An injection for reform and growth, writes Jyotiraditya Scindia – analysis
If one described the magnitude of the crisis facing the world today, one could draw a parallel to that of Margaret Atwood The year of the flood. “The pandemic traveled through the air as if it were flying, it burned cities like fire.” The scene seems to have been planted in reality. The coronavirus has been a disaster for world economies, supply chains, markets, trade, and livelihoods.
But for India, due to bold decisions like the national blockade, the impact in terms of lives lost has been relatively minor. The credit goes to the capable and decisive leadership of Prime Minister (PM) Narendra Modi. Undoubtedly, his unique, unambiguous and bold decision-making has safeguarded the interests of 1.3 billion people and saved thousands of lives. The Indian coronavirus disease case fatality rate (Covid-19) is 3.23%, compared to the overall mortality rate of 6.92%; the recovery rate is 34.06%.
In every adversity there is an opportunity. India’s situation is a turning point, as is the 1991 economic crisis, which heralded a paradigm shift through liberalization, privatization, and globalization. The post-Covid-19 era will usher in unprecedented opportunities. Fortunately, India has been able to take advantage of these opportunities.
The recently introduced Atmanirbhar Bharat Abhiyan (Self-Sufficient India) and the emphasis on “Vocal for Local to Global” hit the right note with the post-Covid-19 era that required a new orientation; a redesign of India’s growth history that is based on reform and dependent on the ability to sell its indigenous capabilities to the world. Developed for the first time by Mahatma Gandhi, the Prime Minister has once again made it the hub, on which reforms will penetrate the five pillars: economy, infrastructure, technology-driven system, vibrant demographics and demand.
The government realizes that this macroeconomic vision will become reality by strengthening the foundations. The economic stimulus of Rs 20 lakh crore, along with the systemic big bang reforms announced by the government, is a suitable opening for this vision. The expected impact is twofold; First, interim measures, such as liquidity infusion and direct cash transfers for the poor, will work as buffers for people with acute stress. The Rs 1.7 lakh crore package under PM Garib Kalyan Anna Yojana and One Nation One Ration Card will allow 800 million marginalized Indians to maintain their nutritional intake levels, through a guaranteed ration. Similarly, the decision to allocate an additional sum of Rs 40,000 crore to the Mahatma Gandhi National Rural Employment Guarantee System, provides a free three-month supply of gas bottles to 83 million LPG families under the PM Ujjwala Yojna, Rs 500 ex-gratia transferring to 200 million Jan Dhan women’s accounts, 1,000 rupees each to seniors and widows, and depositing 2,000 rupees each to the accounts of more than 80 million farmers through direct benefit transfers are steps commendable resuscitation.
The second involves long-term reforms in growth-critical sectors to make them competitive and attractive globally. Taken together, this should not only help get India back on track as a competitive player in world markets, but should also be seen as filling the gap created by the pandemic and creating new growth opportunities in sectors such as agriculture, micro, small and medium-sized enterprises (MSMEs), energy, coal and mining, defense and aviation.
India ranks second worldwide in agricultural products. It continues to be one of the largest producers of milk, fruits and vegetables. Despite the heavy numbers, it is underprocessed here and India ranks fairly low in global food processing value chains. This is an untapped growth opportunity, so we must take advantage of our comparative advantage and increase our competitiveness by allowing farmers to increase the value curve of their products. After Covid-19, we must lead the race to become the world’s food factory. The announced measures for the agricultural and allied sectors are particularly transformative. The proposed new law allowing interstate commerce in agricultural yield will allow farmers to take advantage of attractive prices and markets beyond their home state, moving toward the One Nation One Market goal. Similarly, the proposed amendment to the Essential Commodities Act will allow private players to buy agricultural products on a large scale. In addition, the $ 13 billion measures to improve the farm gate infrastructure will go a long way towards increasing farmers’ incomes, and therefore achieving the goal of self-sustaining villages. However, these measures must be combined with a solid digital commerce platform. The government can create a national network of local platforms that currently operate in isolation, along with the incorporation of credible new agricultural technology companies. This will also help standardize the quality parameters of agricultural products and provide digital tools to assess quality.
Like agriculture, MSMEs are collectively one of the largest employers, with approximately 120 million workers on their lists, including migrant workers. Around 75 million MSMEs contribute approximately one third of GDP and 45% of the country’s manufacturing production. But at the same time, banks consider them the riskiest borrowers. According to a BizFund report, only 16% of MSMEs in India obtain formal credit, leaving more than 80% of these companies underfunded or financed through informal sources. So much of the stimulus is really about activating credit channels. The unsecured loan facility of Rs 300,000 crore for MSMEs or the liquidity facility of Rs 30,000 crore for NBFC, mortgage lenders and microfinance institutions announced in the first tranche of the package are examples.
Another sector that will assume importance will be health care. Almost all countries have been forced to review how much they spend on public health. In perspective, it is important to note that total government spending per capita on health care has almost doubled from Rs 1,008 per person in fiscal year 2015 to Rs 1,944 in fiscal year 20. The government has decided to increase spending on public health, in addition to other prudent measures such as establishing government diagnostic laboratories down to the block level. While this will strengthen the country’s testing capacity today, for the future it will help build stronger resilient health infrastructure.
The recent announcements are also a testament to our government’s balanced approach to addressing concerns across sectors. For example, the recently launched PM e-Vidya program for multimode access to online digital education provides a uniform learning platform for the entire nation, allowing schools and universities to stream courses online without wasting more teaching hours. Furthermore, limiting arms imports and increasing the foreign direct defense investment limit from 49% to 74% will give a much-needed boost to the Artillery Factory Board, while reducing India’s huge defense import bill. .
To establish influence abroad, we must first become a formidable unforgiving force at home. The magnitude of the problem has been enormous. It is of a size that no government in the world could have been prepared to face. However, as the curve flattens out, the Center’s revival plan is optimal and logically sound. It provides a safety net for the most vulnerable and a “vitamin injection” to free animal spirits from growth-critical sectors. It seems we are well on our way.
Jyotiraditya Scindia is a leader of the Bharatiya Janata Party, former Union Minister and a former member of Parliament
The opinions expressed are personal.