SANJAYOVACHA | Policymakers Need Fresh National SWOT Analysis

In August 2022, the Vivekananda International Foundation, a New Delhi-based policy research and advocacy institution, invited me to make a presentation on the post-Covid geo-economic challenges facing India. I decided to offer a SWOT analysis, listing out the Indian economy’s strengths, weaknesses, opportunities and threats. At the end of the discussion, in which several individuals who carry some intellectual weight within the present dispensation in New Delhi participated. The VIF director asked me to prepare a note that would be sent to the national security adviser, Ajit Doval. Incidentally, Mr Doval was the founder-director of VIF. The institution’s chairman, S. Gurumurthy, is a member of the Sangh Parivar and reportedly close to the Prime Minister. The VIF’s list of faculty and fellows is a who’s who of retired civil servants, diplomats and armed forces top brass. Most of them are sympathetic to the current dispensation in New Delhi. I offer here the SWOT analysis that I presented to VIF in 2022. It listed India’s Strengths as follows: (1) India is among the faster growing economies; (2) Rebound from Covid-19 has been satisfactory, even if a bit skewed; (3) Fiscal management has been good and has improved fiscal space for the government; (4) Monetary policy is in the right direction; (5) Export growth has been good; (6) Adequate forex reserves to help stabilise the exchange rate of the rupee. The Weaknesses we identified were: (1) High and persistent import dependence in oil and gas; (2) High and critical import dependence in defence equipment; (3) High and rising trade deficit with China, with dependence in industrial intermediates; (4) Inflationary pressures persist; (5) Employment opportunities remain subdued; (6) With World Trade Organisation in limbo and India not being a member of any plurilateral trade group, there are challenges on the trade front; (7) High overall fiscal deficit in Central and state government budgets. The discussion identified the Opportunities available to India as: (1) Geopolitical space created by East-West conflict, that is between the US and EU on the one side and Russia and China on the other; (2) Opportunity to mobilise Global South through G-20 leadership (In August 2022 we drew attention to the fact that Indonesia, India, Brazil and South Africa would chair the G-20 in the period 2022-25); (3) Domestic entrepreneurship growing in the digital economy creating new business opportunities; (4) Improved market access is being created through Free Trade Agreements with Australia, UK, Canada and the European Union. The potential Threats to economic growth that we identified in our SWOT analysis were: (1) Geopolitical uncertainty; (2) Economic slowdown of major global economies: US, China, EU and Japan; (3) Rising current account deficit; (4) Supply chain disruptions, especially in critical areas like semiconductor chips, accredited pharmaceutical ingredients, rare earths; (5) A spike in oil prices; and (6) Reduced fiscal space to deliver a fiscal stimulus if required. Four years down the road, many of these assessments would still be part of any SWOT analysis for India. However, the fact also is that issues identified as “strength” and “opportunity” have since become more questionable; while those identified as “weakness” and “threat” have acquired a higher profile. India’s economic growth rate is stuck between 6.0 and 7.0 per cent, with little chance that it will return to the 8.0 per cent peak of the first decade of this century. The rupee is under pressure. Geopolitical uncertainty has increased and oil prices are hitting levels not seen for close to two decades. The Gulf war, triggered by the attack on Iran by the United States and Israel, has raised questions about India’s growth and inflation rates for this year. The hardship being faced by millions of Indians on account of reduced employment opportunities, reduced availability of LPG, reduced availability of fertilisers and so on, have created new uncertainties for the economy. The Union and state governments’ fiscal deficit is bound to shoot up. On the geopolitical front, we see China and Pakistan emerging as globally more influential over the past year. India’s voice has been stifled by an unimaginative political leadership at home. The West Asian conflict has imposed new costs and constraints on India. With friends like the United States and Israel, who needs enemies? A SWOT analysis done now will mention fewer strengths and more weaknesses. Opportunities do exist at all times and political leadership is about identifying and exploiting those opportunities while being prepared to deal with threats. It is worth asking who in the government is currently engaged in such an exercise. The Cabinet Committee on Security has met more than once and officials have been tasked to keep track of trends and stocks. A Group of Ministers (GoM) under the chairmanship of defence minister Rajnath Singh has also met. Yet, the level of communication from the government to various sections of society and the economy is below par. It is one of the ironies of the Narendra Modi government that it has excellent skills and capabilities when it comes to political messaging, but very weak competence in policy communication. At a time of multiple uncertainties, the Union government must have competent strategic communication in place. Not mere propaganda, at which the ruling BJP is very good, but real-time credible policy communication. Such communication is key to inflation management and to boosting investor confidence. It is now clear that the uncertainty in West Asia triggered by Israel and the US may continue for a long time. At least months, if not years. Recall the fact that Russian President Vladimir Putin reportedly told Pakistan’s then Prime Minister Imran Khan, who was on a visit to Moscow in February 2022, that his troops would be in Kyiv in four days’ time. It is now more than four years and the Russians are still nowhere near Kyiv. My sources tell me that Israeli Prime Minister Benjamin Netanyahu had similarly assured Prime Minister Modi that the US and Israel would topple the regime in Teheran and take charge within four days. That, I was told, might explain India’s silence on the US-Israel attack on Teheran and the assassination of Iran’s top leadership for five days. It was only on the fifth day that New Delhi realised that the regime in Teheran was still in control and in charge despite the killing of its top leadership. This conflict could drag on for much longer than what either side had bargained for. Sanjaya Baru is a Distinguished Fellow, United Service Institution of India and Takshashila Institution



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