India’s Response to Global Risks – A Call for Action

The World Economic Forum's (WEF) Global Risks Report serves as a wake-up call for the world, highlighting nations' growing challenges across economic, environmental, geopolitical, societal, and technological domains. For India, a country that stands at the crossroads of a rapidly changing global landscape, these risks are not abstract; they are real and imminent. As India’s economy continues to grow and its influence on the global stage expands, the nation’s preparedness to tackle these risks will be pivotal in shaping its future.

Economic Risks: India’s Growth Is Vulnerable

The WEF report identifies economic crises, inflation, debt burdens, and trade disruptions as key risks. India, with a GDP of $3.7 trillion in 2023, is one of the world’s fastest-growing economies, yet it remains highly vulnerable to global economic shocks. According to the Reserve Bank of India (RBI), India’s inflation rate has fluctuated between 4% to 7% over the past few years, and even a slight global slowdown could trigger a contraction in exports, impacting millions of workers in industries like textiles, IT services, and pharmaceuticals.

More concerning is India’s mounting debt. The Ministry of Finance estimates India’s fiscal deficit at around 16.13 Lakh Crores which is 4.9% of GDP for 2024-25. Should global borrowing costs rise, the cost of servicing this debt could drain resources that would otherwise go into critical sectors like healthcare, education, and infrastructure.

Environmental Risks: India Faces the Frontlines of Climate Change

Environmental risks are among the most pressing for India, with the WEF’s report highlighting climate change, water scarcity, and natural disasters. India is already feeling the effects of a warming planet. The 2020 India Climate Change Report revealed that the country has experienced a 2°C rise in temperature over the last century, with devastating impacts on agriculture, water resources, and human health.??

Water scarcity is particularly alarming. A report by the National Commission for Integrated Water Resources Development indicated that 600 million Indians face high-to-extreme water stress, with 21 Indian cities expected to run out of groundwater by 2030. According to the NITI Aayog, millions of lives and livelihoods are in danger as India faces the biggest water crisis in its history. Additionally, the situation would only worsen, predicting that hundreds of millions of people would experience acute water shortages and the nation's GDP would eventually decline by 6%.? The impact of water scarcity on agriculture, which employs about 42% of India’s workforce, could trigger mass migration and exacerbate rural poverty.

Moreover, the frequency and intensity of extreme weather events like floods, droughts, and cyclones are expected to increase. In 2024 alone, over 2,800 people lost their lives and 3.47 lakh houses were damaged in hydro-meteorological disasters. The devastation caused by the 2022 floods in Assam and Kerala underscores how vulnerable India is to climate-related risks. The rising frequency of such events will likely strain India’s disaster response mechanisms and impede long-term development.

Geopolitical Risks: Tensions on India’s Borders

Geopolitical tensions, particularly with neighboring China and Pakistan, remain a key risk to India’s stability. The ongoing border disputes with China, notably in the Ladakh region, present a continuous threat to national security. According to the Ministry of Defence, India’s defense budget for 2023 is $70 billion, but as global power dynamics shift, India must invest in both defense and diplomacy to secure its strategic interests.

In an increasingly multipolar world, India faces the challenge of maintaining its non-aligned stance while navigating complex relationships with both the US and China. Any misstep could destabilize the region and have direct implications for India’s economic and security interests.

Societal Risks: Rising Inequality and Health Crises

As India’s economy grows, the gap between rich and poor continues to widen. According to a report by the Income Tax Department, the top 10% of income earners in India account for 56% of total national income, leaving the majority of the population behind. The WEF report stresses the risks of social inequality and mental health crises, both of which are becoming increasingly evident in India.

The nation’s health infrastructure is already under pressure. During the COVID-19 pandemic, India experienced the second-highest number of infections globally, with over 44 million cases and 500,000 deaths. The mental health crisis, exacerbated by social isolation and economic anxiety, is equally concerning. The National Mental Health Survey reported that 1 in 20 Indians suffers from a mental health disorder, yet less than 10% receive treatment.

India's demographic profile – with a median age of 28 years and over 1.4 billion people – offers both opportunities and risks. The country’s youth bulge is a potential demographic dividend, but only if it can provide jobs, education, and healthcare. If not, it could become a source of instability.

Technological Risks: Embracing the Future While Guarding Against Threats

India is poised to be a global leader in the digital economy, but this brings with it significant technological risks. The rise of artificial intelligence (AI) and automation threatens to displace millions of workers, particularly in sectors like manufacturing and agriculture. A report by the McKinsey Global Institute estimates that 55 million jobs could be lost in India to automation by 2030.

Equally pressing are the cybersecurity threats that come with the rapid expansion of digital infrastructure. India is the second-largest internet user in the world, with over 700 million users, but cyberattacks are on the rise. In 2022 alone, India’s CERT-In (Computer Emergency Response Team) reported around 14,00,000 cyber incidents, including high-profile attacks on government and private sector entities.

A Call for Action

The risks identified in the WEF’s Global Risks Report are not theoretical. For India, they are part of an urgent reality. India must take immediate, coordinated action to mitigate these risks. This includes:

Strengthening economic resilience by improving fiscal discipline and expanding digital infrastructure.

Investing in climate adaptation strategies, including water conservation and renewable energy.

Addressing social inequality through better redistribution of resources and improving access to healthcare and education.

Enhancing national security through diplomacy, strategic defense alliances, and modernizing defense technologies.

Embracing technology responsibly, ensuring that AI and automation benefit all segments of society, and securing digital infrastructure against cyber threats.

India's future hinges on how it responds to these global risks. By adopting a proactive and holistic approach, India can turn these challenges into opportunities and continue its ascent on the world stage.