Economic Instability In Neighbouring Countries Is Worrying For India

World Bank and International Monetary Fund might be gung ho about Indian economy, but emerging geo political situation in the neighbouring countries is a major source of concern and tottering economies in the sub-continent make the situation worse. India might be in a bright spot in otherwise sagging and recessionary global economy but neighbours, Sri Lanka, Pakistan, Nepal, Myanmar are virtually bankrupt and heading towards severe debt trap. The economic situation in Bangladesh and Maldives is not that comfortable and facing severe downside risks.

Coupled with this, the rapidly slowing Chinese economy with the fallout of uncontrolled Covid situation, raise several difficult questions to Indian policy planners. The geopolitical situation emerging from Sino-Indian stand-off on the line of actual control particularly in Galwan and Tawang raise several issues. The Chinese belligerence on the Indian borders notwithstanding, the stand-off between US and China over Taiwan made things worse. The internal strife due to agitating masses over various issues including lockdown, need to democratize Chinese polity, highhandedness of officials makes the geopolitical situation very difficult. A cold war-like situation between India and China can only lead to hike in defence expenditure at the cost of development.

The emerging situation in Pakistan is most worrying. There is political instability, foreign exchange reserves have dipped to $4.5 billion, just enough for 10 days imports. More dangerous is the virtual civil war in FATA, Kyber Pakhtunkhwa and Balochistan with TTP’s all out war against Pakistan establishment. The militant group has taken virtual control in many of these areas and Pakistan army is having a tough time in dealing with the guerrillas. The TTP terrorists were trained by ISI and they are now going all out against ISI and Pak armed forces. What former US Secretary of State Hillary Clinton once told Pakistan that “if snakes are bred in the backyard, it will come to bite you one day” appears to have come true now. Pakistan is in a virtual mess – politically and economically. Pak has no money now to sustain an all out fight against TTP. Pakistan is selling whatever ammunitions it has to Ukraine at the behest of US as well.

The internal strife in Pakistan is in a way good for India as it would keep them engaged and refrain from misadventure along the Indian borders at their plate being full at the moment. But an unstable Pakistan with tottering economy and uncontrolled terrorism unleashed by TTP could pose a headache for India. Afghanistan and TTP never recognized Durand line that artificially divides nationalist pashtoons and Afghanistan-Pakistan. The Baloch never integrated with Pakistan right from independence and they too are demanding separation. Baloch separatist movement has now joined hands with TTP, which has made the situation far more worse.

There are also widespread protests in Pakistan occupied Kashmir to merge with India because of high handedness of Pakistan establishment and new laws that are discriminatory to them. While Gilgit-Baltistan wants to merge with Ladakh, POK wants to merge with Jammu and Kashmir. These developments may have some spill-over effect on India, which has to ensure its borders remain secure. India could not afford to lower its guard.

Sri Lankan economy is already in doldrums and thanks to the largesse of India, the island republic has managed to keep its head above water. One good thing that has happened is the move reduce the size of its armed forces in a phased manner. This will reduce the burden on the exchequer. This is a welcome development as it does not require that huge army, that too with militancy being virtually eliminated. Pakistan too can draw lessons from Sri Lanka to streamline its expenses by reducing the unwieldy strength of 600,000 men in its armed forces in a phased manner. The situation may not be ripe at the moment with Pakistan’s western borders not secure. But it could be suggestion for action in the medium term as such a large army had led to corruption and huge drain on its resources.

One of the major cause of economic concern in Myanmar too is the large and unwieldy armed forces. Myanmar has been mostly ruled by military junta, which commits frequent political atrocities to remain in power. The movement against the military junta has gained momentum. Myanmar military establishment has no time to look after economic needs.

The recent elections in Nepal had resulted in communists capturing power in the landlocked country. Nepal has been traditionally friendly to India, but that situation is changing rapidly now Nepal’s Communist government led by Prime Minister Prachanda is widely expected to dance to the tune of China and already there are proposals to give new thrust to the stalled Chinese BRI project. Also Prachanda is looking for strengthening further economic relations with China which shares a long border in Nepal’s north.

Culturally, Nepalese are very close to India and even today recruitment is made for Indian Army’s Gorkha regiment. Nepal also shares a long border with India on the southern side in particular. This border is very porous and is widely used for smuggling drugs and counterfeit notes from Pakistan. Pakistan’s ISI have set up several sleeper cells along the UP border using mainly Bangladeshi refugees. These are matter of concern but Indian authorities, aware of this problem are taking actions the check the menace.

There may not be significant geo-political concerns from Bangladesh. But its slowing economy particularly after covid is matter of concern. The increasing Chinese presence the country too needed to be watched carefully. The political situation is also volatile in view of the coming general elections in 2024 and the hard campaigning by the anti-India opposition party BNP to unseat Awami League.

In sum, the emerging geo-political and economic situation in countries surrounding India in the sub-continent is certainly a matter of concern for India. Political instability and sagging economies surrounding India needed to be handle deftly so that spill-over effect is minimized. So far India has played its cards well, diplomatically, politically and economically. It has extended support to countries like Sri Lanka and a bailout is happening there. Nepal could turn out to be a headache in the face of emerging political situation, which needed to be handled carefully.

Pakistan however is major source of worry and some hawks there may indulge in some misadventure to divert attention of the local population. There is not only economic woes, the frequent attacks by TTP terrorists have made life insecure there. The inflation is now around 24 per cent and one roti costs Rs 25 Pakistani rupee there. There is widespread food shortage as well particularly after the unprecedented and widespread floods in KPK area and Balochistan. Pakistan has also run out of fuel reserves and the foreign exchange is at its lowest level. (IPA Service)