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Economic Effects Of Taliban Takeover

Updated: Sep 22, 2021

One crisis after another, the world is already dealing with a pandemic and now the Taliban has taken over Afghanistan. What could this mean for the world? What impact would this have on India? Should India feel threatened by the Taliban rule? Here are some facts that may help us hypothesize what the future holds for us.

Amongst the most displaced are the locals of Afghanistan who are ready to sacrifice their homes and livelihood to seek asylum to protect themselves and their heritage for a better future. Along with this, the economy of Afghanistan has also taken a nosedive. According to a report by the world bank, Afghanistan, before being captured by the Taliban had very little foreign business investment due to security issues. Also, the Afghani economy was mainly supported by aid from developed countries which consequentially makes the economic prospects look even more precarious now. The return of the Taliban could also mark the beginning of another dark era for Afghanistan with uncertainty prevailing about the country’s economic progress among other things. Furthermore, its ties with the rest of the world, particularly with those countries which have invested heavily in Afghanistan are now uncertain about the returns of their investments.

In the thick of many countries, India stands out to be one of the biggest investors in Afghanistan with an estimated capital investment of more than $3 billion over the past few years. This includes the building of the Afghani parliament, Salma Dam (or Afghan-India Friendship Dam project) in Herat Province and also the construction of many schools, colleges, and hospitals.

India is also one of the biggest trade partners of Afghanistan. Afghan exports to India include dried raisins, walnuts, almonds, figs, pine nuts, pistachios, dried apricot and fresh fruits such as apricot, cherry, watermelon and a few medicinal herbs. On the other hand, India’s exports to Afghanistan include tea, coffee, pepper, cotton, toys, footwear and various other consumable items. The bilateral trade between India and Afghanistan was $1.4 billion in 2020-21. Now that the trade between Afghanistan and India has stopped, we can expect substantial inflation in the prices of the above-mentioned commodities.

Medical tourism of India is one of the important parts of the Indian economy. Many people from Afghanistan travel to India and various other countries for their treatment as they are devoid of healthcare. Taliban's rule over Afghanistan will also affect the medical tourism of India.

In addition to the resources provided by investing countries, Afghanistan has natural reserves worth $1 trillion which are now at the complete disposal of the Taliban. This includes resources like copper, lithium and many rare gemstones.

With support from the US, the Taliban has an air force now. There are 11 military bases that include an army of well-trained soldiers equipped with the latest weapons and gadgets, well-planned military bases and most importantly, an Air Force. In total, the AAF has an inventory of 211 air platforms of which 167 were operable as of June 30, 2021. Taliban landed with $20 billion worth of the most dangerous military hardware in the world at their disposal. They have enough resources to win wars against them single-handedly.

On top of economic setbacks, millions of Afghanis are suffering from the plight of Sharia law. The outrageous laws and the conservative mindsets have put a setback to all the efforts made by prominent women in Afghanistan. They are facing a major threat to their lives just for demanding and practising basic human rights.

The country is in a deep state of terror and upheaval. It is clearly visible that it is having an impact on most countries, be it big or small. The world economy is rapidly changing for the worst and the long term impact of this situation will be reflected with time.

By- Anmol Singh Madan


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