US Elections and Indian Economy- A New View

A global pandemic, economic slump, unprecedented times; some of the trends you must have come across in 2020. The trend list got its latest addition in the form of US Presidential election. The democratic nation was all prepared to turn around the tables as they split between democrats and republicans. On one hand, where Donald Trump represented Republicans, the Democrats had Joe Biden as its face for the president’s position in the fierce battle. Leading up to an intense turn out of political events the United States had its new president elected in a close battle of states with Joe Biden crossing the magical figure of 270 electoral votes. The entire election was as closely watched by the rest of the world as America did. India, being an important international participant in transactions with the USA was also impacted by the entire election. The effects were visible evidently on the share market and stock indices as well with fluctuations on the basis of future expectations and market conditions in the coming times. To gain a more magnified and micro-level view, this article would take you through the special aspects that can be associated with the change in occupants in the white house.
US Elections and the Indian economy: The investments
There has been an influx of investments in the market which is clearly illustrated through the surprising performance of stock market indices and their closing figures on every passing day. This was an expected trend replicated from the US markets itself. The Sensex and Nifty touched record high numbers in the last few days as well. The investment attitude reflects the expectations of change in trade impacting economic activity in the country with higher FII. A sense of optimism prevails within analysts as emerging markets including India would continue to attract capital flows as long as global central banks regulate the smooth monetary policy to support growth amid COVID run blockages. In terms of yield spread, India stands as one of the top countries for yield spread and hence could experience a higher level of capital flow.
US Elections and the Indian Economy: Immigrant Policies
Immigrants contribute to a major share in the entire build-up to achieving a specified level of economic performance. With Joe Biden coming into the picture of the USA administration, there is a sentiment prevailing on ease out of immigrant policies reflected from the patterns and ideologies of Democrats as a whole. The immigrant policy alterations can be a propelling factor in shaping the prospects of Indian youth as well. There is an expectation for changes in the resident permit policies and relief among the H1B and F-1 visa holders with the favourable policies of Biden.
US Elections and the Indian Economy: US-China trade relations
The COVID virus has brought into the picture an intense relationship between the US and China for trade activities. These may contribute to the opportunity that India as a nation can seize by acting as a credible alternative to China and also providing uninterrupted supplies. The relationship of trade is further expected to substantiate in the form of benefits that pharma firms may gain with a higher level of government spending. The elections are expected to have a positive impact on the market with positive inflows in Asia Pacific markets. With an emerging consensus on having a China+1 model in order to mitigate risk and avoid massive supply chain disruptions as experienced in the early months of the pandemic, this can be helpful for the Indian economy to grow.
US Elections and the Indian Economy: The Iran aspect of trade
During the campaign for the 2020 presidential elections, Biden commented on how he would like to renegotiate the terms in reviving the US Iran nuclear deal. This can lead us to assumptions that the new administration may be in the direction of lifting some sanctions imposed on Iran. India can look towards a positive direction for benefitting from this situation. Iran being one of the biggest oil exporters to India in the past, faced a hard stop post the sanctions imposed by the US. This was followed by China stepping into the picture and taking advantage of the vacuum by investing heavily in Iran. China has also decided to build a new port in Iran. Hence a new deal can be beneficial for the US as well as India followed up with resumption of infrastructural activities if sanctions are lifted.
US Elections and the Indian Economy: The Paris accord
One of the main aspects of Joe Biden’s campaign was the highlight of his stand to join back the climate change agreements in the Paris accord. India has actively supported the agreements at the Paris on climate change but a bigger challenge Biden may face can be in the form of resuming the funding of the World Health Organization (WHO) which was halted by the Trump administration. This is a challenge since it requires the approval of the Senate which is controlled by the Republican legislators.
US Elections and the Indian Economy: The Kamala Harris effect
A prime highlight of this year’s elections was the victory of Kamala Harris as an Indian origin vice president. This is the first time an American with a backdrop of India holds a leadership position at this level. As a symbol of the representation of diversity and the progressive attitude of America, the leadership can help in gaining trust and making it easier to gain positive negotiations. The ties of both countries are guided by the convergence of their strategic interests in security, trade, and technology but the election of Kamala Harris has enthused people in Indian especially women paving a path of positive expectations in the future from both sides.
The presidential elections did have a lot of stake for India and its international ties but a
convergent trajectory of common interests is what would guide the two countries and its bilateral decisions that can be reflected from the stance of the two countries on various topics.