15 minute read
The Impact of Changing Geopolitics on the Future and What this means for Idia
Dr Sunder Ramaswamy, Vice Chancellor, Anna University
We cannot forget the year 2020 not just because of the pandemic. If you go back to MarchApril period when the lockdowns started globally, including in India, it led to an economic and financial slowdown, which we are still recovering from.
The migrant labour from various States wanting desperately to get back home pointed to a festering issue of social justice. The year started out in February/March as a public health crisis because of Covid19. The GDPs of countries have shrunk and they had to pump in a lot of money, building up debt. We still need to address the economic crisis in the short run.
In the US, the death of George Floyd led to the ‘Black Lives Matter ’ movement. In Europe, there were protests against police, anticolonialism protests and bringing down of statues. So 2020 has three crises that are still with us—the public health crisis, economic crisis and a social justice crisis. India is not immune to any of them. We are in the thick of all of these things.
The Four Horsemen
Condoleezza Rice, who was the US Secretary of State and the Foreign Affairs Minister under President GW Bush, wrote in her 2017 book titled, ‘Democracy, ’ about the rise of the four horsemen of the Apocalypse, which is an old Christian biblical myth of four horsemen who foreshadowed the end of the world. The horsemen she referred to are populism, nativism, isolationism and protectionism.
In the last few years leading up to 2020, globalisation itself has been on a retreat. England pulled out of the European Union after the famous Brexit movement of 2016, which is still unfolding. The US elected Donald Trump who practiced ‘America First, ’ or isolationism policies.
Every country tried to follow through by being more isolationist, more native, triggering antiimmigrant sentiments, more protectionist by banning imports and becoming more self-sufficient and self-reliant. We have also launched ‘Atmanirbhar ’ —the self-reliance movement in our country.
So whether it's Brazil, UK, Turkey, Hungary, the United States or Russia, the pendulum has swung more towards these Four Horses. This has been the context of the last few years against which Prime Minister Modi got re-elected to a second term with a fairly sizable majority. He also launched a very ambitious program to make India a five trillion dollar economy in the next few years. It is important in this changing geopolitical landscape. What does this mean for our own country?
India remains a country with enormous potential. We enjoy the demographic dividend. More than 50% of our population are under the age of 25 or 35, unlike many other countries. Our age pyramid is very conducive for an economy that's growing because the youth provide the labour force, they provide ideas, they could be entrepreneurs and they could be the future. We have still not leveraged our true potential and we are now in the midst of solving those three crises of Public Health, Economic and Social Justice.
IOT and AI Are Here to Stay
We are going through the fourth Industrial Revolution where the relationship between humans and machines is increasingly being questioned and reimagined. The first industrial revolution came about in the 18th Century when steam became the source of power. In the second industrial revolution, electricity became the source of power. The growth of IT and Communication marked the third and now we are in the fourth Industrial Revolution where we experience the combination of computing data, Internet of Things, AI and machine learning. Machines are not just assisting humans. They are in many cases replacing us and are also inventing themselves.
This has been going on for the last 15 to 20 years. We seem to have taken a pause as we are caught up with Covid, but these forces are not going to get rolled back. We have both benefited and hurt by them. With IT and ITES boom in India, we have substantially contributed to this.
Future Jobs
As many of the lowend skills get automated, the question of, ‘Where are the future jobs?’ becomes a very relevant question. How do you keep skilling yourself in order to anticipate what the jobs of the future are? The current generation of youngsters may switch five or six careers during their work span. What sort of opportunities will be there and how do you prepare yourself?
While globalization has taken a temporary pause, the pandemic lockdowns have shut down travel to places and seeking jobs. We are all locked down in our places with ‘ work from anywhere ’ culture. But on the flipside, technologies have also made it possible now that you can sit in one place and work for another place. There has been the separation of labour from worker.
Once upon a time, in order to work, the person had to be there. But now there are jobs and parts of jobs that can be done remotely while the worker is somewhere else. It has an interesting implication for the difference between work and the person who is doing that work. Many jobs still require the person to physically travel like getting a haircut or pouring cement, but there are many jobs that can be done remotely. As we have got used to working from anywhere thanks to Zoom, Skype and Teams, companies will have rethink about the nature of jobs and careers.
