India May Slip Into Recession In 2026 27

TITLE: “India May Slip Into Recession In 2026-27” CHANNEL: The Wire DATE: 2026-04-01 ---TRANSCRIPT--- Blocking of Strait of Hormuz is what is is causing havoc.

All major economic crises have happened with the actions [music] individually or bilaterally triggered by the United States. What 26 27 looks like is our balance of payment position needs a laser eyed sharp focus. [music] The government has to keep an eye. The US economy could not perhaps be at its worst position. In fact, our Prime Minister’s statement in context to just mentioning the word COVID may have triggered a lot of people that oh, we need to secure. Catastrophic impact, economic impact of having a silent and a ambiguous position in foreign policy is rupturing the asymmetries in domestic macroeconomic fundamentals. We have a 30-day window. So, what happens after 30 days? What do you think India should do after 30 days? Since you overtly represent a higher interdependence with the United States, you become vulnerable to what the US wants you to do. Then you you cannot choose in that situation. Indian context at the level it is growing anything below 6% is almost a state of deep recession. Hello and welcome to this special discussion on the impact of the ongoing US Israel Iran war on India’s economy in particular and global economy in general. So, what we have seen in the last 24 hours is President Donald Trump making a big statement that he’s going to leave Iran in a week or two. Now, what does that mean? We do not know. The US markets have suddenly picked up in the last 24 hours after that statement. The opening of the US market was very positive. The Indian stock market also today has has moved up shown some positive signs because of Donald Trump’s statement that that he’ll leave Iran in 2 weeks. He said maybe three. He’s also said more significantly which is what the world in general wants to hear. He’s he has said that he’s going to leave the Strait of Hormuz from where 20% of the global oil and other products have have have come into the rest of the world, especially Asia. And the blocking of Strait of Hormuz is what is is causing havoc with the global economy, with inflation, etc. With the currency, the Indian currency as you know has crossed 95. Many people say that if it if things continue like this, it may even touch 100 in the in the next maybe 6 7 8 weeks. So, so there’s there’s some hope that Donald Trump will leave Iran to its devices. And if they leave Iran to deal with Strait of Hormuz and as Trump has said that other other nations may decide to deal with Iran on the opening of the Strait of Hormuz. Now, that’s that seems like a positive statement if the US stops its war and let the other countries negotiate with Iran. There’s a possibility that something positive will come out because Trump has not been supported by by his allies in in NATO, by allies in Europe, even Japan. He hasn’t got support in in his effort to militarily to to to open the Strait of Hormuz by force, by by by militarily countering Iran. So, most of his allies have said no. Many of his allies like Spain, France, etc. have even objected to their their territory or even their airspace being used by by America. So, Trump is very unhappy about that. Now, maybe he’s using that as a pretext. So, so what sort of impact all this is going to have on the global economy and more particularly on the Indian economy which which is seen as one of the most vulnerable most vulnerable in Asia. You know, given our dependence on oil, given our lack of strategic petroleum reserves very inadequate and and given the fact that we were already facing problems with regard to foreign inflows, dollar inflows into our economy. Rupee had been structurally been weakening much before the war. So, so to talk about all this, we we have with us Deepanshu Mohan who’s a professor of economics at the Jindal Global University director at the at this new economics studies at Jindal. So, so Deepanshu has been writing for us regularly for the wire. He’s been watching and analyzing this the events very closely. So, Deepanshu tell us what’s the sense that you get on where does the Indian economy stand in the say in the next few months. We I mean, there are many forecasts. People are forecasting many scenarios. If the war goes on for the next 2 months, there’s a scenario. Next 6 months, there’s a scenario. But general consensus that if for every $10 increase per barrel of oil uh we we lose GDP to the extent of maybe 0.5% or 0.5 to 0.7% inflation also goes up by point between 0.4 to 0.6%. Current account deficit also widens. So, so how do you see this situation developing? First of all, thanks for having me here. Uh I mean, one of the things to make this current situation and to unpack this at large as you you started the discussion is to see that how whenever the United States has acted indiscriminately perhaps in the past 70 to 80 years. If you look at the international economic history, all major economic crises have happened with the