For a developing country like India, economic security refers to its ability to pursue its own developmental goals, independent of threats, internal or external, or coercion. Economic security is a key pillar of national security. A report by leading Indian think tank Gateway House brought out a report explaining various pillars of economic security and measures to strengthen it.
The Indian government has pursued this in several ways, including by seeking partners to aid India’s economic growth – the U.S., Japan, the E.U. and China. However, the past two years have thrown up several new challenges, complicating this process, the report pointed out.
The Covid-19 pandemic has hit global supply chains and caused severe economic hardship. India has a military confrontation on its borders with China, severely complicating that relationship. Among India’s immediate neighbours, Pakistan and Sri Lanka offer stark examples of poor economic policies leading to internal turmoil – a reminder of the need for strong and uninterrupted growth in a country with a poverty rate of 10% and a highly aspirational population. Finally, the conflict in Ukraine is leading to a global commodity price shock – for food, fertilisers, energy and raw materials, the report further noted.
Covid and Ukraine have shown the importance of diversification – be it the supply chains for the manufacturing sector, energy imports, raw material supplies, technology or for capital. However, this comes at a cost. For instance, investing in an oil field in South America can help reduce India’s vulnerability to high oil prices, but it also requires capital and other resources like management bandwidth and technical capabilities to do so. Investing in natural gas and fertiliser manufacturing is more expensive than buying the fertiliser outright from the global market – and there are times when markets fail.
The past two years have resulted in multiple such failures and consequent economic pain. The report with series of papers examines six important dimensions of economic security in India, the challenges they present, and the mitigation measures needed to set them right.
This study has been supported by The New Energy and Industrial Technology Development Organization (NEDO), Japan through their Representative Office in New Delhi.