Global disruptions may no longer be rare events but something economies will have to deal with regularly. Axis Bank chief economist Neelkanth Mishra has warned that countries like India should be ready for geopolitical shocks every one to two years, as global tensions become a more permanent feature of the economic landscape.
Speaking at Kotak Private Banking’s Take and Counter Take forum, Mishra said the recent easing of tensions, including the temporary ceasefire in West Asia, should not be seen as a sign of lasting stability.
Instead, it offers a short window for countries to prepare for what could be a more uncertain future.
GLOBAL ORDER IS CHANGING
Mishra said the current tensions are part of a larger global shift, especially the growing rivalry between the United States and China.
“This is part of a grand war between America and China,” he said, adding that such structural changes in global power balance are likely to lead to repeated disruptions.
He noted that earlier, globalisation helped reduce conflict and improve economic cooperation. But now, the world is moving in the opposite direction, with countries becoming more cautious and protective of their own interests.
As a result, geopolitical risks are rising and are likely to remain elevated for years.
SUPPLY CHAINS AT RISK
One of the biggest risks from such disruptions is the impact on global supply chains.
Mishra explained that even a small disruption in energy or logistics can have a wide impact across industries.
“If four percent of global energy flows are disrupted, it effectively means four percent of global GDP is taken out,” he said.
This can affect sectors such as manufacturing, aviation, tourism, chemicals and fertilisers. Delays in one part of the supply chain can quickly spread across the world, slowing growth.
He also pointed out that these disruptions often lead to higher costs, which then affect businesses and consumers.
INDIA IN A STRONGER POSITION
Despite the risks, Mishra said India is better placed than before to deal with such challenges.
“Compared to any other time in our history, we are much better prepared to deal with this,” he said.
He highlighted improvements in India’s macroeconomic stability, including stronger capital markets and better policy frameworks.
India’s financial system is more stable, and its ability to manage external shocks has improved.
However, he cautioned that being better prepared does not mean being fully protected. The country still needs to take further steps to reduce risks.
ENERGY DEPENDENCE A KEY WEAKNESS
One of the biggest concerns for India remains its dependence on imported oil and gas.
Mishra said global conflicts often push up energy prices, which can hurt economies like India that rely heavily on imports.
He suggested that increasing electrification and reducing dependence on fossil fuels can help lower this risk.
This would not only improve energy security but also reduce the impact of global price shocks on the economy.
TIME TO TAKE HARD DECISIONS
Mishra stressed that periods of uncertainty can be the best time to push reforms.
“This is very painful for the world but it will end,” he said, adding that countries that act during difficult periods are better placed when conditions improve.
He said waiting for stability before making policy changes could delay progress. Instead, governments should use such moments to make tough but necessary decisions.
Areas such as infrastructure, housing and domestic demand can be strengthened to reduce reliance on global trends.
TOURISM AND SERVICES NEED ATTENTION
Mishra also pointed to gaps in India’s tourism and services sector.
He said India remains one of the more expensive destinations for tourists due to regulatory hurdles and limited capacity.
Improving infrastructure and easing rules could help attract more tourists and create jobs.
He suggested that reforms in services can play a key role in boosting growth and making the economy more balanced.
Mishra said the current phase, where tensions have eased slightly, should be seen as a window of opportunity.
“The question is whether we use it,” he said, referring to the need for timely action.
He warned that if countries fail to act now, they may find it harder to respond when the next disruption hits.
PREPARE FOR A NEW NORMAL
The message from Mishra is clear. The global economy is entering a phase where disruptions could happen more often, and countries need to be ready.
For India, this means strengthening domestic systems, reducing external risks and pushing reforms even when conditions are uncertain.
While the country is in a better position than before, the coming years may test how well it can handle repeated shocks in an increasingly uncertain world.