actions individually or bilaterally triggered by the United States. We can go back back to the Great Depression in fact. Federal Reserve acted indiscriminately that time. You had so many episodes of crisis shocks after that. In fact, the previous two Gulf wars, US was right up in center. So, the ’70s is more relevant. The oil shock of the ’70s. The oil shock of the ’70s, early ’90s, there was also a minor sort of a phase of a year, not that bad, but ’70s of course, we we call that as the period when things really went volatile. Now, one of the important things about the current scenario which is different to the past and the past is often helpful in guiding how you can respond better to the current present situation and plan better for the future is that the Indian scenario which is what we want to look at has been also vulnerable before. We have been here, you know. You have situations where oil prices shooting up for an energy dependent country like India will distort your balance of payments. India experienced a balance of payment crisis in the ’90s. And it was that balance of payment crisis that time which made us to undertake serious structural reforms. Now, perhaps I feel that since our domestic economy was fortunate to have fuel prices particularly under the current government, last 10 years generally if you see net net fuel prices were manageable. It did not have a huge impact on the current account. Our import prices bill regulated it. The issue with respect to our currency, the issue with respect to our economy was happening more in the balance of payment terms on the capital account. Because a lot of the investment was going out. So, we have the recent data coming out today as you already pointed out. 1.6 lakh crore of FI’s, foreign institutional investment moving out. Which means in in the previous financial So, so in context to what has happened in 2025 26, what 26 27 looks like is our balance of payment position needs a laser eyed sharp focus. The government has to keep an eye now not only on what is happening on the capital account. It has to manage some capital controls. I would probably in that regard mention that managing the rupee or the rupee depreciation may not be the most salient approach because there’s no one way of managing a currency. And again, past sort of 100 years of economic history tells us you can’t manage exchange rates. You can only keep them regulated and floated in a certain range. So, the RBI is doing what it can, but what you would find now in the current situation is a scenario that the most the government can do is keep its current account deficit or its import bill particularly in terms of petroleum oil imports in a certain manageable range. Now, that’s a function of two things. There are external factors, there are internal factors. External factors may have you thinking war contained its impact contained. India is to the energy imports may or countries to be money. In such a way both sides about children in fact uh current government has come out so vocally about saying that we have diversified our energy imports. And it has been making that argument now for many many years. But it seems to us that the impact is not just on petroleum. You know, it’s also LPG and other factors. So on that geographically we are still vulnerable to our dependence on West Asia. Because LPG 60% of the LPG comes from from exactly So in that I don’t think there’s any diversification. Exactly. And the LPG crisis has a direct link with the low income and middle income group in terms of issues of food security. The other big issue which I think is not getting that much sufficient attention is the fertilizer crisis. Which would have a direct impact on food security and amongst the time where if you sub optimal monsoon season this may have a direct impact. So I think The next guy is prices and fertilizer crisis is in some way affecting the US also. US farmers are paying The US impact and I think the US feeling the impact of this war and combined with the effect of that with the tariff reciprocal tariffs the Trump the US economy could not perhaps be at its worst position and I think it is I mean even not it requires a completely separate conversation to talk about what’s happening in the US. But the US has one fortunate you know identity privilege. It manages a currency which is part of the world’s main reserve currency basket. So they can print excessively they can finance deficit. Now India doesn’t have uh too many options in financing the current account deficit. I got a money current account deficit burden in import bill burden. Or home Capital account may be a problem or current account may be money. To fill to a double The double crisis is what is the rupee impact on the current war and you can see the rupee value rupee value is 100. Uh most of the time in fact uh what is the become of the sector the only thing is we have been able to manage in the last 20 years our foreign currency reserves to be at a respectable position where if tomorrow there’s a crisis like this we