Pole-Vaulting to Economic Security for India
Bhakti Rupika Anand
FY BSc (2023-27)
Reading time- 3 minutes
If national security is a tree, economic security is the roots anchoring it. India, with its sprawling branches as one of the world’s biggest and fastest-growing economies, stands underneath the canopy of opportunity and challenge. The journey of economic security, similar to the growth rings of a tree, isn’t only a policy making but a multifaceted and dynamic effort, involving both, the safeguarding and enhancement, of monetary assets, infrastructure, and strategic assets.
In a world shaped by global interdependence and geopolitical turbulence, India’s approach to economic security takes on significant noteworthiness, requiring an all-encompassing comprehension of the challenges that stand tall like imposing branches.
What are the obstacles that India faces in its journey to achieve economic security? How can India use its qualities and overcome its shortcomings to pole-vault to the next level of development and advancement?
India’s trade deficit with China widened to $48.7 billion in 2020-21, highlighting heavy reliance on imports from sectors such as electronics and machinery, and facing barriers in global market access due to tariffs and intellectual property challenges. India’s global trade share stands at a mere 1.7%, starkly behind China’s 13.3%. Additionally, India significantly trails behind China in attracting foreign direct investment (FDI), crucial for enhancing productivity and innovation.
India’s energy security confronts challenges arising from its increasing energy demand, reliance on oil imports, susceptibility to price fluctuations, and environmental impact. Despite being the world’s third-largest energy consumer, India imports approximately 85% of its oil and 53% of its gas. The oil import bill for India reached 1.4 billion in 2019-20, constituting 18.7% of its total imports. With 6.8% of global emissions, India faces the challenge of balancing energy needs with environmental sustainability.
Lagging in innovation, India ranks 48th in the Global Innovation Index, behind China and Singapore, and invests only 0.7% of GDP in R&D, significantly less than its competitors. Additionally, India struggles with a STEM personnel shortage, having only 216 researchers per million people, far fewer than China and Singapore.
India’s economic security is intricately linked to its national security and political stability. The nation contends with various internal and external threats, including terrorism, extremism, cyberattacks, border disputes, and regional conflicts. Although India’s defence expenditure was the third-highest globally at $72.9 billion in 2020, it constituted only 2.9% of its GDP. Maintaining social harmony, equal education, and good governance pose additional challenges, with India ranking 53rd in the Democracy Index 2020, lagging behind Singapore (16th) and Taiwan (11th). In the Corruption Perceptions Index 2020, India stands at 86th place, trailing China (78th) and Singapore (3rd). These challenges have a profound impact on India’s development narrative. Limitations in trade and investment, high energy and environmental costs, technological and innovative shortfalls, and security risks collectively hinder India’s potential for job creation, poverty reduction, improved living standards, and sustainable growth. As of today, due to the Russia -Ukraine war and the Israel-Hamas conflict the global economy is facing repercussions. Supply chains have once again slowed down and increased inflation. Although India’s GDP predictions show growth, we are leapfrogging towards our goals. To overcome the challenges and accomplish economic security, India requires mitigating activities at all three levels: the government, the private and the public sector, as well as in the international community.
India needs to diversify its trade and investment partners, reducing dependency on China by engaging more with the European Union, the United States, and ASEAN. Enhancing business operations, attracting foreign direct investment, and supporting domestic sectors like electronics, pharmaceuticals, and defence are essential. To address energy challenges, India must increase energy efficiency, reduce oil imports, and invest in renewable energy sources, including solar, wind, and hydro power, while adopting measures to lower emissions through carbon pricing, emission regulations, and afforestation. Participation in global climate initiatives like the Paris Agreement is crucial.
Investing in research and development, enhancing the innovation ecosystem, and fostering entrepreneurship are vital. Prioritising STEM education, improving digital infrastructure, and leveraging strengths in IT, biotechnology, and space technology through international collaborations are key steps. Strengthening defence, modernising military, enhancing cyber security, resolving border disputes, countering terrorism, and promoting regional stability are imperative. Upholding democratic values, ensuring social justice, and combating corruption are foundational to India’s economic and security strategy, requiring resilience and strategic adaptation to fiscal, social, and geopolitical challenges.
India’s economic security is a dynamic journey, not a destination. It requires unwavering dedication, flexibility, and collective vision. By transforming challenges into opportunities, India paves the way for a future where economic stability and growth are in sync. This path leverages strategic insights to overcome obstacles, fostering an environment of economic resilience. As India strides forward, economic security becomes a cornerstone of its identity, ensuring prosperity and well-being for generations to come, like a tree rooted in strength, reaching for success amidst global shifts.