India should be ready for geopolitical disruptions every one to two years, according to Neelkanth Mishra, a member of the Prime Minister’s Economic Advisory Council and Axis Bank’s chief economist. Mishra suggests that during the current lull in tensions, India should focus on implementing long-pending structural reforms in areas such as electrification, housing, urban infrastructure, and tourism. He emphasizes the importance of using this period to enhance resilience in economic growth through reform acceleration.
Mishra highlights that the current volatility is more structural than occasional but mentions that India is better equipped now to handle such situations compared to past instances. He points out that India has stronger buffers today, including deeper capital markets, more robust external balances, and increased policy credibility, making it more resilient to external shocks.
Despite the recent de-escalation of tensions between Iran and the United States, Mishra believes that the broader cycle of geopolitical shocks is likely to persist. He stresses the significance of prioritizing electrification as a strategic move to reduce India’s vulnerability to oil and gas price fluctuations. Mishra suggests that accelerating electrification and improving energy pricing would not only enhance efficiency but also decrease exposure to global geopolitical risks.
In addition to electrification, Mishra calls for decisive policy actions in the housing and urban infrastructure sectors to boost domestic demand and shield it from global uncertainties. He points out that India’s high tourism costs are partly due to restrictive zoning and floor-space norms. By addressing these issues through measures like increasing hotel floor space index and enhancing urban capacity, Mishra believes that India can lower costs, enhance competitiveness, and generate significant employment opportunities.