are more secure or more reserved. Having said that the government’s options to finance the current account deficit is connected directly with the performance of its domestic macroeconomic management. Which is the point that as I was earlier making is not at a very good uh state. Uh you have fiscal deficit which is relatively well contained to the extent the numbers are clear. But we don’t know in a transparent manner from the government where what is strategy going to be in managing both the current account deficit or the capital account and manage its energy imports. One of the things you would expect a government in such a situation to do is come out with a white paper give a 3-month 6-month 10-month strategy that this is what we are going to do. Some visibility on how we will manage What we will manage this and we have been before here many countries have been there. India is not isolated. In fact much like to the advantage of India because you are a large domestic economy we can shock absorb some of these shocks in a relatively better position than smaller island countries or countries which have a huge export dependence. Now one of the things I think which is very important for the audience to realize is There is something both of these things are both important to monitor our inflation level. I do consumer price inflation to say I’m index through measurement about cotton. I know this is about other cost of oil import XOBs dollar barrel water. You expect the CPI level to be around 1.11.2 percent at a rise. At least at that level. But what is the major current account deficit to do the same chart percentage of the current current account deficit current account deficit is 1.2 percentage of GDP. I got to score up at 2.4 to 3.6%. Roughly means this is estimates from Sajid Chinoy and others. Which would mean that you are then suddenly in a balance of payment tough. Now the government that time has only two options. One is you borrow in immediate sense which I think is already something the government has done. Uh you can borrow excessively through help of central bank open market open market operations our future to borrow exactly liquidate the second is you cut down on spending. Manage your budget and look at your central budget. Now is me I got a home in the valley of the body here because the union budget I had a revenue expenditure home big government already fiscally up near both tight record. Uh committed expenditure this is home home capital expenditure burden. What is he the same as government expenditure come which is capital expenditure in areas of infrastructure other things. Now the flip side of that is if you reduce capital expenditure or reduce public investment your GDP or your growth levels will even take another nose diving level. So if you’re already growing at 6.4 6.5% or let’s say maybe at the level of 7% which is anticipated and much of that growth is happening through government spending. And if your government spending in capex also comes down So then you have a bigger problem and I think the exacerbation of the domestic macroeconomic situation happening as a result of a vulnerable foreign uh you know position is exacerbating what the impact is. Now I think where we have to really look at this critically is what has an institution done or what has any state done or what has any government done to manage this better predict this better. Like we seem more reactionary than ever before. I mean if you compare on one specific thing up next strategic reserves key back curry oil key. Yeah I was surprised India What and then exactly billion barrels of reserve China and India were almost at the same position if you talk about the early 90s early 2000s we were almost at the same level in managing strategic reserves in terms of oil. China’s developed tremendous infrastructure capacity in last 6-7 years because they realize that the entire petrodollar market I get it that way. The US key long-term strategy here to create an artificial scarcity of dollar make countries more jittery demand more dollars dollar pricing that side You know this is a mistake that our government did not pay any attention at all to the strategic petroleum reserves and we today we are at a situation we have I think less than 9 days of strategic petroleum reserves. One major I think gap is that that our strategic reserve infrastructure capacity has not been at the level it ought to be number one. such low reserves also has an impact on your balance of payment and on the on the rupee. Suppose India had had a had strategic petroleum reserves It would have not impacted. Something like China’s if not like China’s maybe half of that say for the next 3 months. Things would have been better on the BOP front and on the rupee. One of the big things about spot pricing and reactionary market forces is if you anticipate a crisis which is where panic can spread in you can see long queues at petroleum uh structures which was happening last few days back. In fact our prime minister’s statement in context to just mentioning