Latest news with #SwaminathanAiyar
Time of India
3 days ago
- Business
- Time of India
Tariff wars far from over, Trump likely to reuse trade lever, warns Swaminathan Aiyar
"The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out," says Swaminathan Aiyar , Consulting Editor , ET Now. Well, the official word so far is that US-China trade talks details were limited on Monday, I mean they are saying that US is willing to remove restrictions on some tech exports in exchange for China easing limits on rare earth shipments, but nothing has really happened. Is it going to be too hopeful or too optimistic to think that everything is going to be eased out on the sidelines of these London meetings? Swaminathan Aiyar: The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Kota: Here's How Much Dental Implants Really Cost In 2025 Dental implant | Search Ads Learn More Undo The Chinese stood up, when Trump increased the import by 125%, so did they and ultimately Trump had to back down on that and has backed down on various things. So, on the one hand this means that some kind of deals are definitely more possible. It also means that every country including India we have an incentive not to give way very easily. We have an incentive to say China stood up and it was rewarded. If all of us stand up, then we have this guy who from being a dragon now is beginning to chicken out on various deals, so let us talk tough, let us act tough. So that is the global position right now. For the very fact that the Americans say they are willing to ease the restrictions on high-end chips in return for the rare earths is a sign of chickening out in a big way. Let us see if that actually happens. As I said, we all have an incentive now to act tough because Mr Trump is very keen on reaching deals with the major countries before the 90-day deadline. Let us see what happens. As I said, I would look for last minute developments rather than anything right now despite the talks in London. Given with everything happening between US and China and within the US economy itself, you also have the matter of the rare earth metals that is looming on everybody's head and not only these two countries. Give us a sense of where India stands amid this storm. Do we stand to benefit from supply chains potentially shifting out of China and towards other EMs? And also, we understand that we do have enablers to manufacture our rare earths, but we are at a very nascent stage. So, what is your take on that as well? Swaminathan Aiyar: All across the world major countries have suddenly realised by God I am so dependent on China. It had not occurred to them in the days when globalisation was proceeding a pace, that you suddenly become so dependent on one single source. The United States has a bill of $39 million to promote its own supply chain of rare earths. We have begun, but it will take a long time and frankly we do not have very good domestic prospects. It will be more like trying to diversify our sources from other places. But the fact is that right now our auto industries and smartphone industries are both complaining that the supply chain is becoming very strained. Stocks of rare earths and permanent magnets are coming down to dangerous levels and if this does not reach some kind of quick conclusion, they may have to reduce production from June. Live Events India has made it very clear that Sino-Indian relations must not be mixed up with Sino-US relations. So, I mean that is one good thing. On the other hand, it also means while we do not have to worry as much about China hitting us as the US has, it also means we have less leverage to use the USA to get things done for us. So, let us see. China is keeping a very large number of countries on a tight leash to prove how strong position it is in and it knows very well that while all the other countries want to get other sources of supply, it is going to take some time and therefore China is going to have the upper hand in this deal not just in what happens in the next month or so but even in the next year, in the next two years. So, this is going to be an interesting Chinese lever that it may use again and again. As of now, let us see that 90-day deadline is approaching and let us see whether the USA and China manage to do a deal. Once that happens, there will be a lot of relief the world over and people saying okay things are not as bad as they are. The guy has chickened out once again, let us see. But things are really turning out to be bad between Elon Musk and Donald Trump, at least what their social media handles do suggest and finally that bromance seem to be coming to an end. But help us understand that what do you make out of that because some experts are even highlighting and anticipating that it is possible that both parties come along and once again join and shake hands. But what is your sense on that because for now in the latest commentary we see that Donald Trump calls Starlink a good service, but the tensions between both of them do remain. How do you see the