It is very much pertinent to quote a most significant observation made in recent by the Chief economic advisor of our national govt., Sri NAGESWARAN wherein he while placing the Annual economic survey report for 2025-26 has opined that “the tail wind of globalization is over and now the head wind has begun” means benefits of globalization of economy started since 1991 is over and now very hard days is on anvil. Perhaps this is the most wisest observation being made by any top economist in the global perspective and is finding strong approval from the business leaders particularly from IT and banking sectors worldwide resonating the identical sentiment that days of easy monies is over which means sourcing the sufficient funds to sustain the current growth momentum for both the corporate, financial as well as for the govt. sectors will be very hard in coming days due to fast drying of easy monies in the market.
Already in my previous articles I have deftly discussed the reasons behind this great peril. Now it is pertinent to deliberate how Indian economy will perform in next ten years by negotiating this incoming most adverse landscape of global economy. Now at first two things are very important to mention, one is that irrespective of globalization or not, in modern digital based economy all nations are highly interdependent with each others both in terms of exports and imports which is the chief determining factor for financial prosperity of a nation as well as for job generation since the ancient time as old as Indian, Greek, Roman and Babylon civilization more than 3000 ago, secondly the domestic consumption and services demand of a nation.
Now regarding on first issue of export and import trajectory in last 34 years of globalization of economy developing and poor nations has garnered maximum financial gains by their buoyant growth in exporting both the goods and servicing by availing the cheap labor and digital revolution factors. Not only the giant economies like China or India or Brazil but even the tiny or small or medium nations like Bangladesh, Vietnam, Philippines, Indonesia, Cambodia, Costa Rica, Mexico, Gulf nations etc have also gained immensely in proportionate.
Then big question is when everything is well off in world economy then why the ongoing massive lay offs, ballooning national and household debts, shrinking govt. spending? The blunt answer is that said prosperity and economical growth of developing and under developed nations have been achieved at the cost of the developed nations particularly of USA, where 70% world economical activities still persist and for that very reason USA is finding that it is importing 90% of goods and services from the developing or poor nation instead of exporting which it logically is entitled due to it’s unquestionable technological and financial superiority over the rest of world.
That’s why USA president Trumph has most correctly accused the developing nations particularly the China, India, Mexico, Brazil for sheer banking upon the USA economy for their rapid economical growth. It means the correct reason for falling of USA and other developed nations in unimaginable abyss of debt trap and stagnant GDP is finally detected after persisting efforts by the USA since the 2016-17 when American economy along with European nations started to faulted. Initially the reason was thought to be huge migrations from the developing and poor nations but now the real thieves are caught red handed by the TRUMPH which is the silent fast shifting of USA and EUROPEAN wealth to the developing and poor nations through the channel of goods and services imports and ironically the concept of globalization was imposed upon the world by the USA through GATT agreement and WTO rounds in early 90’s for sole purpose of monopolized exports of goods and technologies to the developing and poor nations but now finding itself at receiving end which has completely eroded the legendary wealth base of USA.
Therefore he has weighed most risky reciprocal tariff war and other austerity measures in consonance with his election promise TO BRING THE USA WEALTH ONSHORE. Now issue is now much Indian economy will be affected by his policy as 80% of our export markets particularly IT, Pharma, engineering goods, agro products, steel, financial and accounting services are totally the USA domestic market based which means several disruptions of our export apple cart is in waiting mode and commensurate huge foreign exchanges earning loss coupled with job losses.
Now in my opinion although TRUMPH highly conservative policies will have severe adverse effect on our export oriented economy but two issues must fit for apt consideration, one is actual efficacy of Trumph blanket Tariff policy to curb the wholesale imports considering the commensurate counter effects on USA domestic market with spiral inflationary pressure upon the common people already suffering for recessionary affect and reducing govt. spending. So one thing is clear that Trumph is gambling with possibilities and he is logically bound to it since USA economy is on verge of collapse without any doubt under the yoke unimaginable external and domestic debts and siphoning of revenues behind the social welfare, subsidies and Russia-Ukraine war.
USA consumer market including the corporate sector capacity to sustain upon the costly goods and services will determine the ultimate faith of both USA and exporting nations including India and clear picture will not be available till the mid of 2026. That now on second issue of domestic demand of goods and services in Indian economy will assume a very crucial factor to sustain at least the current 6% GDP growth amid the ensuing global trade wars and reversal of beneficial import policy of USA upon which the strength of our domestic economy largely dependent.
In my assumption in this volatile global economic situation Indian economy will generate a very quixotic domestic financial picture. While growth momentum will sustain to good and satisfactory level in coming ten years due to partial strong consumption by the 10% of our population on whose hand 80% of national wealth is concentrated including the corporate contrary to unimaginable financial hardships to the 90% of people including the middle and lower middle class.
With shrinking govt. spending due to tumbling of revenue jackpot of (GST & CESS) both central and state govt. will incur runway debt burden to feed the 90% population coupled with continuous capitalizing the drying banking sector. However it will our great legacy of exports again will come to great aid for the national govt. by generating handsome foreign exchanges due to diversification of Indian export market world wide particularly the IT, LEGAL & ACCOUNTING, PHARMA, ELECTRONICS, ENGINEERING GOODS, AGRO $ PROCESSED FOODS and good corporate earnings with commensurate corporate tax collection including good job generation.
India’s strong manufacturing and service and agriculture along with strong banking sectors will help immensely to weather this storm at least in next 10 years without any doubt albeit the travesty of high income inequalities.
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