the word COVID may have triggered a lot of people that oh we need to secure a more reserves. In a completely different context. But then but the moment he said COVID uh I think people suddenly they were taken back to their nightmarish memories during COVID. So cycle the psychology of panic that sets in can work in a very different order. I think whoever whoever wrote the prime minister’s speech also committed a blunder by introducing the word COVID. Yes because that that those narratives are never received in that sense because you’ve come back from a memory or trauma of you know big big deeper crisis. So strategic reserves infrastructure capacity develop new on a year major lapse here definitely. What is the impact balance of payments beyond a rupee beyond a dollar reserves beyond a year over time what I but do see what I do know do key also I mean I think it’s a big problem is we are not taking the courage in our foreign policy positioning in continuing the relationships we want to nurture. Now I’ll give you an example. The idea was that let’s delink or our energy dependence on specific countries maybe buy cheaper crude oil from market forces from Russia and countries other partners. But then we became vulnerable when a strong assertive push was made by the US uh in asking us to reduce our oil dependence on what would be seen as non-US allies or countries that the US had trouble with. Now, you need courage. You need continuity. You need courage, and you need risk aversion. Now, what has happened is the countries which you were buying at a cheaper rate from or at a discounted rate will no longer give you those discounts, number one. We’re not getting any discounts from Russia now. Seconds, and most of these countries will also second-guess and second-doubt what is that you’re looking for beyond market forces in terms of continuity in relationship. And I think that’s where a lot of the multi-alignment approach that was being projected in foreign policy stands to be questioned. If we are actually multi-aligned or we are being too dependent in a certain sense, while being silent, I mean, there is nothing official on the record which may say that India is tilting or pivoting on one way or the other, but the interpretation of what we can see right now is that the catastrophic impact, economic impact, of having a silent and ambiguous position in foreign policy is rupturing the asymmetries in domestic macroeconomic fundamentals. Here, you know, there’s another big blunder in my view that we committed. Until 20 18, um India was getting oil from Iran on very very favorable conditions. You know, they used they took care of the insurance cost also. And India was paying in rupees. So, so just imagine today’s situation. If you are not paying dollars, and dollars are so scarce now for India, India is trying to save every dollar that it can. If we had If we had continued the oil imports from Iran on a rupee basis, and discounted oil, India would have been in much better position today because when when under Trump’s pressure when India stopped uh buying oil from Iran, and we moved to other entities paying dollars, um there is some data to show that we we were actually 6 to 7 billion dollars a year uh is is what we were saving when we were buying from Iran. So, now that we’re paying 6 to 7 billion dollars extra uh for to import the same amount of oil which we moved to other countries, you know, stopped buying from Iran. I think that’s So, so now that the question now is going forward, should India whatever the US says, should India continue to buy oil from Russia and Iran since um why should India just you know, its decision depend on what the US says, you know, that you can buy now, you can’t buy now. So, suppose tomorrow Trump says, “Okay, now you stop buying from uh you know, there’s a 30-day window with Russia, right? We have a 30-day window. So, what happens after 30 days? What do you think India should do after 30 days? I think I think so. I mean, these these are these are all valid points in context to a government which would have I think a conviction uh and courage to stand by principles of what it considered as non-negotiable terms in foreign policy and economic interdependence. If you are going to compromise in making decisions to be extremely volatile under what would be a very irrational uh American president, uh and the word irrational is very critical because if you observe any indicator in the US economy right now, the level of what is volatility in that economy is now cascading into the entire world um structure at large. That’s precisely what is forcing Trump now to to retreat. And Iran wanted Iran knew this. You know, Iran’s uh conscious effort to prolong the conflict as much as possible In fact, was played played into the hands of those who realized or under-stay-estimated that oh, like what happened in Venezuela or what happened in any other context, um whatever the US wanted would would get what it wants. We’ll know better about the the the impact of the war or the success behind