India is safe

Brij Bhardwaj
With chaos on the horizon and India’s neighbours bleeding, it is a matter of satisfaction that India is doing reasonably well and has managed to keep its head above water despite choppy weather and world-wide crisis on account of covid epidemic. World was just recovering when it was pushed into another crisis by Russian invasion of Ukraine, which has pushed up the prices of all food items and crude oil. Result is that nearly seventy developing countries in different parts of the world are on verge of becoming defaulters on account of foreign debt.
As for our neighbours, things have reached a bleeding point . One saw how people in Sri Lanka stormed the Presidential palace and Government offices forcing the President to flee in the middle of the night . Hungry people are marching the streets with shortage of food grains, essential items like fuel and medicines not available. Country has no foreign exchange to pay for imports of these items. Situation was bad because of covid which stopped flow of tourists, a major earner of foreign exchange, and was made worse by reckless loans taken to build ports and other projects from China which have not yielded any revenue.
It is feared that it will take a long time before the situation becomes normal, as inflation is running at a break neck speed. It is no better in Pakistan where people have been asked to cut down tea drinking to one or two cups a day as there is no foreign exchange to pay for import of tea. Pakistan spends several million dollars for import of tea. It also has taken huge loans from China and help from countries like Saudi Arabia. Pakistan industrialists have been asking its Government to open trade with India so that imports become cheaper.
Situation is also bad in Europe which is badly divided on account of Russian invasion of Ukraine. In view of sanctions imposed by USA and NATO, Russia is threatening to cut off gas supply to countries like Germany and Italy, which may push them into darkness. On top of it, weather is also becoming uncertain. There are warnings of heat wave in Europe , USA and other parts of the world, which in turn is affecting agriculture. For instance in India while South , East and West had excess rain, there is big deficit in north. As a result paddy sowing has been affected.
Situation is also bad in Nepal which has only enough foreign exchange for a month left. Under the circumstances India is having problems but is in happy position because of adequate food stocks and a large foreign exchange reserve. A stable Government at Center is trying to reduce pressure on our currency which has taken a hit as far as exchange rate against U.S dollar is concerned but hit is not so big to create major problems for us.
The Reserve Bank of India has taken many steps to protect Indian rupee by allowing settlement of bills all-round the world in Indian rupee. The flow of foreign investment is also continuing and our industrial output is picking up. The presence of a stable Government at Center is a big plus factor in meeting crisis, which has hit not only developing countries but also countries in Europe and America. Inflation has become a major problem and countries like USA have reported unprecedented hike in inflation. Even China, a major power is facing a tough time. Its growth rate has fallen and many rural banks are unable to pay depositors because of bad loans.
Many countries who had been given soft loans by major Chinese banks under different schemes are not in a position to service these loans. This in turn is affecting the ability of major banks in China to help smaller banks. The crisis has come at a time when organisations like IMF and other international organisations also have limited resources to meet world-wide crisis.
There are bad cases like Sri Lanka, Venezuela and Lebanon, but crisis is not limited to few as number of countries facing problems is rising every day. Only good news is that crude price have fallen, which may provide relief for a country like India which depends on imported crude. But our strongest defence is political stability, food stock in hand and foreign exchange reserve.

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