The Hindu Editorial Analysis
16 October 2025
Navigating the Global Economic Transformation
(Source – The Hindu, International Edition – Page No. – 8)
Topic : GS Paper II – International Relations | GS Paper III – Economy
Context
The world is experiencing a seismic economic transformation, driven by a new geo-economic rivalry between the United States and China, reshaping global trade, financial systems, and strategic alignments.
The editorial argues that this transition from a unipolar to multipolar world economy offers both challenges and opportunities for countries like India. It calls for a recalibration of global economic governance, emphasizing collaborative, equitable, and sovereign frameworks rather than continued subservience to Western financial norms.
1. The Changing Nature of Global Economic Power
a) From Laissez-faire to State Capitalism
The traditional Western economic model of laissez-faire capitalism—minimal state interference and free markets—is being replaced by state-capitalist regimes, where governments directly control key industries and influence global markets.
- Populist autocrats and corporate oligopolies now collaborate, prioritizing political control over economic equity.
- This “state-corporate nexus” allows the concentration of wealth while weakening democratic institutions and widening inequality.
b) U.S.–China Rivalry: The New Economic Cold War
The ongoing U.S.–China strategic competition has redefined global supply chains and trade alignments:
- The U.S. is rebuilding industrial capacity (e.g., semiconductors, rare earths) and securing critical supply lines through trade blocs like the Indo-Pacific Economic Framework (IPEF).
- China, meanwhile, is consolidating its Belt and Road Initiative (BRI) and Global Development Initiative (GDI), promoting infrastructure diplomacy and debt-financing across the Global South.
Together, these shifts are fragmenting global trade into competing blocs—each advancing its version of “economic sovereignty.”
2. The Rise of Populist Autocracies and Crony Capitalism
a) Populism’s Economic Grip
Populist regimes across continents are securing power by centralizing resources and relying on corporate elites for patronage.
- These regimes mortgage national assets and public enterprises to consolidate political loyalty.
- This “authoritarian capitalism” undermines the social contract, deepening class divides and weakening civic participation.
b) Consequences for Global Equity
Such plutocratic structures divert economic surpluses from public welfare to elite enrichment, creating:
- Fiscal stress and reduced investment in health, education, and social safety nets.
- Vulnerability among developing nations, as they rely increasingly on external funding and lose policy autonomy.
3. The Decline of Multilateralism and Global Aid
a) Erosion of Global Norms
The decline of Western aid and withdrawal from developmental commitments is leaving large parts of the developing world without safety nets.
- Example: The G7’s $44 billion funding gap may push 57 million Africans into poverty by 2026.
- Similarly, cuts in World Food Programme allocations in 2023 left 16.7 million people food insecure.
b) Strategic Impact
This withdrawal is fostering political instability in regions like Sahel (Africa) and South Asia, leading to:
- Rise in armed militias and migration, and
- Erosion of state legitimacy.
At the same time, the U.S. sanctions regime—affecting 70+ nations—has disrupted free movement of trade, capital, and technology, worsening the global slowdown.
4. India and the Global South: Navigating Opportunity in Crisis
a) Emerging Leadership Role
India, as the voice of the Global South, has a historic opportunity to shape a new global economic architecture based on:
- Sovereign equality and developmental justice, and
- South–South cooperation through platforms like G20, BRICS, and IBSA.
India’s “Voice of the Global South Summit” (2023) reflected this ambition — advocating fairer trade, technology sharing, and reforming financial institutions like the IMF and World Bank to make them more representative.
b) Constructing a New Economic Deal
The authors argue that the Global South must collectively resist neo-imperial economic norms and co-create a “New Economic Deal” that ensures:
- Equitable financial governance,
- Debt justice and developmental autonomy, and
- Inclusive growth free from exploitative lending.
5. Strategic Pathways for India
a) Recalibrating Economic Diplomacy
India must adopt a dual-track strategy:
- Domestic Resilience: Building technological capability, investment in education, and welfare state reforms.
- Global Partnership: Engaging the Global South for alternative trade and finance mechanisms — such as local currency trade, de-dollarization, and regional payment systems.
b) Strategic Autonomy and Regional Cooperation
India’s policy alignment should emphasize:
- Strategic autonomy, avoiding dependency on any one bloc.
- Strengthened economic coordination with South Asia, Africa, and Southeast Asia.
- Bipartisan partnerships beyond traditional West-led alliances.
6. The Opportunity for Systemic Reform
a) Reimagining Multilateralism
The ongoing crisis can catalyze reform of global financial institutions, especially by:
- Expanding representation in IMF and World Bank boards.
- Creating development banks and sovereign funds for the Global South.
b) Redefining Growth
A sustainable global order must prioritize inclusive, planet-friendly growth — emphasizing climate finance, green technology, and social equity.
India can lead this effort by linking economic diplomacy with climate and digital cooperation.
7. The Way Forward
a) A New Non-Aligned Economic Order
India and the Global South should collaborate to establish an equitable, multipolar economic framework — not anti-Western, but post-hegemonic.
This requires:
- Coordinated reforms in global taxation, trade, and digital rules.
- Regional trade corridors and financial independence through rupee-based or local currency trade systems.
b) Moral Leadership and Policy Innovation
India’s diplomacy should combine moral legitimacy (as a democracy of scale) with economic leadership (through innovation and digital inclusion).
By championing equitable globalization, India can reposition itself as a bridge between developed and developing worlds.
Conclusion
The editorial concludes that the current global economic flux is both a crisis and an opportunity. While Western powers recalibrate economic dominance through protectionism and sanctions, the Global South, led by India, must push for systemic reform — one that upholds sovereignty, fairness, and sustainability.
In essence, India’s leadership in crafting a new global economic consensus will define not just its strategic future, but also the trajectory of a more balanced and humane world order.