what the US was trying because in the world play of narratives, we don’t really know what happens. But I think one of the things which one has to understand in the Indian standpoint is if our approach has been entirely conceptualized and conceived as multi-aligned, our economic interdependence then in that case has to reflect this, and our ability to not be equally vulnerable. See, why is a comparison with the 1990s being drawn in 2026? It’s bizarre. It means that the efforts that we have undertaken so much in all these decades to diversify to a naught or something, yeah. To coming to a naught. Our our oil imports I mean, this point around energy imports has been said so many times. So, Russia was a country which you were trading with despite what Russia was doing with Ukraine. You said it’s not our business to engage with that. But to the fact that the once you make a decision with trade another country dependent on a partnership with a third country uh you know, to be aligned, there is no end to that. By the way, Russian oil supplies was with a price cap imposed by US and Europe also. And Europe uses much of the processed Europe gained much more from Absolutely. Russia’s oil supplies than we did. I think that was that was one mistake. If you look at the last 7 to 8 months, one big mistake of India not speaking out against the issue of its dependence on Russia, for example, or its economic engagement with Russia to be separately treated from India’s relationship with the US. I do feel that there is some kind of an internal discord on this as well within the government. I asked that question, and deviating away from the academic interpretation, I asked that question because I don’t see uh the Minister of External Affairs who uh Jaishankar explicitly mentioning that India’s US trade relations have nothing to do uh with India-Russia economic interdependence, whether it’s from buying oil or anything. That did not translate. What he said I thought they were fused. They were fused. That’s what we saw that they were very active in the fused. The government was not giving any Which means that somewhere within the government itself, the lack of clarity, conviction, courage, and continuity, I think, in standing by with what it believes, what it projects, what it wants to do, is somewhere now hurting us. It will hurt the common citizen, of course, no matter what and how you frame it. But in the future, and at least in the medium to long term, India would want to learn its lesson while managing, of course, what we want to do for macroeconomic reasons. It does raise a big question also on another C which I would want to just mention for the audience. Is a question of competence. Yeah. Does the Finance Ministry or at this point of time the government at large have the competence to correct Yeah. course correct when there is an economic crisis in a very important point. I just want to raise one or two more crucial very critical issues on course correcting. That’s why I mentioned now that we are buying from Iran and Russia, should this course correction continue or would it depend on Trump’s whims and fancies after things somewhat normalize? I believe that in a few weeks, I have [snorts] the conviction that in in about three, four weeks, this Strait of Hormuz will normalize. But the other aspects of the conflict may continue, right? Now, I can see that Trump is trying to isolate the Strait of Hormuz from the from the larger uh questions um that still prevail between US-Iran, uh Israel-Iran. So, those may continue. Those negotiations may continue, but Strait of Hormuz, I’m convinced, will will be solved in the next two, three weeks. Now, what happens after that is I just I just told you, Sajid Chinoy, who’s an uh economist on the Prime Minister’s Advisory Council, I heard him say on CNBC day before that even if the even if things normalize, even if the Strait of Hormuz, as you know, the traffic normalizes, he’s he said that oil may will continue to remain high for a while because after such supply shocks, prices don’t come down immediately. And he he gave one or two reasons. He said countries which have drawn down their strategic reserves will try to, you know, fill it up again, right? So, the demand for oil will will be little higher in the interim. So, oil prices may stay at about say, 95 to 100 dollars But but I want to just quickly add to this. I had made a very similar argument, I think, on this show few months back when we were celebrating the GST cut in rationalization that the You are right. The prices never came down, yeah. It never came down. They were rationalized. Why? Because firms, in this case in oil, you will see OMCs, they tend to profit for the period of time where they’ve incurred losses when the prices had gone up. This happened with post-COVID also. Absolutely. A lot of businesses, even MNCs, Absolutely. they they raised prices Absolutely. even when demand was very tepid, saying that we are recovering past losses. This is what airlines did, if you recall. They doubled prices of