In the mid-1980s, when I began my career in journalism, business news was not considered a priority. There used to be something that was referred to as the Commerce page and handled by a clutch of disinterested reporters and sub-editors. In the main, the page consisted of dreary company handouts and the day’s stock market and commodity prices. The main task of the reporter or the sub-editor was to write a small introduction to the day’s fluctuations on the trading floor. By and large, the reporter had very little idea why a particular stock or a group of stocks had either risen or fallen. Writing that introduction called for some imagination.
One morning, I was slightly bewildered to read the headline “Glasnost triggers fall” in the stock exchange section. Reading closely, it was apparent that in trying to locate a reason why the market had fallen, a clueless reporter had mischievously attributed the dip to events in far-off Soviet Union. In those days, in the high noon of protectionism, international events rarely affected the day-to-day movement of stocks. As such, the heading — which, incidentally, went unnoticed by the editor — was an example of inspired improvisation.
I thought of this Glasnost example while soaking in the umpteen doomsday messages that seem to be pouring in as Briton’s prepare to vote in the Brexit referendum on Thursday. There are suggestions that, along with a possible rise in US interest rates, the slowdown in China’s economic growth and the progress of this year’s monsoons, a possible victory for the Brexit side in the United Kingdom will contribute to India’s economic uncertainties. last week, at his Press conference where he seemed to be having a great deal of fun teasing the media, Reserve Bank of India Governor Raghuram Rajan too listed the Brexit vote as among the developments India had to look out for.
The financial markets in london are crucial in international finance and any uncertainties are bound to be reflected all over the world. But does that necessarily mean India should be alarmed if British voters, in an onrush of petulance decide that they have had enough of the European UnionIJ It is being put out that in the event of a no vote, all trade between the EU and the UK will cease abruptly. In that case, or so the over-simplistic formulation goes, the unsold cars of Tata’s JlR will remain piled up in the warehouses and the Indian company will suffer an irreversible setback. Consequently, all those Indian companies that have been manufacturing units or big service centres in the UK will see the bottom falling off their stock market valuations.
I don’t know how and why this ridiculous hypothesis began to be circulated or even believed. But the reality, if the newspapers and TV wisdom are any guide, it is now conventional wisdom that India stands to suffer grievously if the UK decide to say farewell to the EU. It is being suggested that Indians should do their bit to persuade their friends, relatives and Indian citizens (who, by virtue of being Commonwealth citizens have the right to vote in British elections) to turn up in large numbers and prevent a UK-EU divorce.
Apart from the fact that how British voters choose to determine their future is entirely their business and doesn’t concern us, I am not persuaded that India has a stake in this whole Brexit business. If the UK asserts its national sovereignty, it will still continue to trade with the EU. The only difference will be that UK-EU trade will be governed by the same set of norms that govern, say, India-EU trade and EU-US trade. I don’t think that there will suddenly be an embargo and that the Royal Navy will be called upon to evacuate masses of British holiday-makers and residents from the beaches of Dunkirk. Somehow I don’t suspect there will be a proverbial humanitarian crisis.
Yes, there will be some long-term and a few unintended consequences of a UK-EU separation. Some of these will also have a bearing on India.
But the entire process will be painfully long drawn and give adequate time for all the players to adjust to new realities. It is understandable that political campaigns lead to a great deal of exaggerated claims and fears. Very few of these materialise.
The important thing to realise is that there is precious little India can do to shape the verdict in one direction or another. Poking our nose into the internal affairs of a country for its own sake, is never a good idea. India must observe, and be seen to be observing, strict neutrality in matters that affect our friends. The UK is a trusted, long-term friend and so for that matter are most of the EU member-states. It is up to them to sort out their problems without us doing what the US, the International Monetary Fund and multinational merchant banks have done: Weigh in one side. When the dust settles over the Brexit affair, India must be seen to be detached spectators.