Donald Trump's re-election as President of the United States, as well as other major elections across the world, will have long-term consequences for the energy crisis, climate policy, and international commerce, India's chief economic adviser warned on Friday. Speaking at the Business Standard BFSI Insight Summit, V Anantha Nageswaran presented his personal view on the changing global economic landscape and its ramifications for India, particularly in light of the recent US elections.
Nageswaran emphasized the importance of steady and cheap energy costs for India and other growing countries, implying that fossil fuel prices will stay manageable in the absence of major supply interruptions. He also mentioned that improving security along major trade routes such as the Red Sea might help India cut shipping expenses.
Nageswaran stated, "I feel there is a positive outcome for keeping energy prices reasonable and cheap, which is critical for India and other growing nations. Prices for fossil fuels should remain stable and within present ranges, assuming no other supply disruptions occur. They should stay at the lower end of these ranges. Enhanced security in the Red Sea passage could lower costs and facilitate smoother shipments from India."
India's shift to a Middle-Income Economy
Regarding Indian economic progress, Nageswaran claimed that the country is on its way to become a middle-income economy. "For this, we need not only reliable energy supplies but also affordable energy supplies," according to him.
He pointed out that recent US voter rejections of measures that could raise natural gas prices indicate a larger preference for stable energy costs, which could assist rising nations such as India. "In terms of climate change and energy transition, India may benefit from increased flexibility as a result of these election results," stated the chief economic adviser.
Autonomy in Energy and Energy Transformation is critical for India
Nageswaran claimed that, while renewable energy is useful, it faces obstacles such as high capital prices, land needs, and external dependencies, all of which have the potential to displace workers and cause macroeconomic changes. He emphasized the need of energy autonomy, arguing that each country should be able to pace its energy transition based on its own needs.
"The idea of energy transition is essentially erroneous. "There is no sequential transition from one energy source to another," he stated.
On climate policy, he criticized industrialized countries' unwillingness to confront their "carbon debt," calling the proposed European Union carbon border adjustment tax as incompatible with the Paris Agreement. He contended that this strategy unfairly limits developing countries' carbon budgets.
Politicians have always resisted the notion of 'Free Trade'
Concerning trade, Nageswaran criticized the "religious belief" in free trade, claiming that historically, today's industrialized nations used restrictive trade policies and only called for open markets once they had advanced.
Reflecting on national progress, he observed that wealthy countries had effectively "kicked the ladder" away from developing economies. He cautioned India not to be unduly concerned about global trade battles, particularly since rich countries have become less devoted to free trade ideas.
Accelerated Capital Spending to Stimulate Domestic Growth
Nageswaran advocated for more capital spending in India, in line with budget pledges, to boost the domestic economy. He warned against "preemptive pessimism" and expressed hope that policy changes in the global arena would create new chances for India. "Global growth remains uncertain, but the policy stance of the new administration may present new avenues for India," according to Nageswaran.