Assault on Democracies
In terms of the geopolitical landscape, in the US, Joe Biden is about to become the President. We have seen the assault on democracy that the current US President launched. It points to the fragility of democracies around the world. India should be very proud that it has remained the largest democracy for the longest period of time, except for the short period when Emergency was in force. But, we should never take Democracy for granted because it is quite a fragile process. The US experience teaches us that.
Not many barriers separate democracy from demagoguery. There has been a rise of strong men across the world—Bolsonaro in Brazil, Erdogan in Turkey, Viktor Orban in Hungary, some middleeastern Sheiks and Emirs, Xi Jinping in China who has pretty much reconstituted the Constitution so that he can be in power for life, and Putin who has been around for the longest time possible.
The history of the world has always seen struggles between authoritarianism and liberal democracies and more so, in the last 50 to 70 years. Now, in some ways, democracies, liberalism and free movement of goods and services have been under assault and this trend has been amplified by the pandemic lockdowns.
Once vaccinations happen, what sort of a world will we go back to? We have all lived through this period now for almost ten months. By the time it's over, we will not go back to March 2020 normal. We are still discovering what the normal will be for 2021 and 2022 in terms of freedom of mobility of labour within a country and across countries and how schools and colleges will operate. There will be hybrid learning and so, for every crisis there is an interesting opportunity. Nimble organisations may leapfrog in certain ways. Some IT companies have already asked employees to work from anywhere for another ten months.
The K‐Shaped Recession Is Not OK
Though our economy has shrunk by 25%, which is quite dramatic, we need to remind ourselves that the Indian economy started to sputter even before Covid hit us, putting pressure on the Prime Minister 's plan for making us a five trillion dollar economy. Thanks to Covid, we have lost about a quarter of the GDP and we are in dire straits. How do we get out of it? Economists come up with recession and recovery models—U shaped, V shaped or W shaped. In the Ushaped model, the collapse and recovery is gradual; whereas, in the Vshaped model, both happen fast. In the Wshaped model, there is a second shock.
For the very first time, we also talk about Kshaped recession. Here, one part of the economy goes up very fast and the other part goes down very fast, which means that certain people who have money, skills and who are portable may recover from this pandemic faster than others like migrant labourers, beauty salon technicians and the hospitality people. The downward slope in ‘K’ means that the plight of some people is getting worse.
This can also happen at nation levels. There are certain countries like the US, Europe and Japan who were better positioned economically before the pandemic and they may go up fast. But some countries in the global South may slide even further because the pandemic has created such a crisis for them.
The Three Who Revolt
When certain people in our country go up the ladder even as a vast majority slides down, it will create tensions on the political and social side, as Karl Marx pointed out. More recently, Thomas Piketty, who wrote the famous book on ‘Capital in the TwentyFirst Century, ’ brought home the point that if we create islands of opulence and islands of opportunity while being surrounded by a sea of deprivation, that is not good and there will be revolts on the streets.
Based on a study I had done, throughout the history of democracies across the world, three groups of people tend to protest and they are the students, industrial workers and farmers. The middleclass, the white collar workers and the homemakers don't protest. Unfortunately, in India, we have all these three groups in huge numbers. So politically, we have to be very careful and sensitive that these three groups are not going to catch up like a tinderbox when they see their opportunities slipping away.
Because of IOT, machine learning and use of data and automation, the share of labour income to GDP globally and within India has been declining. It means that jobs are not there in the same numbers as they were 20 years ago.
There is also a disconnect as we have created many new opportunities that didn't exist 10 years ago, like the rise of the gig economy, as in the case of Ola or Uber drivers and Swiggy or Zomato delivery persons. Statistics may not quite capture what the opportunities are and we need to rethink our labels of white collar, blue collar, skilled and unskilled workers. We interact with each other, with capital market and the government in new ways.
The geo-political landscape is dominated by the forces of technological change. India is somewhere in the cusp of all of these changes. Recently, there was a big trade agreement—REPC and many Asian countries signed it. New Delhi stayed out of it despite a lot of pressure. India has been very selective in choosing to be part of global agreements. It is part of the G20, BRICS and ASEAN.
India’s Challenges
There are real and perceived challenges that China poses. This is a historical struggle and it is not restricted to the last 50 or 70 years. China is a giant of a country. India has security issues given the recent border incursions by China.