travel internationally. And I don’t see prices coming down even today. You know, there there was a time when Delhi-London used to be whatever 50,000 55,000. Now, today it’s not less than a a lakh rupees Delhi-London return, right? So, so so that will play out in the Indian system. Now, the other aspect is this course correction uh particularly is in the middle of war I was fascinated uh uh that that Malaysia which had signed a very adverse trade deal with Trump almost as adverse as India’s. It was a like a one-way deal and Malaysia had in addition had given a given an assurance that for future they will they’ll be geopolitically aligned with the with the US, which means if US took some action against against China or Russia, Malaysia will also uh you know, follow the US if there was a if there was a big kind of tariff uh regime against or if there was some quantitative restrictions on Chinese uh you know, imports, Malaysia will also follow it. So, Malaysia has seen sense and it has it has just gone out of the trade deal. Of course, they used the fact that the US Supreme Court had you know, had uh nullified the trade deal. India has not said anything. Again, there’s lack of clarity. Do you feel that India should also just get out of the trade deal and say that that these are the things that we will follow a more multi-aligned uh approach and we we won’t uh uh just uh you know, say yes to whatever the uh the US trade deal uh the one-sided deal says or uh the way it affects us because it it has an impact on India’s growth recovery also. Mhm. No, no, but I think to help us understand that the point which I was earlier making uh overtly proximate position to the US even from an economic standpoint doesn’t enable us to gain in a significant sense while uh sort of misaligning or I would say delinking our dependence on other countries. No, no. In any way in any way the point I’m trying to make is if your projection and [clears throat] and confidence as a as a big emerging uh nation and a big market, I mean, everyone looks at India as a market which has a large consuming economy. Much of the youth are in the higher consuming bracket. The workforce participation rate is high. Everything is going well on that front. So, if you have good fundamentals and you have good projections, you also need the conviction and courage to stand by with what you want to do. I think we have sent the right signals for some years now, but our policy ecosystem and our actual decision-making apparatus I would say within the government and if not entirely in conjunction with what the government is doing has not added inches to that. What it does is whatever vulnerabilities you face on the domestic front, they exacerbate automatically when you act in proximity to one partner. Now, Well, this is the question I raised around competence that when you have a crisis, you seem more reactionary to look at okay, this is a problem we are facing LPG key crisis here or this is the state of almost is blocked or this is something we will get through. That’s fine, but where are your strategic reserves? What are you doing to delink your dependence on one partner? What are you doing with your relationship with Iran? What are you doing with your relationship with other countries in the region? Yes, we did very well as a country to increase our terms of trade with Gulf countries. I think that was a very smart decision of the current government which one should give credit to the government for. But what you have at this point of time since you overtly represent a higher interdependence with the United States, you become vulnerable to what the US wants you to do, then you you you cannot choose in that situation. No, no, I’m you you you’re right. I mean, broadly what you’re saying is right. But I’m now pointing to a very specific course correction. Mhm. By committing to the US that we will buy 500 billion dollars worth of uh stuff uh you know, uh goods in the next 5 years, what we what we have done is and at the same time committing that we’ll reduce uh imports from Russia to the very minimum, you have essentially shifted your imports from uh oil imports from Russia and substitute substituted with oil imports from the US, right? So, that’s a natural consequence. So, I would I would so, so, so, so, this I got it. I got it. So, so, what we ended up doing was Mhm. we promised US uh with nobody ever does in trade history nobody ever made such a promise that over 5 years we will Yeah. But you what you did was you you drew down your uh the only the previous year you had a big agreement with Putin where you said we’ll increase our bilateral trade from 69 to 100 billion. Now, that 100 billion obviously had a lot of energy component, defense component. But you have moved all that without saying so publicly towards US. That goes I think there we can course correct in the current situation when things we come out of the war, we have to do that. see that. You’ll see that. So, I anticipate India and I’m not sure whether we will stick I mean, academics have