India’s South Asian neighbours have all seen sharp currency devaluations since early 2022. These are a result of maintaining artificially strong exchange rates, made possible by remittances from migrant workers. However, by postponing the inevitable devaluations, these states have made their economic crises much worse.
The Sri Lankan economy is showing signs of stabilizing after experiencing the worst contraction in its history in 2022. Decisive policies by President Ranil Wickremasinghe, timely Indian aid, and an IMF Programme have laid the groundwork for a return to growth. India and Sri Lanka must now shift from an aid relationship to one which deepens bilateral trade and investment flows.
A report on “E-commerce: A Driver of Inclusive Growth in Sri Lanka?”, co-authored by Ganeshan Wignaraja, Professorial Fellow in Economics and Trade, Gateway House, and Anishka De Zylva, Head of Public Policy and Corporate Affairs, Daraz Sri Lanka, was presented to President Read more
The dominance of the U.S. dollar in global trade and its status as a fiat currency means it is unlikely to be replaced in the near future. However, the repeated and continued use of sanctions has created the need for a multi-currency trading regime. India must now prepare alternative payment systems and promote the use of the Indian rupee in global trade.
India’s Northeast is developing and getting close to its goal of being part of the Indian mainstream in connectivity and business – which is also critical for the success of India’s Act East Policy. For both goals, Bangladesh and Japan are invaluable partners and friends. The troika’s collaboration can be a model in the region.
In 2022, increased sanctions were imposed on Russia by the U.S., E.U., and their allies. The track record of Western sanctions shows they are quick to be imposed, but slow to be removed. In the current environment, it is reasonable to assume that sanctions on Russia will stay in place for a very long time. India should plan its defence and commercial relations accordingly.
The World Bank has published a reform roadmap for multilateral development banks. It touches upon operational change, but in a limited way. The roadmap remains largely silent on how a 21st century World Bank can better address some of the long-standing frustrations that borrowers express about working with it and other such development banks.
The UK has been admitted to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP, a significant step forward for its efforts in achieving its Brexit goals. The benefits will be more strategic than economic, as it gives the UK a place in the new ‘Atlantic-Pacific’ region.
The focus on climate finance must take into account the high cost of debt, foreign exchange risk and weak public energy utilities in the developing economies. A creative and workable solution to all these issues is to establish a Global Climate Finance Agency, managed by a reputed multilateral agency with some of the capital support promised by the developed countries.