The decision of the British voter to exit from the European Union has immediate political reasons as well as medium and long-term economic consequences. Stock markets across the world reacted sharply to the Brexit poll, tumbling down a few notches, as with any business, which is based as much on sentiments as on fundamentals. The markets would have boomed for a while if the Brexit polls had gone in favour of the UK staying on in the EU, before stabilising, as it won’t now, but based on fundamentals.
India did not escape the Brexit impact. However, government and institutions had prepared to intervene and had tried and stabilise the markets, mainly as indicators of overall impact, rather than immediate sentiments’ based reaction.
From the larger South Asian perspective, as with the ASEAN crisis of the late 1990s, Brexit could reopen a regional discourse for SAARC to develop into a regional economic zone with a currency of its own. In India, loud voices could be heard, for and against such suggestions.
In the medium term, however, there are arguments that India's trade with the UK as well as the EU could grow in the absence of mutual bottlenecks that the two were creating for the other in the context of third nation trade and investments.
This seminar will examine the issues, concerns and fallout.
R. Sivaraman, IAS (retd), is former Revenue Secretary, Government of India
Ambassador M. Ganapathi, IFS (retd), is former Secretary (West), Ministry of External Affairs, Government of India
Somi Hazari is Convenor of International Trade Cell, FICCI Tamil Nadu