landscape shaping up? Swaminathan Aiyar: At this point, Trump is very keen on doing deals within that 90-days, that is why people are accusing him of chickening out. From starting with a very-very tough stance, he has given way again and again. So, I would hope that a number of deals will be concluded within that 90-day deadline, but by no means all. I would also add that there is an incentive for every country like India to drag its feet. I mean, the key question is what will happen after the 90 days? Will Trump once again impose what he called those reciprocal tariffs of different rates from 26% to much-much higher rates all over the world. Is he going to reimpose them? As of now, that does not seem to be his intention. He keeps saying, I am hoping for deals. If those deals do not happen, are we going to see another phase of Trump saying now I am going to act tough because if you suddenly get reciprocal tariffs coming back after 90 days, then all this optimism that you are seeing in the markets right now, it will disappear like a whiff of smoke and all kinds of dire predictions will come again. So, we do not know what is going to happen. However, the longer-term prediction, I would say, please let nobody think that the 90 days is going to be the end. I think Mr Trump is going to continue to use the tariff lever for four full years. It is not over in 90 days. I do not think this is the end of the tariff thing. He is a believer in tariffs. He really thinks that tariffs are the solution and not a problem. And while in the short term he may say okay, I will chicken out here, I will chicken out there. The chicken will come back again and again and again. I do not think you are going to have any kind of safety or security in the next four years. So, in the long run, watch out. But what about the big beautiful breakup now between Musk and Trump? What are the implications of that? Swaminathan Aiyar: Well, I have to say that Mr Musk has been revealed as a greedy money grabbing guy. I mean, the thing he mainly disagrees with is among other things is that his own pocket is going to be burnt by some of the clauses in this bill. Some of the huge amount of subsidies that he has been getting, that some of the tax breaks that buyers of electric vehicles have been getting, if all that is taken away, it will hurt him very substantially. And people really think this is the big thing that is going behind. In any case, I do not think Mr Trump is famous for having permanent allies. I mean, even in the case of Iran, he turned around and said, we can do a deal with them and when people were astonished, he says we have no permanent enemies. In the case of Musk, he can also say we have no permanent friends. As long as, Mr Musk was willing to spend millions of dollars on helping Trump to get elected or as long as he was willing to ride on some of the slashing of expenditure, that part of the bandwagon, Trump was with him. The moment he got out of line, the moment that he ceased to be as important as he thought he was, he went into a sulk and Mr Musk is welcome to go into but Mr Trump is the guy who has the Trump cards. So, this was going to happen at some point of time and I would say that nobody should ever believe that Trump has permanent friends. If you look at his first term itself, many-many of the people he appointed to top posts were sacked and he has sacked people all over the place. In the TV programme called The Apprentice, his favourite line was you are fired. So, Mr Musk should not be surprised. What about India? We have got a great mix going on here. You have got lower inflation, now lower EMIs after the big bazooka from RBI , lower taxes back in the budget, and now good monsoons as well. You think it is a good mix for India markets to stay up? Swaminathan Aiyar: People are talking about the big bazooka and the big cut. To me this is a preparation for a possible recession. So, they are doing a counter cyclical thing now itself. Just a month ago I would say there were people rating chances of a recession extremely high. Now those chances may be a little less. But just wait for the end of the 90-day pause. Let us see what happens about this reciprocal tariff. Let us see how many trade deals are done because if it does not get done fairly quickly, we will indeed slip into a recession. From that point of view, Mr Malhotra can say, well, look I am taking advance action, I can see the possibility of a recession, so this is counter cyclical policy being taken at a very appropriate time, that I think will be his defence. There are some people accusing him of being too gung-ho. The Financial Times in London has said, hey, just take it easy, why are you cutting so badly after all you still have these problems and things are there. I agree we have our problems, but one of those problems is going to be a possible coming recession and as a counter cyclical thing against that recession, I think the RBI governor's aggression can be justified at this particular point. It is a bold move, but boldness might pay.
