The world is slowly limping back to work. There is some slowdown in infections and death rates in many developed countries, but the coronavirus is not done with the world yet. Till now, more than 51 lakh people have been infected by the virus globally, with over 3.33 lakh deaths.
That is the human cost. The economic and social impact is unprecedented. This is one of the worst global economic declines ever since records have been kept. Most of the countries are going to witness negative growth ranging from 5-15%. But there is enough resilience in the system with new technologies and global connectivity in financial markets. India needs to have a clear policy to survive and grow in the post-Covid-19 world. Based on these early signs, five trends and suggested policy responses are listed below.
1) Diversification of global manufacturing sectors: The world has seen the danger of concentrating manufacturing in one country, i.e. China. One of the main lessons of Covid-19 is that such concentration might provide cheap goods, but it would be most expensive and even dangerous when the systems break down. This will change and the process is on. The battle lines are being drawn between two major economies—the US and China. With the recent strategic decision of intruding into digital currency, China seems to be sending a signal that it wants to move away, though gradually, from the dollar-dominated international monetary system. The US reaction to fix China for the global disaster needs to be seen in that context. There will be a movement of capital away from China in the manufacturing sector. This might present a great advantage to India, particularly southern states, provided there is a proper policy and strategy framework. India needs to move in that direction fast.
2) Public health at the centre of development: Surely India needs to spend a lot more on public health, not just on reimbursing costs to the poor, which certainly gives temporary results. Its focus should be prevention in order to maintain primary health, which depends on clean water, clean air, green spaces, proper housing, drainage systems, etc. These are no longer welfare spending, they are part of economic growth. India could be a major manufacturing base for vaccines, and it could provide facilities and training for many developing countries, and establish R&D for early detection and monitoring of such future situations. The large pharma base will also help and gain in that process, provided it takes all measures to eliminate pollution. State governments need to develop comprehensive public health policies and comparable programmes with serious investments to develop institutional facilities and human resources.
3) Climate-friendly economy: There is a danger that with cheap oil prices, India may go back to encouraging an oil intensive economy. The focus should be green transport, electric cars and public transport in order to meet green standards. It is important to note that our cities are polluted so much that it would be difficult to add more polluting industries and cars. At a global level, a post Covid-19 economy will be mostly a green economy. What this means is a) efficient internet system that encourages remote meetings, reducing transport within the city and between cities; b) public transport systems like expanding metros to suburban areas; c) tax rebates for electric vehicles at production and consumer levels; d) enforcement of pollution regulations and tightening existing regulations on water and air pollution; e) facilities for using bikes to get to work, etc.
4) Focus on agriculture: India has a great opportunity to promote sustainable agriculture. In times of crisis, social stability is of paramount importance and that is secured with production and distribution of food grains. India in general and particularly some of the states like Telangana did very well in terms of producing the much-required food grains. For the next one year, until the economy starts recovering, at least there will be food for everyone. So spending on agriculture, particularly for the steady supply of food grains, is extremely important.India needs to refocus on the agriculture sector after Covid, but in different directions such as a) organic agriculture to meet the growing demand in urban areas for quality food. There is enough market, but the government needs to have policies to promote, certify and streamline markets with reliable organic food. People are ready to pay a huge premium for organic produce; b) directing subsidies to organic inputs; c) focusing on value addition and rural agri-processing industries so that jobs can be created in rural areas and pressure on cities can be reduced. Sustainable agriculture should be the focus, and approaches and technologies are now mature and available. India needs a serious policy and programmatic approach to take advantage of these methods through incentives.
5) Youth employment: This is one area in which India needs to go a long way. For quite some time, India focused and to some extent succeeded in creating high-end jobs created by intensive capital, both domestic and foreign. After Covid-19, the strategy should be to develop policies and institutional frameworks to create entry-level, mid-level and low-end jobs in large numbers, mostly in rural and semi-urban areas. Financial institutions need to come out with innovative lending that creates jobs with limited capital.
Finally, Covid-19 is a global disaster for which the world was totally unprepared. But the world and India must draw some major lessons out of this unpleasant experience and turn it into a positive one. Doing more of the same after the lockdown is fully lifted is not at all an option. Let us hope that a new thinking process will lead to better policies that helps us come out much stronger, with more resilient economies and health systems. The economy is not just numbers; real progress and social stability are needed—that is the biggest lesson from this Covid-19 disaster.
B Vinod Kumar
Vice Chairman, Telangana State Planning Board & two-time former MP
(Email ID: vinodkumarboianapalli@yahoo.com)
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May 23, 2020 at 05:30AM
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Post-Covid economy: A great opportunity to do it right - The New Indian Express
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