Updated: November 9, 2020 9:09:41 am
United States President-elect Joe Biden delivers a speech in Wilmington, Del (Erin Schaff / The New York Times / File)
Dear readers,
By now it is clear that both Donald Trump’s rise to the White House and his departure were the product of reactionary reactions from the electorate. In 2016, Republican voters chose him to poke fun at career politicians like Hillary Clinton and reject the presidency of Barack Obama. In 2020, Democrats out-voted Republicans primarily by get rid of trump.
Trump and his supporters, however, has involved foul play. Its essential complaint is perhaps best captured in the words of Tom Stoppard (a British writer): “It is not the vote that democracy is, it is the counting.”
Another question is that, in the case of Trump, it might be more appropriate to quote what Thucydides wrote as early as 431 BC. C .: “In a democracy, someone who is not elected to office can always console himself with the idea that there was something not quite right about it.”
Regardless, by electing Biden over Trump, American voters have most likely changed the course of the global economy. That is why the whole world has been so closely following the twists and turns of the presidential election in the United States.
Aside from the likely reduction of uncertainties in global trade, what may be of immense importance is the fact that Biden understands the need to control the Covid pandemic before a sustainable economic recovery can take place, be it in the United States. USA or anywhere else.
Biden’s approach, in stark contrast to Trump’s, could have a healthy impact on how the US pulls the rest out of this difficult phase for the global economy when so many countries are witnessing a sharp rise in Covid infections.
So what could be the impact on the Indian economy, assuming, of course, that Biden achieves a smooth transition from president-elect to 46th president of the US in January 2021?
There are several ways in which the American economy, its health, and its political choices the government affects India.
On the one hand, the United States is one of those few large countries with which India enjoys a trade surplus. In other words, we export more goods to the US than we import.
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A man wearing a mask as a precaution against the coronavirus reads the Mathrubhumi newspaper which is headlining the news of President-elect Joe Biden’s victory in the US presidential election in Kochi. (AP Photo / RS Iyer)
A recent analysis by Madan Sabnavis of CARE Ratings shows that for the past 20 years, India has always had a trade surplus with the US The trade surplus has widened from $ 5.2 billion in 2001-02 to $ 17.3 billion in 2019-20. “The trade surplus peaked at $ 21.2 billion in fiscal 2018 (2017-18) and has moderated to some extent,” the report notes.
In 2019-20, India exported goods worth $ 53 billion to the US, that’s about 17 percent of all Indian exports that year, and imported goods worth $ 35.7 billion to Instead, that’s about 7.5 percent of all Indian imports.
Aside from trade in goods, “India accounts for nearly 5 percent of the world’s US service imports,” according to Sabnavis. Between 2005 and 2019, India’s American service imports have grown at a compound annual growth rate of 14 percent. In 2019, US imports of services from India were $ 29.7 billion.
Beyond trade, for the past two decades, the US is the fifth largest source of foreign direct investment (FDI) in India. Of the total of $ 476 billion in FDI that has entered since April 2000, the US directly contributed $ 30.4 billion, about 6.5 percent. Only Mauritius, Singapore, the Netherlands and Japan have invested more FDI since 2000.
Apart from FDI (or investment in physical assets within India), the US also accounts for a third of all foreign portfolio investment (ie investment in financial assets) in India. FPI data shows that as of September 2020, total assets in custody were Rs 33.22 lakh crore and the US accounted for Rs 11.21 lakh crore of this amount.
In trade, Biden is likely to be less nosy than the current Trump administration.
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Paintings of President-elect Joe Biden and Vice-President-elect Kamala Harris are displayed on a sidewalk outside an art school alongside lanterns posted outside a store in Mumbai. (AP Photo / Rajanish Kakade)
In Trump’s worldview, trade was a zero-sum game. In other words, one country had to lose for another to win. Of course, that is not the case most of the time. Most of the time, trade is mutually beneficial, although it may be true that it may not be “equally” beneficial for all countries. Under the Biden administration, India’s trade with the United States could rebound from the slump since 2017-18.
A Biden presidency may also see a renewed push toward a rules-based trading system around the world, rather than outright adhocism as was the case with Trump, as well as a move away from the protectionist approach that has grown stronger across the globe. country. world.
Combined with the control of Covid infections and economic recovery, the United States could once again provide a growth boost to the global economy that countries like India need to boost their exports and grow.
Aside from these very direct ways in which the United States is important to India, there are also massive political concerns.
For example, how a president of the USA H1-B visa issuance, it affects the prospects of Indian youth much more than the youth of any other country. Under President Trump, who severely restricted the visa regime, Thanks to its “America first” policy, India had suffered the most. That could change with Biden, who is unlikely to view immigrants and workers from India with similar suspicion to Trump. 📣 Express Explained is now on Telegram
Similarly, the exclusion of India from the United States Generalized System of Preferences could raise a reconsideration under Biden.
Children carry posters of Vice President-elect Kamala Harris during celebrations for her victory at a temple in Thulasendrapuram, the hometown of Harris’s maternal grandfather, south of Chennai, Tamil Nadu. (AP Photo / Aijaz Rahi)
Other points of contention between India and the US, such as the sensitive issue of data localization or capping prices for drugs and medical devices, have a better chance of reaching a resolution as we move away from the radical approach of President Trump toward the pragmatism of a Biden presidency.
Furthermore, under the Trump administration, US sanctions on Iran severely limited the supply of cheap crude oil from India. For an economy like India, which needs a regular supply of cheap oil to grow rapidly, a normalization of the US-Iran relationship (and the lifting of sanctions) would be more than helpful.
In China too, while US arrests are unlikely to be minor even under a Biden administration, a Biden administration is more likely to help India against China, rather than pummel the two together.
Last but not least, Biden has promised to rejoin the Paris Climate Agreement, And this can help countries like India meet the enormous challenges, both technical and financial, on this front.
Of course, many of these benefits may also involve a Biden administration taking a closer look at civil liberties and democratic rights in India, an aspect that the Trump administration was largely blind to.
Stay safe!
Udit
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