Economic Impact on India with the change of president in USA

By now it is clear that both Donald Trump’s rise to the White House as well as his exit were products of the electorate reactionary responses. In 2016 the Republican voters chose him to become the next President. And in 2020, the Democrats outvoted the Republicans primarily to get rid of Donald Trump. Trump and his supporters have alleged foul play. Their essential grouse is perhaps best captured in Tom Stoppard’s word: “It’s not the voting that’s democracy, it’s the counting”. It can also be quoted that “In a democracy, someone who fails to get elected to office can always console himself with the thought that there was something not quite fair about it”.

Anyway, after choosing Biden over Trump as the president, the American voters have most likely changed the course of the global economy. This is the reason why everyone is so keenly following the twists and turns of the presidential elections in US. Biden’s approach in stark contrast to Trump’s could have a salutary impact on how the US leads the rest of this tricky phase for the world economy when so many countries are witnessing a strong surge in COVID infections. So, what might be the effect on the Indian economy presuming that Biden is the 46th president of USA.

A recent analysis by Madan Sabnavis of CARE Ratings shows that over the past 20 years, India has always had a trade surplus with the US. The trade surplus has widened from $5.2 billion in 2001-02 to $17.3 billion in 2019-20. “Trade surplus had peaked at $21.2 billion in FY18 (2017-18) and has moderated to some extent,” points out of the report. Apart from the trade in goods, “India accounts for nearly 5% of USA’s services imports from India have grown at a compounded annual growth rate of nearly 14%. Also, in 2019, US imports of services from India were almost $29.7 billion.

Other points of contention between India and USA such as the tricky issue of data localization or capping prices of medicines and medical devices. Which have a better chance of getting towards a resolution as we move away from the radical approach of President Trump to the pragmatism of a Biden presidency. Also, further under the trump administration, the US sanctions on Iran severely limited India’s sourcing of cheap crude oil.

For an instance, how a US president looks at the H1B visa issue, affects the prospects of the India youth or of any country. Under president Donald Trump, who severely curtailed the visa regime, thanks to his policy “America First”, India is one of the country’s which has suffered the most. But there are high chances that it can change under Joe Biden, who is unlikely to view immigrants and workers from India or any other country with Trump like suspicion.

For an economy like India, which needs a regular supply cheap oil to grow fast, a normalization of US-Iran relationship would be more useful. On china too, while the US apprehensions are unlikely to be way fewer even under Biden’s presidency, it is most likely that Biden administration will help India when against China, instead of clubbing both of them together. Biden has also promised to rejoin the Paris Climate Accord, and this may help countries like India in dealing with some massive changes in both technical and financial on this front. Definitely many of these benefits may also imply that Biden’s administrative may take a closer look at civil liberties and democratic rights in India. An aspect to which Trump’s administrative was largely blind.