Global economy is under immense stress following Russia’s invasion of Ukraine. Indo-Russian partnership may emerge as a resilient power amidst the challenging external environment.
Covid-19’s departure from the global landscape was expected to bring in stabilization. Economies acquired independence from years of financial disruption. However, Russia’s invasion of Ukraine, has encouraged the dormant seeds of recession to pollute the economic soils once again. Yet, developing economies like India are expected to evade these downturns with their astute stance in the global fiscal market.
Alongside the economies, it’s the strength of the Western nations that is being put to test as well. America’s economy has managed to evade many economic disruptions and has led the global economy for more than a century but, the erratic decisions of its cold war rival has laid a track of tribulations threating the livelihoods of many. Emerging tensions have been threating a long-brewing recession, however, profits brew for developing economies who have maintained a savvy standing in the economic landscape.
Russia’s invasion of Ukraine was regarded with contempt. Some western nations along with the European Union decided to impose strict sanctions on Russia, hoping it would stop the Kremlin from advancing any further. However, this backfired tragically. Before the Russian invasion, majority of Europe’s energy imports were carried by Russia.
Now that the sanctions found their place in the economy, this partnership was nullified. The gas pipeline, also known as the Nord Stream 1, known for importing about 35% of all gas to European Union states was now deemed inoperative. The interesting part about stopping this import is that Russia never did it deliberately, or so it seems.
After the sanctions were imposed on Russia and when a lot of MNCs decided to depart the country, Russia closed the pipeline after several reported leaks for its “maintenance”. Even though it is argued by the European states that the leaks were deliberate, Russia neither confirmed nor deny those claims. They masked their reduction of supply by blaming problems with the equipment.
India’s dual benefit
Despite these issues plaguing the global landscape, India seems to have played its trump card, enabling the nation to gain majority in the international crude oil market. India’s purchase of crude oil is well below the western price cap. This is expected to be beneficial in two ways.
Number one, the country’s surplus imports, with discounted prices, is helping establish India’s place as the key exporter in the Crude oil trade. Number two, the global oil market can work toward stabilization with India’s assistance. This will, again, maintain the flow of profits to India.
The contingencies of thriving profits
The profits (brewing in India), however, come with contingencies of their own. The nation deals with an unemployment problem, that has been affecting the lives of many. Unfortunately, this problem is expected to amplify within the coming months.
Yash Aggarwal, a former employee at Twitter, was fired from his position after the company was worried about the threat of recession. For why the companies fire employees at the time of recession, he had this to say, “While the Central banks are raising interests to control the level of inflation, companies want to reserve cash for the upcoming recession.”
The societal angle
While economic prosperity is expected to arrive in India, the country is not immune to the effects of recession. These effects, alongside economic downturns may also amplify existing societal issues. Global shift in corporate attitude is expected to make changes in the corporate groups present in India as well.
Dr. Nishika Bhatia, a professor at OP Jindal University, who deals with the topic of resource management, mentioned, “Specially in terms of recession, the (supply chain) is pre-planned. They try and make their supply chain more resilient.” This resilience typically comes at the cost of employees who might lose their jobs owing to the company’s questionable dismissing and hiring practices.
Hiring practices of corporate groups are destined to change with the incoming recession, presenting a possibility of societal relapse. Dr. Kanchan Sehrawat, who focuses on topics relating to women and finance in the contemporary world, voiced similar concern stating that, “employers may revert to traditional gender roles, assuming that women are more likely to prioritize family obligations over work.”
While women might be forced to return to their traditional gender roles, the below poverty line (BPL) population is suspected to be another victim of the economic hurdles looming in the future. Dr. Mrinalini Jha, experienced with discrimination economics, mentions, “For them(BPL population) there is no shield other than government support. It is, thus, critical for the state to support them”.
The financial toll in India is expected to fuel the already existing capitalist ideologies in the country. While such issues arise complimentary with fiscal repression, India’s position and partnership with the Kremlin in the crude oil market has piqued the interests of many global powerhouses.
According to the data intelligence firm Kpler, 2023’s inception has seen India ship more oil to the US than it did in nearly four years. This increase in supply outweighs the demand scale, making it attractive for nations like India to import its crude oil at discounted rates.
Besides the data, Dr. Sehrawat has pointed out four other factors, that might explain India’s sudden rise during the time of despair. These include – Strong domestic demand, India’s diversified economy, Low government debt and a healthy age pyramid.
The current and possible implications
Europe’s economic revival has struggled since COVID’s divergence. With factors like Russia’s exit While Russia’s exit presenting further complications and Germany officially entering recession, all signs of the Indo-Russian partnership seem to lead roads of economic prosperity.
While the current economic landscape may strengthen this, it is important to note that this entire discussion balances on the pillars of forecasts and predictions. As Ukraine continues its defense against the Kremlin might, only time will be the dictator of outcomes. For now, it is India who leads the economic race, forfeited by many.