Economic Times
3 days ago
- Business
- Economic Times
Tariff wars far from over, Trump likely to reuse trade lever, warns Swaminathan Aiyar
From that point of view, Mr Malhotra can say, well, look I am taking advance action, I can see the possibility of a recession, so this is counter cyclical policy being taken at a very appropriate time, that I think will be his defence. There are some people accusing him of being too gung-ho. "The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out," says Swaminathan Aiyar, Consulting Editor, ET Now. Well, the official word so far is that US-China trade talks details were limited on Monday, I mean they are saying that US is willing to remove restrictions on some tech exports in exchange for China easing limits on rare earth shipments, but nothing has really happened. Is it going to be too hopeful or too optimistic to think that everything is going to be eased out on the sidelines of these London meetings? Swaminathan Aiyar: The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out. The Chinese stood up, when Trump increased the import by 125%, so did they and ultimately Trump had to back down on that and has backed down on various things. So, on the one hand this means that some kind of deals are definitely more possible. It also means that every country including India we have an incentive not to give way very easily. We have an incentive to say China stood up and it was rewarded. If all of us stand up, then we have this guy who from being a dragon now is beginning to chicken out on various deals, so let us talk tough, let us act tough. So that is the global position right now. For the very fact that the Americans say they are willing to ease the restrictions on high-end chips in return for the rare earths is a sign of chickening out in a big way. Let us see if that actually happens. As I said, we all have an incentive now to act tough because Mr Trump is very keen on reaching deals with the major countries before the 90-day deadline. Let us see what happens. As I said, I would look for last minute developments rather than anything right now despite the talks in London. Given with everything happening between US and China and within the US economy itself, you also have the matter of the rare earth metals that is looming on everybody's head and not only these two countries. Give us a sense of where India stands amid this storm. Do we stand to benefit from supply chains potentially shifting out of China and towards other EMs? And also, we understand that we do have enablers to manufacture our rare earths, but we are at a very nascent stage. So, what is your take on that as well? Swaminathan Aiyar: All across the world major countries have suddenly realised by God I am so dependent on China. It had not occurred to them in the days when globalisation was proceeding a pace, that you suddenly become so dependent on one single source. The United States has a bill of $39 million to promote its own supply chain of rare earths. We have begun, but it will take a long time and frankly we do not have very good domestic prospects. It will be more like trying to diversify our sources from other places. But the fact is that right now our auto industries and smartphone industries are both complaining that the supply chain is becoming very strained. Stocks of rare earths and permanent magnets are coming down to dangerous levels and if this does not reach some kind of quick conclusion, they may have to reduce production from June. India has made it very clear that Sino-Indian relations must not be mixed up with Sino-US relations. So, I mean that is one good thing. On the other hand, it also means while we do not have to worry as much about China hitting us as the US has, it also means we have less leverage to use the USA to get things done for us. So, let us see. China is keeping a very large number of countries on a tight leash to prove how strong position it is in and it knows very well that while all the other countries want to get other sources of supply, it is going to take some time and therefore China is going to have the upper hand in this deal not just in what happens in the next month or so but even in the next year, in the next two years. So, this is going to be an interesting Chinese lever that it may use again and again. As of now, let us see that 90-day deadline is approaching and let us see whether the USA and China manage to do a deal. Once that happens, there will be a lot of relief the world over and people saying okay things are not as bad as they are. The guy has chickened out once again, let us see. But things are really turning out to be bad between Elon Musk and Donald Trump, at least what their social media handles do suggest and finally that bromance seem to be coming to an end. But help us understand that what do you make out of that because some experts are even highlighting and anticipating that it is possible that both parties come along and once again join and shake hands. But what is your sense on that because for now in the latest commentary we see that Donald Trump calls Starlink a good service, but the tensions between both of them do remain. How do you see the landscape shaping up? Swaminathan Aiyar: At this point, Trump is very keen on doing deals within that 90-days, that is why people are accusing him of chickening out. From starting with a very-very tough stance, he has given way again and again. So, I would hope that a number of deals will be concluded within that 90-day deadline, but by no means all. I would also add that there is an