Harsh V. Pant

Amid this rising regional turmoil, India has a tough task ahead. It has to first ensure that its economic fundamentals remain strong, and it continues to remain on an upward growth trajectory.

At a time of multiple global disruptions unfolding almost simultaneously, it is easy to forget that South Asia has always been a turbulent region. Political and economic challenges have continued unabated in a region that hosts around a quarter of the world’s population with simmering inter — as well as intra-State — rivalries.

The great powers have done their bit as well, further muddying the already opaque strategic waters by pitting one nation against the other. Not surprisingly, this has been the least integrated region of the world economically. India’s structural dominance and its overweening presence make it an easy target of resentment, but for external players, New Delhi’s inability to lead in the region has been a major source of bewilderment and often ridicule.

The unfolding economic and political crisis in Sri Lanka has once again underscored the challenges of South Asian governance. Corruption and misgovernance of the Sri Lankan political elites have exposed the vulnerabilities of an island nation that was seemingly doing rather well till a few years ago.

The fall has been dramatic and the inability of the Sri Lankan political class to manage the crisis has been equally revealing. The fact that the two key players in the saga — the Rajapaksas and China — are today bereft of any support tells its own story about a model of economic governance that was once seen as the Chinese Communist Party’s great success story, to be emulated across the world.

Today, the Sri Lankan crisis is creating a new awareness in other South Asian nations about the vulnerabilities within their economic structures. The pandemic has accelerated economic deterioration in the region. Concerns have been expressed about the economic underpinnings of Nepal, though its external debt situation is not that serious. But it is political apathy and poor governance that are the real issues that need tackling.

Myanmar, reeling under western sanctions and pandemic-induced declining economic productivity, is facing serious troubles but the military junta remains adamant about further isolating itself, as exemplified by the execution of four pro-democracy activists this week. Even Bangladesh is seeking help from the International Monetary Fund (IMF) to prevent a potential economic crisis.

Pakistan, of course, has taken the challenge to another level with its political instability making it impossible to manage its dire economic crisis effectively. It has struck a deal with the IMF for a $6-billion loan program this month, but it needs $41 billion in foreign exchange over the next 12 months. For this, it will have to approach its friends such as China, the United Arab Emirates, and Saudi Arabia, all of whom are likely to pitch in but have so far refused to make concrete commitments.

China, in particular, is already concerned about its China–Pakistan Economic Corridor projects that are going nowhere with popular discontent growing against them. Pakistan’s government remains unstable, unable to make any difficult choices as it faces Imran Khan’s political juggernaut. There is a gathering storm of political turmoil and economic distress that none of Pakistan’s traditional partners, least of all China, will be able to help in managing.

Amid this rising regional turmoil, India has a tough task ahead. It has to first ensure that its economic fundamentals remain strong, and it continues to remain on an upward growth trajectory. The Indian economy cannot remain completely immune from global and regional economic trends and will have to navigate its way forward carefully.

At the same time, ignoring the troubles in its backyard is not really an option for New Delhi. As the crisis mounted in Sri Lanka, India was proactive in keeping the interests of the Sri Lankan people at the heart of its policy response. It committed $3.8 billion to Sri Lanka and supplied fuel, rations as well as over 44,000 metric tonnes of urea under a credit line to help Lankan farmers. China’s silence despite owning a large part of Sri Lankan debt and India’s very visible help at a time of great need are factors that will shape the contours of regional politics for some time to come.

At a time when South Asia is widely viewed as a central pillar of the wider Indo-Pacific maritime geography and when major power contestation is rising by the day, for many states in South Asia and beyond, this moment is a critical one. China is not going away, but its future role will inevitably be reassessed. The contrast between Indian and Chinese responses is being registered globally. Underlining Sri Lanka’s indebtedness to China for infrastructural development, United States Agency for International Development administrator Samantha Power made it clear that “when the price of loans carries with it a profound infringement on sovereignty, it will be problematic” even as she saluted India “as a friend of the poor.”

India’s rise as a serious global player today allows it to leverage its role in mobilizing multilateral institutions and other major powers to support its neighbors in tiding over the present crisis. New Delhi should do this with a sense of urgency and to some extent, it has already begun. New Delhi’s leadership during the Covid-19 crisis has generated a new sense of expectation and the multiple crises brewing in the neighborhood should also be seen as an opportunity to project an India that takes its regional responsibilities with the seriousness they deserve.

This article was first published in Hindustan Times as S Asia is in a flux. India must show leadership on August 1, 2022.

Read more by Harsh V. Pant at IMPRI Insights:

India-EU Trade Talks | July 18, 2022

Shinzo Abe & his India Connection | July 11, 2022

The G7 is one part of India’s pursuit of a multipolar world | 6 July 2022

India must bolster ties with ASEAN | June 23, 2022

Afghanistan: India must make its presence felt | June 19, 2022

India lends helping hand to Sri Lanka | May 15, 2022

Youtube: Watch Harsh V. Pant at IMPRI #WebPolicyTalk-India and the Evolving Global Order

About the Author

Harsh V Pant edited

Harsh V. Pant, Professor, International Relations, King’s College London; Vice President – Studies and Foreign Policy, Observer Research Foundation (ORF), New Delhi.