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The Cause, Impact & Lessons

Denis Alipov, the Russian Ambassador to India, believes that the effects of the conflict between Russia and Ukraine would be felt across the globe, including India. However, he did not mention exactly what sanctions would be imposed on New Delhi. Talking to the media in the Indian capital in the first week of March, Alipov stressed: “This crisis will have consequences for the whole world, including for the Russia-India relations. To what extent, it will be reflected, probably no one can say now.” Commenting on India-Russia ties, the ambassador said: “We perceive from the fact that our relations are developing in the interests of the two countries and they are of strategic nature. There may be an impact in terms of transactions.” Alipov is of the opinion that there would be little impact of the Western sanctions on India-Russia ties, as there exists a bilateral mechanism for mutual settlements of transactions in national currencies. “There is a working bilateral mechanism for mutual settlements in national currencies which is already being used. The only question is how to use it on a wider scale,” added the envoy.

Denis Alipov

It may be noted that the International Monetary Fund (IMF) had forced some East Asian nations, which were experiencing foreign exchange deficits, to adopt a wrong economic policy 25 years ago. As a result, the respective economies of various countries, like Indonesia, had almost collapsed. Later, they rejected the policy, and concentrated on foreign exchange savings. In 1963-69, the then US President Lyndon Baines Johnson had used wheat aid as a diplomatic weapon to help famine-stricken countries, like India. Although India was the recipient of wheat, New Delhi had openly condemned the US atrocities in Vietnam. Indira Gandhi, the then Prime Minister of India, refused to accept wheat from the US, and decided to increase production of grains. Thereafter, the South Asian nation witnessed the Green Revolution, and managed to produce huge amounts of grains, which was gradually reflected in the excess of the Reserve Bank of India‘s (RBI, the Central Bank) foreign exchange reserves.

Countries, which had fallen victim to such a form of extortion, have developed a tendency to overlook the benefits of peace. It seems that they have failed to realise the benefits of self-reliance and the underlying issues involved in it. Hence, the West is trying hard to bring Russian President Vladimir Putin to its knees by arming almost everything… from parts of aircraft to the economy. Of course, its impact would not be positive. In actuality, the West has launched a barrage of missiles on the basic infrastructure of Globalisation. It is not difficult for any large country to understand this, and to avoid such a situation.

PM Modi & President Putin

Russia has proven to be almost a nightmare for India in recent times, as Moscow has built a military axis together with China and Pakistan. Ukraine is currently experiencing the consequences of creating troubles for a powerful neighbour. Although the Ukrainians do not have much affection for Russia, Kiev could have received military assistance from the Kremlin. Now, Ukraine has to fight alone. The situation is not quite different for India, as China is continuously posing a serious threat to its neighbour.

It is also a fact that India’s relations with Russia have deteriorated in the last two decades. The erstwhile Soviet Union was India’s largest trade partner. Currently, India imports only defence equipment and oil from Russia. Most importantly, India depends a lot on Russia for defence equipment. Experts are of the opinion that Russia’s invasion of Ukraine, and India’s diplomatic position on this particular issue could have a negative impact on New Delhi-Moscow ties. The sanction-hit Russian economy could also raise questions about its reliability as a supplier of defence equipment. Russia’s veto in the UN Security Council would not be effective in the coming days, especially if it needs to be applied against China. And, India shall face the heat.

Courtesy: Hindustan Times

Another section of experts is of the opinion that it is important to play the diplomatic game with the West as per its own rules. Unfortunately, no one has applied these rules to the non-Western countries, including India. The South Asian nation’s caste system, colonial past, size and cultural diversity have prevented it from playing the game in a different hemisphere. The Global Community has already opposed India’s nuclear programme. In such a scenario, the diplomatic decision not to make any particular commitment might have been a wise one.

It is also possible for India to concentrate on self-reliance. Of course, it is a partial solution, as such a move would not boost the National Economy. As there is no alternative to the US Dollar, the issue of supply chain prevails, and a country would have to depend on imports in order to meet the energy requirement. With the Western world controlling each and every international organisation, it is quite difficult to get out of this cycle without following the footsteps of North Korea. Also, it is not so easy to boost the production of defence equipment. If imports stop and domestic production does not take place, then the defence sector would hardly survive, as imports play an important role in the production of almost every weapon. For example, General Electric manufactures engines of the Tejas multi-role light fighter aircraft, while Ukraine supplies engines of the Indian naval power.

Anti-Russia Protests in Brussels

However, no one can underestimate India Stack, an ambitious project of creating a unified software platform to bring India’s population into the digital age. The website of India Stack describes its mission, saying: “India Stack is a set of APIs that allows governments, businesses, start-ups and developers to utilise a unique digital infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery.” One of the finest examples of India Stack‘s success is the United Payments Interface (UPI), a new Indian alternative to the US-based Gateway Payment Service (GPS). The usage of UPI extends from mobile phones to naval ships in deep seas, using satellite connectivity.

If the foundations of democratic institutions remain strong, then forced data localisation is possible by stopping the flow of Information Technology from outside. As far as the construction-based industry is concerned, the newly emerged situation shall be able to boost the major domestic industries by providing back support to the weak production-related stimuli. In this case, it is important to identify in advance which industries are really required, and which ones need to be restructured.

The most important task is to realise the limitations of this method, and to boost domestic production. Russia has been trying hard to build an Economic Fortress since 2014 in response to sanctions imposed on its economy. However, the Russian Economy has remained virtually weak. In such a case, choosing the appropriate sectors, and building a system of interdependence seems to ensure positive outcomes for both India and Russia.

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