incentive for every country like India to drag its feet. I mean, the key question is what will happen after the 90 days? Will Trump once again impose what he called those reciprocal tariffs of different rates from 26% to much-much higher rates all over the world. Is he going to reimpose them? As of now, that does not seem to be his intention. He keeps saying, I am hoping for deals. If those deals do not happen, are we going to see another phase of Trump saying now I am going to act tough because if you suddenly get reciprocal tariffs coming back after 90 days, then all this optimism that you are seeing in the markets right now, it will disappear like a whiff of smoke and all kinds of dire predictions will come again. So, we do not know what is going to happen. However, the longer-term prediction, I would say, please let nobody think that the 90 days is going to be the end. I think Mr Trump is going to continue to use the tariff lever for four full years. It is not over in 90 days. I do not think this is the end of the tariff thing. He is a believer in tariffs. He really thinks that tariffs are the solution and not a problem. And while in the short term he may say okay, I will chicken out here, I will chicken out there. The chicken will come back again and again and again. I do not think you are going to have any kind of safety or security in the next four years. So, in the long run, watch out. But what about the big beautiful breakup now between Musk and Trump? What are the implications of that? Swaminathan Aiyar: Well, I have to say that Mr Musk has been revealed as a greedy money grabbing guy. I mean, the thing he mainly disagrees with is among other things is that his own pocket is going to be burnt by some of the clauses in this bill. Some of the huge amount of subsidies that he has been getting, that some of the tax breaks that buyers of electric vehicles have been getting, if all that is taken away, it will hurt him very substantially. And people really think this is the big thing that is going behind. In any case, I do not think Mr Trump is famous for having permanent allies. I mean, even in the case of Iran, he turned around and said, we can do a deal with them and when people were astonished, he says we have no permanent enemies. In the case of Musk, he can also say we have no permanent friends. As long as, Mr Musk was willing to spend millions of dollars on helping Trump to get elected or as long as he was willing to ride on some of the slashing of expenditure, that part of the bandwagon, Trump was with him. The moment he got out of line, the moment that he ceased to be as important as he thought he was, he went into a sulk and Mr Musk is welcome to go into but Mr Trump is the guy who has the Trump cards. So, this was going to happen at some point of time and I would say that nobody should ever believe that Trump has permanent friends. If you look at his first term itself, many-many of the people he appointed to top posts were sacked and he has sacked people all over the place. In the TV programme called The Apprentice, his favourite line was you are fired. So, Mr Musk should not be surprised. What about India? We have got a great mix going on here. You have got lower inflation, now lower EMIs after the big bazooka from RBI, lower taxes back in the budget, and now good monsoons as well. You think it is a good mix for India markets to stay up? Swaminathan Aiyar: People are talking about the big bazooka and the big cut. To me this is a preparation for a possible recession. So, they are doing a counter cyclical thing now itself. Just a month ago I would say there were people rating chances of a recession extremely high. Now those chances may be a little less. But just wait for the end of the 90-day pause. Let us see what happens about this reciprocal tariff. Let us see how many trade deals are done because if it does not get done fairly quickly, we will indeed slip into a recession. From that point of view, Mr Malhotra can say, well, look I am taking advance action, I can see the possibility of a recession, so this is counter cyclical policy being taken at a very appropriate time, that I think will be his defence. There are some people accusing him of being too gung-ho. The Financial Times in London has said, hey, just take it easy, why are you cutting so badly after all you still have these problems and things are there. I agree we have our problems, but one of those problems is going to be a possible coming recession and as a counter cyclical thing against that recession, I think the RBI governor's aggression can be justified at this particular point. It is a bold move, but boldness might pay.
Time of India
12-05-2025
- Business
- Time of India
Some good news is better than none but let's not get overenthusiastic: Swaminathan Aiyar
