[Answered] What do you understand by the term Brexit? What are various causes and possible impact of Brexit on India?

Brexit is the scheduled withdrawal of the United Kingdom (UK) from the European Union (EU). The EU was created in the wake of the 2nd World War in order to foster economic cooperation and to prevent further conflict between European countries. The UK, joined the EU in 1973, which was initially made up of the six founding countries. EU was posed to be a successful economic union, which unfortunately has not been fulfilled completely. Today the arguments in favour of Brexit have increased.

Various causes of Brexit:

1. Sovereignty: Although the British Government has an influence in some form in selecting the members to the European Commission, the members are neither under the influence nor accountable to the British Parliament. Some of the policy decisions such as competition policy, agriculture, copyright and patent law go against the interests of Britain (these laws override the domestic laws). This weakness of being unable to take decisions in Britain interests has led to support for Brexit.
2. Overriding regulations: Some of the regulations such as limits on the power of vacuum cleaners, non-recycling of tea bags etc have often been seen as a burden by some of the conservatives in Britain. These limits and regulations acted against the British interests and has adversely impacted British economy, leading to rise of voice for Brexit.
3. Failure of Euro: Although Euro is the common currency for EU, Britain still uses pound as its currency. The problem with euro as a common currency has also been exposed wherein on one side countries such as Greece and Spain are suffering from high debt, high unemployment, whereas other countries such as Germany are enjoying higher growth. Thus it has not helped Britain interests much.
4. Immigration: Britain is not a signatory of Schengen Border free zone. Over the last ten years there has been a quite an opposition towards migration into the country from within the EU and its effects on wages and public services especially post 2008 recession wherein the workers from Lithuania, Poland, Italy, Romania etc have moved to Britain.
5. Financial burden: Although EU doesn’t have the powers to collect the taxes from the people directly, it mandates member countries to make payments. In case of Britain it comes around $19 billion per year or $300/person. Although the funds are again used on Britain, the Brexit supporters say, the money could be used more efficiently, if Britain is out of EU.
6. Security concerns: The rising threat of terrorism in Europe which is exaggerated by EU’s inability to keep the area secure has led to Britain to get out of EU. Refugee crisis in Europe has added to the security concerns.

Thus, various factors have contributed to the Brexit. The effect of Brexit on the global economy coupled with weakening/depreciating currencies of various countries will make it more harder for recovery. It would not only have impact on Europe alone but will impact many nations.