that I think sometimes that privilege where even if we are proven wrong, there’s no one sticking any uh you know, uh problems to us. I think if I if I probably read in the current context of what may happen is you may not see a trade deal with the US. India may not go ahead with what it has been trying. I think the way very happy if that is the outcome. I I would probably anticipate India correction. That would be course correction. That would be course correction. Uh there will be some reassessment internally that maybe India should not become this vulnerable to a US-Israel axis. I’m quite sure that there would be some internal reflection. If not, then I don’t know where we are going. We’re going to a very dark zone. Uh India would need to sort of I think band-aid what would Russia would have interpreted as a fair-weather friend like India was buying our oil when it was suiting their interest. Suddenly when the US said oh, don’t buy the Russian oil, you want to stay take a step back. So, Russia would also want to look at an India-Russia relationship would have to go through a reassessment, reevaluation. How does Putin and Modi navigate through that? I think I’m reading some uh assessments of uh meeting which may happen at some point in time in 2026. In whatever is the scenario, I mean, forget India-Russia. Let’s talk about BRICS for example. You know, BRICS as a group, this was BRICS moment. If you wanted at any point of time would be a course correction. Exactly. This situation should lead to BRICS But my becoming much more My problem there has been my problem there has been that China’s presence in BRICS has made India’s ability to assert it is its own position to be quite difficult. That’s there’s no two cents about it. But that’s where I think India’s foreign policy position and what it is using the word strategic autonomy is tested. It is tested because it has to in some cases dehyphenate or delink from the US. Dipanjan, at the moment the charge against India is Mhm. This is not me saying. Absolutely. Objective geopolitical analysts are saying that India is seen as an outlier in BRICS. It’s not even doing what it can possibly do. I agree. I agree. I agree. So, which is what which is what makes me to question that what is your foreign policy strategy because your economic interdependence is not adding up to what you’re positioning Exactly. projecting. Up up even you will see areas where you will be vulnerable or this my option this time you will be vulnerable. interdependence Mhm. uh it’s far more linked to BRICS uh rather than just uh being seen uh rather than just this putting all your eggs in the US basket. No, no. Any amount of alignment with the US now is almost contagious. Yeah. I think any country which has figured it out if you want any historical reference for those looking at this, look at the history of Latin America, you’ll know. The entire Latin American region was decimated decade after decade when the US would pull out some trick and that would cause an impact on a crisis or a shock. You look at 1980s, 90s, Argentina, Brazil, all of these countries never could come out of crisis. So, India would stand to learn its lesson from this particular episode, I hope, that it does not engage with the US uh in an unequivocal, you know, preferential partner terms and rather diversify its economic relationship while not just politically projecting it, but doing it in economic terms of trade. I think our FTAs and calculation of doing more FTAs was principally a good good motive uh whether it’s with Europe. In fact, it is the India-Euro FTA that triggered somewhere Trump to get back on the negotiating table for trade with the US. Uh India-Australia relationship whether it is on other countries, the point you made about Malaysia is not a point about what India can learn from Malaysia, but what it can learn in that scenario is to act in convictions of what you want to stand as a strong country. We are extremely projecting ourselves in an acting action manner as a weak country by constantly giving up autonomy or decision-making power to another country. And I think that is where the US position and US relationship will stand to be questioned. So, anything in the next 3 years, if there is any lesson to be learned, is focus more on other trade partners. I think clearly look at what are your domestic macroeconomic fundamental weaknesses. You need more strategic reserves, be less energy import dependent. All of these cannot happen overnight. It will require more time, but to absorb the kind of impact you’re seeing either on the rupee or either on other factors, you’ll be still in a better position. My only question and concern is is there enough wisdom in the internal machinery of the government policy making and decision-making system to take that courageous step. What I’m seeing right now is and competence. Competence. You know, because because you do Yeah, finally coming back to our economy. You know, some of the structural weaknesses were already there before the Iran-Iraq war. Which