulses, crude oil , fertilizer etc.were initially affected due to Russia-Ukraine war. But we could recover gradually due to our policy of NOT putting "all our eggs in one basket"

Recent U. S. Economic Policy Shifts and Indian Economy

Ukraine war is not the only major challenge India had to face. As we always focus on a kind of Economic Resilience through various reforms vis a vis global shifts in policies, we generally, if not rightly, have a hope. So when different countries opt for change, India does not get deterred or deviate from strengthening its economic position.

Govt. of India Initiatives: Are we Adapting Well To Changing World?

Modi-led measures focus on policies that aim at ensuring long term economic health and adopting ro changing conditions, such as, rise in tariff rates, trade disputes, payment in a particular currency and shifts in global power or even security issues affecting oil prices in the all important, Middle East.

Many areas need to be looked into, such as, agricultural reforms, private sector investments and ensuring building strong brands for Indian products and services. But same is neither easy nor can it be done in a short period.

It needs profound strategic planning and pro active measures to safeguard and improve Indian economy.

50% U.S. Tariff & H-1B Visa Restrictions

At the very outset, protectionist stance of President Donald Trump is simply INHUMAN.

H1-B visas are very crucial for Indian professionals. Hence the negative order of President Trump will hit skilled Indian labour in USA also. It will cast a shadow over next round of trade negotiation in USA soon.

According to Indian Express, average annual salary of an Indian H1-B visa holder in USA is between US Dollar 60,000 and US Dollar One lakh.

Further, it informs that India born professionals are the biggest beneficiaries of these visas. Supporting the input statistically, between Octber 2022 and September 2023, a whopping 70 % of these visas issued under the H1-B programme went to Indian professionals.

During the same period, as per U.S.Citizenship & Immigration Services data, four Indian IT Companies having a presence in USA - Infosys, TCS, HCL and WIPRO managed to obtain approval for around twenty thousand employees to work on H1-B visas.

Recent Developments & Response

In the recent past, industry confederations like C.I.I. have been actively involved in detailed consultations with the Central Government, particularly in respect of impact of U.S. tariff rise to 50%, which is bound to affect the small exporters of diamond, textiles and marine products immediately. Also protecting the interest of those companies having global presence will be equally important in the long run.

Announced restrictions and raise in H-1B Visa fees in U.S.A. may further strain outsourcing prospects Of Indian I.T. industry.

P.M.O. in particular and Commerce & Industry Ministry in general need to be extra cautious on the eve of next round of trade talks in USA. MEA may also like to review and toughen its strategy, given the changing circumstances.

Should We Negotiate with the U.S.

One may ask- Is there a necessity to talk to Americans in such an adverse or inclement situation when their President is bent upon troubling Indians time and again, left, right and centre?

While rolling out GST 2.O rates and tariff adjustments recently are expected to create a positive impact on internal economic dynamics, more growth in wages is also much required to boost consumption and improve economic conditions.

Though central government aims to stimulate investment and ensure growth through steps like GST reforms and tariff adjustments, one doubts their efficacy in the SHORT RUN. It has been also suggested that working on building strong branding and marketing them globally will also make our products fitter.

Let us keep our fingers crossed about the trade related negotiations in the next rounds of BRICS and SCO ?

MULTILATERISM, to my mind, as stressed upon at the Tianjin SCO summit on 1st September, should be the answer to make the U.S. realise that it can’t prosper in isolation.

(Author, a former civil servant, has served as the Chief Secretary in Sikkim government. views are personal.)