The stability of the incumbent Afghan regime is critical for New Delhi in order to save its investments in that country
The monsoon session of parliament may have to urgently discuss the developing situation in Afghanistan that sees the Taliban, Pakistan and gradually China increasing their influence, mostly at the cost of India.
The stability of the present Afghan regime is critical for New Delhi to save its Afghan investments. The situation is becoming complex as apart from extra-budgetary burden on the Covid-19 health issues and high inflation, India’s security-related expenses may surge to check the fall-out of increased violence in the western part of the sub-continent.
India and Afghanistan share in-depth economic and trade links despite uncertainties about achieving a political settlement to the lingering conflict. India has invested over $3 billion in reconstruction and relief work since 2001 when the US-led troops drove the Taliban out of Kabul. New Delhi still firmly supports President Ashraf Ghani’s government. In March, during a three-day visit to New Delhi, Afghan foreign minister Haneef Atmar desired that the two countries deepen economic and trade links.
However, recent flash battles of the Afghan forces with the Taliban which is tactically supported by Pakistan, and the capture of several strategic areas are making things difficult for the government in Kabul. The recent statement of Pakistan army spokesman Maj Gen Baba Iftikhar, “Pakistan is a facilitator of the peace process but not a guarantor”, speaks volumes of Pakistan’s complicity. Islamabad had always been against India’s humanitarian and developmental work that made India immensely popular in Afghanistan.
Last week, India withdrew its diplomatic personnel from its consulate in Kandahar and closed down consul offices in Herat and Jalalabad amid growing threats to Indian employees not far from the Pakistan border and operational areas of the Taliban. Afghanistan remained a key issue at the meeting of the Shanghai Cooperation Organisation (SCO) on July 14 in Tajikistan. Minister for External Affairs S Jaishankar participated in it along with his counterparts in China, Russia, Pakistan, and West Asian countries. The SCO joint statement merely stated that international terrorist organisations are destabilizing the country and peace be restored with talks between the Taliban and the Afghan government.
It does not give any succour to India. The wishy-washy deals of the SCO will not solve the issue. The Taliban’s historic linkages with Lashkar-e-Taiba and Jaish-e-Mohammed are the sore points. The Taliban will always stand by these organisations and shelter them even if it gives any assurance to India. This virtually pushes India to the brink of direct or indirect conflicts and increases its security expenses.
The issue of Iran virtually reneging on Chabahar port and access to central Asia has already created problems for India. The Taliban excesses will put at stake India’s $ 3 billion investments. It is likely to impact its external trade as well. The additional burden on India is not easy to fathom but would be substantial.
The US failure in Afghanistan in terms of its hasty pull-out is impacting the dollar, adding to global inflation. This would create further troubles for India. Media watchers say that India may not have direct involvement in the conflict but it is expected to pay a heavy price for it even in the domestic market. They quote a HSBC Capital Market study that warns that upside risks to inflation could re-emerge in the second half of the fiscal as conflict deepens.
The inflation has virtually crossed the tolerance of six per cent set up by the RBI. The government has recently announced an 11 per cent rise in DA for central government employees; it may add another three per cent to adjust for rising inflation.
The wholesale price index is also galloping and has reached 12.94 per cent as per May figures due to the rise in commodity prices in the international market. The National Statistical Organisation figures say rising prices of food, fruit, edible oil, and fuel are impacting consumption. In the rural areas, the share of bulk or high-value purchases fell 22 per cent and low value by 10 per cent. Even for FMCG electronics and apparel, buyers are settling for lower-priced products.
The lockdown has impacted the IIP, which grew at 29.3 per cent against a drop of 57.3 per cent a year back. It is a positive indicator but not exactly a booster for the economy. The poorer sales and production also mean that the industry would take time to recruit people and the employment scenario might take time to brighten up.
The recovery remains dicey and more so, as the Afghan situation gets murkier. The country would have to gird up its loins.
(The writer is a senior journalist. The views expressed are personal.)