Biden’s Bagel over Trump’s Trifle
Well, well, well …… Putting Joe Biden in the Oval Office, it’s the Democrats with the triumph! The fierce yet amusing rivalry between the donkey and the elephant kept the world on its toes for days.
“Will you shut up, man?!”
“You graduated one of the lowest in your class, don’t use the word “smart” with me…. you’ve done nothing in 47 years” and much more of name-calling and feisty lines! These debates are going down in history for sure.
For many out there wondering what US’s elections might possibly have to do with India, let’s have a look at the repercussions of Trump’s frantic policies and what all to expect from the newly elect Biden. Shall we?!
In his four years of tenure, Trump had provoked India’s GSP status, slapped new and higher tariffs, and made India import oil from the US against the shorter route from Iran. (P.S.: Distance between Iranian and Indian ports is less than that between Delhi and Mumbai!). Strict immigration policies only made it difficult for aspiring Indians students to move to the US hence losing out on possible remittances. He introduced new tax reforms (slumped them from 35% to 21%) and reshaped the federal judiciary.
How sweet is the Biden bagel going to be for India?
US alliances with other countries are bound to be a priority for developing countries like India. With increased border tension at LAC since June this year, how the US handles China, becomes yet more crucial. Trump’s and Biden’s shared view on India came out to be striking given how less they shared agreed opinions. Because after all, policy towards India is one of the few foreign policy issues that enjoys bipartisan backing in Washington. Trump’s constant retaliation of China, from the US-China trade war to the almost banning of the popular Chinese app TikTok did make India enjoy the support of a big brother. Moreover, with the Indian GDP falling by more than 23%, Bangladesh marching ahead of India in GDP growth, ever-increasing income disparity, and unemployment due to the pandemic, the last thing India would want right now is heavy military tension and expenses. Earlier this year, President Trump even offered to resolve the Kashmir issue with Pakistan to which India rebuffed. Biden is expected to try diplomacy to build a stronger coalition to push back against the 3rd superpower, contrary to Trump, who was more than happy to go all solo. Given that India could count on more robust efforts from the USA to develop a global consensus against India’s strategic rival, Biden’s multilateralism on the China front seem to be in our favour now.
Rumours indicative of Democrats amending their relationships with its allies, especially with Pakistan or China, paints a scary picture for India. We know Biden has a soft stance against China and wants to mend their tarnished relationship. During the Obama reign, the US was in fact on good terms with Pakistan and Afghanistan. Will this make Mr Modi miss his “best friend” now? Hope you remember how Trump sent his Secretary of State Mike Pompeo for talks a week before the election and held two rallies in Houston and Ahmedabad the past year with Prime Minister Narendra Modi. Not to forget when Trump referred to China as “Corona Virus creator”, “Wuhan Virus” or “China Virus”. He even went on to ridicule Pakistan for acts of terrorism against India. True acts of friendship I say!
Concerning the global trade policies, India should have it easy with Joe Biden in the office. Not only higher fiscal stimulus and withdrawal of H1B visas, but Biden is expected to re-engage in the JCPOA agreement or the Iranian nuclear deal, which may lead to cheaper access to Iranian oil again. However, the delivery of the Russian S-400 missile due 2021, might face a tad bit of an issue with Biden.
If trends over the history of the US are to be noted; the US economy has been most robust when both the white house and the senate are under the Republicans. The economy is the second strongest when Democrats preside over the White House, but the Republicans take over the senate. And the third strongest is when both house and senate fall under the Democrats. Trump hailed from a business background and the pro financial growth and development stance after the ’16 win was impressive. Even after the March’20 market crash, the global financial market saw a ‘V’ shaped recovery, and most global stock market indices are at record breaching levels. Sensex recovered over 53.66%. There was a continued inflow of cheap capital into Indian stock and debt markets. But overall as we saw earlier, Biden trade policies will be more relaxing, and the Indian Equity market will be more affected in the long run. Only future indices can tell how sweet the bagel is?!
But either way, we expected the Federal Reserve’s low-interest policy to continue. And more importantly, as many economists have suggested, with the US election out of the way now, Asian equities are expected to perform better. Investors can refocus on pivotal problems, such as improving the economy and a likely Covid-19 vaccine in 2021.
Considering how vocal Democrats have been on the issues as CAA, Delhi riots, actions against journalists and NGOs, and alleged human rights violations, on the political front, the Biden bagel can be saltier.
What does Joey’s victory mean for Dalal street?
Pre result declaration, we saw stocks going all down the conventional road. Stock indices in Asia on 4th were all green; Nifty gained over 1500 points; Nifty, Sensex were up by more than 1.5% on 5th, Sensex, Nifty all green on 6th,7th and 8th as well; normal behaviour.
Impossibility of the Supreme Court intervention has discarded any reason for volatility. And with the results out on the 7th, 9th of November saw an all high Nifty and Sensex. Global market was high on steroids and NASDAQ almost hit double digit gains while the gains in Indian indices trailed closely.
Biden’s advocacy for renewable sources may cause a surge in oil prices as the supply shrinks. (P.S.: The US is the largest crude oil producer). If the cut in subsidies in the tax code for fossil fuel companies leads by the nose, companies as BPCL, HPCL, ONGC, etc. might have to worry a bit. A tax rate hike (28% from 21%) in the US as Biden and Kamala promised, might impact the earnings of US companies, leading to more incremental flows to emerging markets in Asia. For now, an end to shareholder capitalism doesn’t sound anything near to a threat to the Indian economy. Technology especially IT, pharma, healthcare, insurance, and consumer durables, are expected to lead the way under the blue sweep. Investors who were on toes for the past couple of days- take a chill pill now.
Major Missing: Donald Trump!
“MAKE AMERICA GREAT AGAIN” did cost India!
Donald Trump’s famous America First and Make America Great Again approach to foreign policy wrecked the global trade rules and instead, enforced the laws of the jungle. India being the 5th largest economy, crucially needed to have its certain powers back at the time. Not to forget when;
- it walked out of the Paris climate accord
- torpedoed the Iran nuclear deal
- walked out of the World Health Organisation
- bought Covid vaccines in the making for its citizens.
You remember Trump saying,
“Wind is extremely expensive” and that “it causes cancer.”
“Extremely” funny right?! But Trump’s “lust” for oil wells and that of Biden’s for renewables energy sources was yet another crucial factor. Under Biden, India now has multilateral pressure to do more to reduce carbon emissions and potential trade incentives to cooperate on green tech development. In contrast, Trump was lucky that his climate change denial and promotion of fossil fuels did not lead to countries facing a rise in sea level, global warming, and extreme weather events.
The “America-First” Trump was not a reliable ally. Today Asian superpowers, Japan and S. Korea can’t count on the US to stand in the face of an adversary. Recently when American troops withdrew from the Kurdish region of Syria, Turkey attacked, leaving Syria to nothing but to retreat. And guess what, Kurdish used to call itself America’s comrades in arms.
But we all saw the Delhi guy keeping a “pooja” for Mr Trump’s triumph or the Tamil guy who starved to death when Trump got sick. Part of India certainly shared its love for Donald Trump as the US president. His news-making tweets, open diplomacy, and no comment on Indian issues will be missed!
Keeping in mind the tradition of bipartisan support in favour of better ties with India, every US President has only made it better than what he inherited from his predecessor over the last two decades. It is now to see how Biden’s structured agreements across the borders and steady hands, walk him down this legacy!
Written by Liza Anshul & Thanush Kilaru