Hans Raj Singh asked: What is the impact of Arab uprisings on India, politically and economically?

Prasanta K. Pradhan replies: The uprisings in the Arab world do not seem to have any direct political impact on India as India does not play a proactive political role in the region; rather, it poses a challenge for India’s foreign policy. India is opposed to any kind of intervention in the affairs of other states and believes that the problems should be resolved taking into account people’s aspirations. Thus, India abstained from voting in the United Nations Security Council over draft resolutions on Syria and Libya. However, with huge stakes involved in the region – political, economic and security - the Arab uprisings are a test case for India’s policies and approach towards the region.

Economically, the Arab uprisings have led to a sharp increase in oil prices as oil production and supply were affected by the protests. The oil prices increased from around US$ 89 per barrel in December 2010, when the protests started, to over US$ 120 per barrel in May 2011. This can be attributed as one of the reasons for the rising oil prices in India. The impact of the uprisings on trade and investment has not yet been properly ascertained. But it has been reported that a number of Indian companies who have invested in several projects in the region, particularly in North Africa, are concerned about their investments and the future security environment in the affected countries. Also, there may be some marginal fall in remittances as number of Indian workers from Libya and Egypt have come back home.