Former Indian Prime Minister Manmohan Singh, who is also a world-famous economist, has warned against trading in local currencies and the "forced and hurried" dismantling of the US dollar structure.
In an opinion piece published in The Hindu, a local English daily, on Friday, Singh said that the Russia-Ukraine conflict portends "a reshaping of the world order."
"The American dollar has emerged as the global trade currency, bestowing an 'exorbitant privilege' on the dollar, much to the justifiable consternation of other nations," Singh wrote. "But a forced and hurried dismantling of this order and replacing it with rushed bilateral local currency arrangements can prove to be more detrimental for the global economy in the longer run."
Since Russia declared war on Ukraine on Feb. 24, the US and the EU have imposed sanctions on Russia. Many countries are also now exploring trade settlement opportunities in their local currencies.
He stated that the global village for nearly 8 billion people on the planet is built on the foundation of "advanced transportation networks, cemented with the U.S. dollar as the reserve currency and fenced by integrated payment systems."
Singh, who used to draft the G20 economic agenda, said "any disruption to this delicate balance runs the risk of plunging the 'Global Village' into disequilibrium and derailing the lives of all."
Recalling the time when the former premier was part of bilateral currency negotiations -- such as the Indian rupee-Russian ruble agreement in the late 1970s and 1980s when India mutually agreed on exchange rates for trading purposes, Singh said that "such isolated bilateral agreements are fraught with risks."
"But when trade is a small share of the economy and such agreements are limited to a few trading partners, it was wieldy," he said.
The former prime minister has also maintained that India in the long run wants to "gain more from unfettered access to the western bloc markets for Indian exports under the established trading order than from discounted commodities purchased under new bilateral currency arrangements that seek to create a new and parallel global trade structure."
"Opportunities to buy discounted oil or commodities may be enticing but if it entails a prolonged departure from the established order of dollar-based trade settlement or jeopardizes established trading relationships with western bloc markets, it can have longer-term implications for India's export potential," he said, referring to India's buying of cheap oil from Russia at discounted prices.
Noting that social harmony, is the "edifice of economic prosperity," Singh also cautioned against the rising hate politics in the country.
"India can be the fulcrum of this new global order, as a peaceful democracy with economic prosperity. But this requires India to first stem the raging communal divisions within," he said.
Of late, there has been an increase in attacks against minorities in India, especially Muslims. Communal clashes were witnessed last week during the Hindu festival of Ram Navami across a number of states.