The Trump shock: Policymakers can track it by this 4-D formula

How matters move in terms of diversification, defence, debt and the dollar could guide our policy

- NIRANJAN RAJADHYAKSHA

The churn in the international economic system since Donald Trump became US president for a second time has fanned uncertainty for companies, investors and governments. As with the famous story from Indian mythology, the Samudra Manthan, in which the churning of the ocean generates nectar as well as poison, the ongoing episode will likely have good as well as bad consequences.

This column is a tentative attempt to list out four changes that are likely to cast a shadow on Indian economic policy in the years ahead. Each change alliteratively begins with the same letter: Diversification, defence, debt and the dollar.

Diversification: There are several ways in which one can think of how countries will try to diversify their economic structures amid geopolitical uncertainty. Such rebalancing could be through bolstering the share of manufacturing, depending more on domestic demand, increasing domestic savings and restricting trade within regional economic zones.