Swaminathan Aiyar , Consulting Editor, ET Now , says geopolitical tensions are easing with positive developments in India-Pakistan relations and progress in US-China trade talks , though significant hurdles remain. While the World Bank anticipates minimal economic impact from the India-Pakistan situation, the stock market is poised for recovery. Trump's tariff approach may face resistance, particularly from Europe, but overall, the outlook is brighter after weeks of uncertainty. What is your view on current geopolitical scenarios? Swaminathan Aiyar : After several weeks of uncertain and difficult times, suddenly we are getting very good news. It is good news on the Indo-Pakistan front. It is good news on the China-USA front. It is good news basically all around. So, some of the really worst case scenarios are clearly gone. Whatever we are dealing with are among the better case scenarios, no matter what the actual outcome is. I am very glad that the India-Pakistan thing has wound up and I checked with somebody in the World Bank. Basically they said we had not expected any significant effect on either economy and that appears to be the case. So, this would not even register as a blip on the overall economies of the two countries. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Unleash Your Creativity with Adobe - The Ultimate Design Partner Undo Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. So, as far as we are concerned, the stock market, which has gone down, has some catching up to do and I am sure investors will be in for a somewhat good time. The same thing is true of the USA and China. Mind you, I do not think they are close to what you might call a final deal. Mr Trump said the other day that the 80% tariff against China looks about right. It might look about right to him. I am sure it will not look right to Mr Xi Jinping . So, they would still have some considerable distance to go yet. But the fact that they have made some progress is good news. Overall, we are seeing geopolitical tensions decreasing and it appears that politically there is a lot of force in reducing the geopolitical tension and not increasing it as was the case, I would say, one month ago. So, this is good news. Let us see how far this goes and if all goes well, perhaps some of this will not look so bad. But let us remember, Mr Trump has a very firm conviction that tariffs are the right way to go, and bully others into proper positions. This may work up to a point and with some people. Beyond a point, it is going to cause disruption. I would say that Europeans are not easily going to give way and certainly they have ways of retaliating against the big American financial companies. But overall, after some three-four weeks of considerable uncertainty, things have gotten much brighter and we should all smile today. Live Events You Might Also Like: India-Pakistan conflict: No military solution possible, it will ultimately be a political solution: Swaminathan Aiyar What is the assumption you work with – it is going to be back to pre-tariff days or do you think there will still be a catch when we hear from both parties when that official press conference is slotted today? Swaminathan Aiyar: We do not know for sure, but the entire notion of liberalising and lowering tariff barriers has wittingly or unwittingly been given a push by Mr Trump. So, the deal that we achieved with the UK was a good deal and it would not have been easy had there been no Trump scare to begin with. We are certainly going to bring down our tariffs vis-à-vis the USA and on the other way. This then sets up a brighter future for India and the EU. So, all I can say is that overall, I see things getting better. The big problems will still be regarding the USA and China. The big thing is still going to remain if there are significant high US tariffs. Please remember, in any case they have this baseline of 10% across everything plus 25% for aluminium, steel, autos and they are talking about something on pharma and semiconductors as well. Overall, whatever the USA is going to do is going to have a slowing effect on international trade . But at this point, we can say the worst case scenarios have gone. Whatever is going to happen would be one of the better case or mid-case scenarios. Some good news is better than none. But please let us also not get overenthusiastic. Let us be very clear that with Mr Trump's fundamental position on using tariffs to get other countries into line, up to a point, you can get away from the worst case scenarios, but it is going to slow down world trade, GDP growth as well as Indian GDP growth. We are going to have some negative effects. How big that negative effect is, we do not know yet. Let us see what the actual outcomes are.
Time of India
09-05-2025
- Business
- Time of India
DII holdings in Nifty 50 surge to a record high of 23.6%. Axis Bank among top 5 choices
Domestic Institutional Investors (DIIs) have increased their holdings in the Nifty-50 universe to an all-time high of 23.6% as of March 2025, up by 240 basis points (bps) year-on-year (YoY) and 40 bps quarter-on-quarter (QoQ), according to a report by domestic brokerage firm Motilal Oswal. Motilal Oswal further noted that DII holdings in the Nifty-500 have also climbed to a record 19.2%. In contrast, FII holdings have declined for the fourth consecutive quarter to 24.7% as of March 2025, down by 50 bps YoY and 20 bps QoQ. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Innovative Jackets for Mountain Adventures [Buy Now] Trek Kit India Learn More Undo This surge in DII holdings comes as Foreign Institutional Investors (FIIs) have reduced their stakes in more than 80% of the stocks in the Nifty-500 universe. The brokerage report further revealed that DIIs raised their stakes in 42 Nifty-50 companies on a YoY basis, while FIIs reduced their holdings in 41 companies. On a quarterly basis, DIIs increased their stakes in 41 stocks, while FIIs cut stakes in 38 stocks. Among the top gainers in DII holdings were Axis Bank , IndusInd Bank, Dr. Reddy's Labs, HDFC Life Insurance, Kotak Mahindra Bank, and Eicher Motors, each posting a YoY increase of more than 4% in DII exposure. On the other hand, Hindalco and Bharat Electronics witnessed a YoY decline of more than 1% in DII holdings. Live Events Meanwhile, FIIs reduced their stakes by over 4% in