The economic shock of COVID-19 in 2020-2021 and subsequent escalating debt burdens, the ongoing Ukraine war now in its third year, and, in 2023, the eruption of the Gaza conflict, repeatedly jolted the economies of all countries in South Asia. The smaller and more vulnerable economies of all of India’s neighbours have been hit hard, leading to countrywide protests and in some instances, even street violence in 2023. Maldives just had its election in September and in 2024, all South Asian countries (except Afghanistan and Nepal) are scheduled to go to the polls, adding a degree of political uncertainty to the mix.
This churn in the region is occurring when there are fundamental structural shifts under way. Three relationships will be observed carefully by the neighbours: first, the US-China rivalry at the global level; second, the India-US emerging partnership, and finally, India-China relations that have not recovered since the nosedive it took in 2020 following Galwan. How these evolve and how India’s neighbours respond will influence India’s neighbourhood policies.
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