Best of BS Opinion: India needs to recalibrate in a changing world order

Today's editorials and columns look at the world through the lens of relationships, and how they don't always turn out as intended

Hello, and welcome to BS Views, our daily newsletter of the best of Business Standard's opinion pieces. Our world survives on the strength and synchronicity of relationships between diverse elements, be they nations, growth and spending, stability and markets, and so on. Each of our editorials and columns can be read through this prism. Let's take a look.  Our first editorial highlights the breakdown in multilateral global institutions following President Donald Trump's return to the White House. At the recent Business Standard Manthan conclave, Finance Minister Nirmala Sitharaman noted this development and suggested the era of multilateralism might finally be giving way to more bilateralism. Keeping this in mind, the government needs to establish interdepartmental processes that minimise holdups when issues concerning other ministries crop up. It will also need to make greater, more targeted concessions in such bilateral negotiations. The proposed EU-India FTA will be a litmus test for the government’s commitment to the new bilateral era, the editorial argues.  The second advance estimates project GDP growth rate of 6.5 per cent for FY25. But with an average growth of 6.1 per cent in the first three quarters, the last quarter will need come in at 7.6 per cent, which is a big ask. The average growth rate in eight years ending in 2019-20 was about 6.3 per cent. The challenge, our second editorial says, is for Indian policy managers to rapidly grow the trend growth rate. This, too, won’t be easy, given the private sector's reluctance to invest more. While higher capital expenditure will help growth, continued higher government demand for savings could affect private consumption and investment demand.  Donald Trump's recent pronouncements have sent shockwaves across global markets and policy circles. Reading the economic policy uncertainty metric as a measure, our lead columnist Ajay Shah notes that they are at elevated levels, signaling policy uncertainty, levels which were seen at the peak of the Covid-19 pandemic. However, the volatility index of the S&P500 is at a relatively comfortable 20, showing no panic. Further policy uncertainty could eventually impact the US' economy to a point where Americans question Trump's decisions. It is then that the markets might react unfavourably and force Trump to take a step back and start checking his own impulses.  Our second columnist Sunita Narain calls for greater focus on action that will reduce climate risks while improving livelihoods and global economies. The challenge, she says, is to achieve the benefits of inclusive development with sustainability, while sticking to decarbonisation paths that work for the global South. While lauding the government's target of 500 GW of rewewable energy by 2030, she questions the lack of data on such projects, most of which are private-sector driven. Then there are project delays, and reluctance of state governments to sign PPAs because of the uncertainties surrounding storage and higher capacity that could ensure uninterrupted supply. These need to be fixed if the 500 GW target is to be reached, she says.  For our book review today, Mark Gimein reviews ‘MELTDOWN: Greed, Scandal, and the Collapse of Credit Suisse’ in which Duncan Mavin unpacks the misdeeds and missteps of the former Swiss banking giant. The author points to the (in)famous secrecy of Swiss banks, making them the banking destination of choice for all sorts of clients – many shady, others less so – who wanted to keep their money safe from prying government eyes. But it also allowed the banks to trample their clients’ rights, exemplified by denial of money to descendants of Holocaust victims. In the end, they were brought down by the one thing endemic to banks that go bust: bad loans brought on by bad decision-makers.   Elsewhere in the paper, Tamal Bandyopadhyay reveals that bankers are now ruing their rush to sell financial products like mutual funds and insurance through branches, which has meant lower deposit levels. Their earlier preference for fee income over sinterest income is coming home to roost. Moreover, mutual funds are now parking their cash in the form of certificates of deposit instead of investing it; for banks, this is a double whammy since CDs command a higher rate of interest than fixed deposits. Many bankers admit, privately, that their immediate concern is not growth but slowing the erosion of current and savings accounts.