key names such as Maruti Suzuki, Larsen & Toubro, Kotak Mahindra Bank, HDFC Life Insurance, Dr. Reddy's Labs, and Trent. Also read: India-Pakistan conflict: No military solution possible, it will ultimately be a political solution: Swaminathan Aiyar According to the report, the FII-DII ownership ratio in the Nifty-500 contracted to an all-time low of 1x in March 2025, down 10 bps YoY and flat QoQ. The ratio has expanded only in select sectors, including NBFC Non-Lending, Media, Infra, EMS, and Telecom, while contracting in Technology, PSU Banks, Consumer, and Oil & Gas. Sectorally, FIIs were observed to be significantly overweight in the BFSI sector, which accounted for 34.4% of their Nifty-500 allocation, up by 280 bps YoY and 300 bps QoQ. This was followed by Technology (10%), Automobiles (6.9%), and Healthcare (6.5%). In contrast, DIIs were overweight on Consumer, Oil &Gas, and Metals while underweight on Private Banks, NBFCs, and Real Estate, according to the brokerage report. The top 5 sectoral holdings of DIIs in the Nifty-500 accounted for 62% of the total allocation — BFSI (27.3%), Consumer (9.8%), Technology (9.3%), O&G (8.5%), and Automobiles (7%). Motilal Oswal also highlighted that among the top 5 stocks by holding value, HDFC Bank, ITC, ICICI Bank, Reliance, and Infosys were the dominant stocks in the DII portfolio. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Time of India
09-05-2025
- Politics
- Time of India
India-Pakistan conflict: No military solution possible, it will ultimately be a political solution: Swaminathan Aiyar
Swaminathan Aiyar , Consulting Editor, ET Now , says amidst missile and drone engagements, expectations in Washington DC lean towards de-escalation between India and Pakistan, deemed mature nuclear powers capable of restraint. While political rhetoric may intensify, a military solution is unlikely, with a political resolution anticipated. Despite potential financial pressures, China's support for Pakistan, including debt rollovers and strategic partnership, mitigates concerns of economic collapse of Pakistan. This is what we were fearing when we last spoke that there is going to be an escalation and it has been quite a dastardly attack by Pakistan! Swaminathan Aiyar: Absolutely. It was expected and it came, and it was not just a small thing. It was a much bigger attack – even on some of our military bases – all the way from J&K, down to Bhuj and Kutch. Pakistan says they are not going to treat this as just a small measured thing. We are going to treat this as something where we can claim that we attacked and destroyed various things in India. We do not yet know what their official statement is going to be. However, there are reports that in response to Pakistan's attack on these Indian targets, India itself has responded. There are reports that India has hit targets near Lahore, near Rawalpindi which is the military headquarters of Pakistan, and even Karachi. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo There are reports of the Indian Navy having now taken a role in this attack. We have to wait for the government's briefing a couple of hours from now to get details on this, but in effect, things are escalating more and more. There was first the Pakistani terrorist act in Pahalgam, then India responded, Pakistan then retaliated. India has escalated further according to the latest reports. And if that is true, it is a very major escalation and Pakistan will not take it lying down. If we have really hit Lahore, Karachi, and Rawalpindi, then a), we have gone into the heart of Pakistan. Rawalpindi is a long way from the border. If we can hit that, then we have really made enormous progress. b)If we are going to be hitting Lahore, this is where the prime minister's brother and wife are, and Karachi, of course, is their biggest city and if we have hit it and we have brought in our navy, there will be a demand within Pakistan to bring in Pakistan's navy to try and bomb some targets within India. I am afraid that while we were expressing hopes that there will be de-escalation, it appears just the other way around. It appears that we are right now ramping up. Both sides have ramped up. Neither side wants to go down. The United States is really not interested. Everybody is telling the two sides to cool down, and not to escalate. It will achieve nothing. After all, what will escalation achieve? Live Events You Might Also Like: Nifty muscle memory check: India-Pakistan conflicts have meant 5% dip. Will this time be different? The two countries do not want to go out on an all-out war. If they bomb each other and do even more damage, you cause damage, you take lives. But the fundamental underlying problems are not going to change. We are not going to change the fact that Pakistan is going to continue to support various Indian collaborators; that is not going to go away and it would appear that like in the case of Ireland, there was a kind of war which went on for more than a 100 years, it is going on here. Mr Donald Trump has just said well, they are fighting, they have been fighting a long time. In fact, they have been fighting centuries, which is perhaps not a very accurate remark. Further, it gives an idea that the world just tells India and Pakistan, guys, cool it. Guys, cool it, you are going to achieve nothing through this escalation. De-escalate and stop. But the mood in the two countries right now, I am afraid, is extremely heated. So, let us see how much this heat heats up, how much damage it causes, and who and how we can down the temperature India is not