Where does India fit against an expansive China, not just in the region, but also in the third market countries, be it Afghanistan, Kazakhstan, Kyrgyzstan, and Uzbekistan, which have historical ties with India given the Mughal history or places like Sri Lanka and South Africa that have historical ties with India? Chinese have already reached them well before us and it is going to be a struggle for us, for quite some time.
Globally, we have had struggles between capitalism and communism; and some of those debates have all been consigned to the pages of History, because there are very few countries that are purely non-capitalist. Every country now is a mixed shade of socialism and capitalism, including China and India. China looms large and will impact India ’ s stand on exercising its rights even in South Asia and how it deals with its neighbours.
History Favours India
To give a historical context, 300 years ago, the richest region of the world was the Mughal Empire. We forget that the Mughal Empire contributed an incredibly large portion of the global GDP, followed by the Chinese. Together, these two civilizations contributed about fifty percent of global GDP. Nobody heard of Europe or the US at that time.
But in a very short period of 300 years, we have been relegated to the background as an alsoran. China and India want to reclaim their place and view the last 300 years as pure aberration where the West suddenly became dominant and it was not the historical order. China, of course, has been much more successful in reclaiming its day under the sun because they started the reforms in 1979. India started much later in 1991.
For India, the growth has always been in spells and spurts. Our periods of growth have been followed by periods of downward spiral and then we rebuild. There have been lots of successes in the last 25 years of Indian growth—the reduction of poverty, incredible opportunities for the youth and global brand names like Tatas and Reliance. There have been huge challenges too —the rise in population and the rise in inequality within the country.
Ways to Navigate Forward
India is at an inflection point in history which is even more accentuated by the Covid crisis. It has literally brought out into the open the need to shore up our health infrastructure, not just in the metros and Tier1 cities but throughout the map of India. India has spent a lot more on military than it has spent on health and education cumulatively over the last 50 years and that starts to catch up at some point.
Second, how do we address the deficit in education? I am an educator and, as I mentioned, we are in the midst of the fourth Industrial Revolution, which means there is an enormous premium being placed on how educated today 's youth are, to handle the changes that are happening. For every kid who has done really well, there may be five or six who have not benefited because we have underinvested in education. Covid has forced us to look at ourselves in the mirror. We need to prepare the human capital for handling a fast-changing world.
Third, we have done a better job in the last 25 years of reforms where we, as a government, have created more opportunities for the private sector to tap into creative opportunities. We can be pleased with the rise of Reliance, Infosys, TCS, Hidesign or any Indian companies that are doing extremely well. It requires the government to give space for entrepreneurs to succeed.
There are industrialists and associations that bat for the government to be even more enabling and to make credit more readily available. There is an opportunity for the present central government to think about its script to propel the country to become a five trillion dollar economy or even to double the size of the current GDP.
A lot of things still need to happen and can happen. The history is with us. The Centre and the States must allow individuals whether it's a student or an entrepreneur or a worker to become the best at what they are able to become and that should be the enabling function of the government.
Lastly, how do we make use of our democracy? As a democracy, India can play a very crucial role in geopolitics because we are not seen as an aggressive power like China or Russia. We are certainly seen with better eyes than our neighbours—Pakistan or Bangladesh. But can we leverage what Joseph Nye, the famous American political scientist called the ‘ soft power, ’ and play a much bigger role in global conversations —whether it is G20, the UN, the World Bank or IMF—because of its moral authority of having been a democracy respecting individual rights and minority rights?
Need to Articulate Our Strengths
We can find flaws and problems in our country. But if we compare India with countries in Latin America, Africa and Asia, India is definitely a lot better. We haven't quite figured out a way to articulate that at the highest level and secure a seat to the table to have those conversations, so that we become the right countervailing force to China or Russia. The inflection point provides an opportunity for Prime Minister Modi and our Chief Ministers. We need to start planning for the postvaccine phase. The race horses are waiting for the gates to open.
The CEOs of some of the top most companies in the world are Indians. We have tremendous potential both within and outside the country. We need to take our rightful place under the sun as we have done historically, other than the brief period when the British dominated us. It depends on how the government enables us and how it removes itself as an obstacle and allows for the individual freedom and talents to flourish. That is my hope for all of us both as a citizen and as an educator. We all should strive for and build a better future.
