Economic Highlight

New Delhi, 20 July 2020

Future Belongs To India’s

OPENING UP THE MANTRA

By Shivaji Sarkar

India has to end its lockdown completely for fast economic recovery. The unlocking is like a see-saw. While the Centre is keen on opening up, the States have become erratic imposing closures either on a daily, weekly or hourly basis, hurting the crucial revival after 15 weeks of complete or partial curfew.

With a number of States, including Uttar Pradesh, West Bengal, Assam, Karnataka, Tamilnadu, Rajasthan and Maharashtra re-clamping curfew in parts it has led to closures all over, now in pieces. Very few States are functioning to their full capacity. It is affecting supplies, trade, transport, health of businesses and uncertainties across the country during the 13 weeks since March 25. Over 40 crore Indians are estimated to be still under various forms of local lockdowns.

The Narendra Modi government is caring for the health and life of the people, which is a solace. However, the disease is not lethal, says ICMR DG Balram Bhargav in his pre-unlock ‘Meet the Press’. He said overall incidences are low and fatality is less than one per cent in smaller cities and does not consider it to be a fatal disease. A cautious post-unlock approach has caused more piecemeal closures though impact is national. There is little evidence that local lockdown reduces spread of COVID-19.

Half of the year, first due to financial crisis since December 2019 and then severe COVId-19 closures, is witnessing tepid recovery. Post-unlock some select big industries such as the automobiles appear to be doing better but it’s still far from normal operations.

The US’ flip-flop policies are hitting the global economy accentuated by poor shipping operations and other blockades. The trade war with China has hit the US hard. Disney and Apple, among major US companies, Bloomberg reports, have become pawns of China, enabling Beijing to amass influence and wealth at the expense of the US and western democratic values.

India is no less hit by Chinese border and economic aggression. The country has taken tough steps to ban Chinese goods and 59 apps. It made Beijing react sharply and cajole India in diplomatic language. Indian search for alternative has begun but long dependence on Manmohanomics is delaying it. Complete swadeshi, or atmanirbhar Bharat, dream of Prime Minister Modi or every self-priding Indian through “Make in India’ is time-consuming. Total unlocking is needed to pace up these efforts.

Key economic indicators such as labour participation rates, mobility indices, and electricity consumption are down in July compared to initial activities in June. The weekly Nomura India Business Resumption Index (NIBRI) has plateaued causing worries. The index fell to 66.8 points till July 12, from 69.3 on July 5 and 70.5 at June-end.

June saw a pent up demand due to prolonged lockdown that gave hope. The e-way bills under GST needed for goods transportation also are seeing a slump at 17.2 million in July against 18.7 million till June 15. Similarly, labour participation is falling since June 21 and mobility indices fell 30 per cent below since mid-June.

The news of Google’s investment of $10 billion and various other companies, including Facebook and Qualcom in the country are encouraging. These would materialise as the country starts functioning in full scale.

At the same time, intermittent closures by city or State administrations are impacting demand generation and production. Large manufacturers and retailers of consumer goods, smart phones, automobiles have declined reversing the initial unlock gains. It is affecting truck movements, already hit by high diesel prices and no relief post-lockdown in toll rates and GST procedures. Markets closing weekends in UP and cities like Bengaluru, Guwahati, Kolkata reduce 30 per cent sales of companies like German wholesale Metro Cash and Carry.

Policies like imports are not in a stable zone. The nation has to chart out a clear road map to swadeshi atmanirbharata. Higher tariff barriers may not be a flat approach in an economy that has become dependent on global producers, including China, for many raw materials and finished goods. The nation has to come out of the quandary whether to fully produce internally or have a mix.

The political leadership must clarify whether it wants a Gandhian or a modern solution. But no party alone can give a solution. A national confabulation to develop policy for the next 30 years is needed to severe itself from the debilitating uncertain Manmohanomics.

The policy to cut on public sector just to boost the private also needs review. The public sector has set a standard not only in production quality but also creating models for labour engagement. This strength of the PSUs is being tried to be eroded through watering down labour laws, wage policies and denying companies like HAL from naval copter production to ‘help’ private sector. To say that PSUs have undue advantage is a move against the spirit of strategic partnership model.

The Modi government has taken many good steps, it should allow PSUs to function freely so that Indian private sector could also achieve an overall quality level – a plank they are trying to compromise for fast growth by demolishing the standard makers. The PSUs are needed to be strengthened for atmanirbharata or self-dependence of the country. The nation needs to learn from the US, which despite private sector growth has not compromised on public sector. Most western countries too have followed that pattern.

The private sector should be advised to come up to the level of PSUs but they also be told that it cannot be at PSUs’ cost. The PSUs and private sector must compete to make this a strong nation and not annihilate each other. Public money is involved in both. Growth of one is integral and mutually beneficial for the country.

Similarly for overall growth they need to coexist and not go for handing over select profitable rail routes to private sector. It may emerge as a poor imitation of the Praful Patel policy of annihilating Air India.

India has to go on a fast trajectory. It must now open up, end lockdown irrespective of the disease and start operations of railways normally to avoid an abnormal shrinkage of the economy. The country has its strength, it has to take a plunge and not be cowed down by fear, apprehensions or panic. With a bold and practical step, the future belongs to India.—INFA

(Copyright, India News & Feature Alliance)