only striking with missiles and drones, and is planning a financial strike as well because we understand that India will put forward the position on Pakistan loan to the next IMF board meeting. Can this hit Pakistan hard given their financial situation and what implications can this have? Swaminathan Aiyar: At this point I am not in a position to say whether India's intervention will stop that particular loan. The details of that I am not familiar with. Most of the time, if anything goes to the board, it goes to the board because there is already a consensus. So, stopping a thing once it has gone to the board is frankly very difficult. I do not know whether India will succeed. But I have to add that China will bail out Pakistan. Can you have a swap facility? China will do it. So, it is not as though Pakistan is alone. Pakistan has its Islamic friends including Turkey who have already sent some munitions and China is a solid strategic partner and China will not allow Pakistan to go down. China has already rolled over about $2 billion of debt that Pakistan could not pay. It has been rolled over. So, Pakistan can take its time. So, I do not think on the financial side there is going to be any kind of victory for India or serious stoppage. Pakistan will carry on. This thing cannot be de-escalated via money issues, it would then be a diplomatic issue. You Might Also Like: Will the escalating India-Pakistan conflict continue to rattle stock market? We have been talking about the repercussions for the economy if this were to escalate. The cue on one hand unfortunately is how this entire tariff situation is going to play out. It has been dictating world markets and not just equities but pretty much every asset class right, from the dollar to crude to precious metals and now this special situation. What are we staring at going forward because I can see the rupee also is headed in for a big decline? Swaminathan Aiyar: As of now, the markets are still assuming that this thing will be controlled and get over, there is some acceptance right now that this has escalated to a greater degree than we saw in 2016 or 2019. Even so, the markets seem to feel that this will die down because the markets do say who can gain? We can escalate from five to seven cities on one side and from 9 to 11 cities and then again and again. But since there is no such thing as victory that is going to be achieved by these tactics and since there is absolutely no sign of trying to move enormous quantities of infantry across the border, that is not the game. Everything is being played fundamentally with missiles and with drones. In these particular circumstances, I am of the view that this will die down. It has caught us by surprise. We had not expected it to escalate this far. Even so, the expectation is these two countries have been good at deterring one another over the last 20-30 years. They have become nuclear powers. People were very afraid, there would be a nuclear war. There has been no war. So, the general assumption here in Washington DC is that these are two mature countries who know how to hold their horses, that at the political side, on the media side, there will be lots of huffing and puffing, lots of threats to get even further saying blood must flow, etc, but at the end of it, these are responsible nuclear powers who will de-escalate. That is the feeling right now certainly in Washington. Now, things could get worse. If Pakistan says that if the navy has attacked Karachi, let us attack Bombay High which is impossible to defend. You never know what unexpected things might happen. But as of now, the mood in Washington DC is that this thing will come under control. The two countries are mature people, and neither wants an all-out war. They will find some way to de-escalate first the rhetoric and then the actual war You Might Also Like: Flight diversions to cause longer travel times as India shuts 24 airports after Pakistan's escalation: What you need to know Is a military solution possible? Swaminathan Aiyar: No, whatever happens, there is not going to be any military solution. It will ultimately be a political solution . The de-escalation is not a military decision. It is a political decision. We have damaged Pakistan. Pakistan has tried to damage us. On both sides, the local media are hailing. I mean, just as we are hailing what we have done, in Pakistan the media are claiming that they are doing extremely well. It is necessary for both sides to claim victory in some sense and then one can get together and de-escalate. At this point of time, I do not think our attempt should be to have more and more attacks which will only result in further counterattacks. The emphasis right now should not be on saying how big an army we have. The truth is Pakistan will not be alone. If there is any chance of Pakistan seriously suffering against India, China will come in and then if you suddenly find Ladakh and Arunachal Pradesh are under attack, it will be very different. If you then begin to measure the Chinese army against the Indian army, you will not get the kind of thing that you are getting right now. So, the aim at this point has to be not to crow as to how great and important we are. At this point of time, we have established what we can do. We have shown that we are a significant power. We have shown we can attack even without leaving Indian airspace which is the best way because it minimises casualties from our point of view. Having achieved this, we need to go for de-escalation. We should not be raising the temperature any further.