was We all know mentioned the economic survey by the chief economic advisor. Two things that he mentioned which still sort of stayed with me and it troubles me. He said that that foreign investment shying away from India is something worrying and needs to be studied. And the other thing he said was the rupee uh is punching way below its weight. Now, post this Iran war, whatever happens in the next two, three, four weeks, state of war was perhaps opens, negotiations continue between US and uh Iran. Um What are the challenges for the economy in the medium term? Let’s say in the next 6 months to a year. Uh challenges to our GDP, challenge to our uh the the incomes of the poor, inflation, uh What do you How do you assess the uh the economy? the short answer to that this is a tough year for the Indian economy. We will experience uh a much much more lower than anticipated growth. Um our budget position for the government will go to a deep about say say 5 and 1/2% or 6% would be I mean somewhere around I I I avoid using a specific figure, but I wouldn’t be surprised that if the actual uh real growth number below 6% would be is is way below 6%. I mean definitely. And in Indian context at the level it is growing, anything below 6% is almost a state of deep recession. Yeah, yeah. Which is I mean in our terms it’s almost negative growth. Yeah, yeah. So, that is number one. Because every year is recessionary. Exactly. Because because every country a different stage of development for for those who sort of looking at this would want to understand that negative growth rate in recessionary terms in developed countries is very different from developing countries. Inflation I feel is going to be a concern, definitely not just not because of what we’re seeing right now, but since the impact of the current crisis will spill over to food security, it will have its own impact. And and do you think the concern on incomes Do you hope the private investment, which has been tapered for a while, will it recover? Will will foreign Because at the moment after the war, uh you’ll see that nations would be get busy uh you know, rebuilding their own economies. Like Gulf, we we were hoping to get a lot of money from Gulf. Now, what has happened with the with the Gulf, they’ve also suffered a lot of damage. They’ll be rebuilding their economy. In fact, some people are saying petrodollars Gulf may not be able to even invest in the US as they had promised earlier. So, So, most major economies will take care of their investments. So, what what will happen to India? I may number two gonna there’s a brilliant column by Ratan Roy in Morning Context. I guess that it come just couple of days back where he given this estimate and I think it’s a very important estimate that if you calculate what is called as the price elasticity of demand. The idea is that the tail can down but they have to tail can demand it doesn’t even do it because it’s an inelastic product as such. Yeah. A 10% increase in price of oil, which you are seeing already happening, leads to a compression of demand by 6%. Yeah. This is a calculation that he had done way back when price of oil was around 80, 90 dollars. The reason I’m mentioning increase in the 10% increase in price leads to a compression in demand by around 6%. Now, what it means is natural way as CPI or consumer price inflation levels go up, you know, in terms of an inflationary impact, you will see a larger compression in demand, which will negatively impact both your private and over time maybe public investment levels as well. But private investment will take a hit, which is already at a very vulnerable position. Yeah. So, you don’t expect private investment to pick up when you have a position of higher exogenous or external volatility. You in fact see private investment even when things were normal worldwide, our private investment was very tapered. Uh now it’ll be even worse. I think our industrial policy pushed towards a manufacturing led growth story, which allowed somewhere I think there was some conventional wisdom in the financial bureaucracy that rupee’s value depreciating is somehow is going to boost our exports. Yes. That’s never happened, yeah. It has not happened. Because exports on the contrary, the lack of focus on effectively promoting services has now. So, we lost what I would feel is a golden window. Fuel prices have low thing I’m good pivot concept to do we have no money here to at least 26 and I think beginning and middle of 27. At least if I would say the next 12 months, you’re not expecting anything positive on the economy front. I would be surprised and shocked if there is something that comes out that you have an 8, 9% unless you do some statistical hara-kiri. That is a scenario I would say. So, thank you. With that we wind up. Thank you, Dipangshu, for talking to us. We’ll keep this conversation going. There’ll be a lot more opportunities. This war is has not ended. Uh very dynamic situation. So, we’ll be we’ll have you back again with us uh Thank you very much for watching.