Reviving the Indian Economy during COVID-19 pandemic
RECESSION IS COMING!!!
It sounds scary, isn’t it? Unfortunately, it is the truth of today’s India. We are now entering the stage of recession where there will be fewer jobs, employees getting laid off, reduced salary, inflation, and increased unemployment. The outbreak of COVID-19, the prolonged lockdown, and the disruption of the demand-supply chain has impacted the Indian economy and turned it progressively degrading. India’s GDP growth was already de-accelerating in 2019–20, but the worst is yet to come due to pandemic. According to the World Bank, India’s GDP will reduce by 3.2% in 2020–21.
There are chances of moderate recovery to 3.1% growth in 2021–22. This means that 2021–22 GDP will be less than what it was in 2019–20. The import-export business and trade sectors have also been affected due to tensions with countries like China. The tourism industry also received a blow resulting in significant revenue loss. There is an inevitable economic pain ahead. To recover from this financial conundrum, the government must undertake some firm policy decisions. In this article, we will lay down some policy recommendations to revive the Indian economy.
As we all know, India is an export centric country, i.e., our TOT (term of trade) is always high, which means our Price of Exportable Goods are more than the Price of Importable Goods, which is the Plus Point of our country as we are the jack of trading. That means if we focus again on the production of our exported products, then in no time we will get back on the track. Our export’s significant strength is Fruits & Vegetables, but this lockdown crisis has affected a lot of farmers & the labour sector.
So by just promoting the farming sector, we can provide back employment & can very effectively revive our drooping economy. Thus, all our government has to do is bring down the price of harvesting tools & fertilizers and provide loans to farmers. This simple step can act as a single arrowhead, which can scatter both the problem of unemployment and the economy’s drooping.
India exported fresh vegetables worth Rs 168 crore and fresh onions worth Rs 12.7 crore to the UK in 2017–18, and trade sources said about 30 tonnes to 50 tonnes of vegetables are shipped to London daily.
India is a developing country, and we still don’t have enough hospitals( keeping in mind the population) & transportation facilities like bridges & roads. So this pandemic can be taken as a lesson to enhance the construction of the medical sector as the construction of hospitals, bridges & roads will again provide employment and revive the fallen economy.
In India, there is one government allopathic doctor for every 10,189 people, one government hospital bed for every 2,046 people, and one state-run hospital for every 90,343 people.
As many trading giants are planning to shift from China after this pandemic, we can grab this opportunity by the easy availability of land & power & a single window for clearance. This will benefit India to become a production ground from just being a manufacturing unit. Companies will invest in our land, which will help in boosting our economy.
It is aptly quoted that “One shoe doesn’t fit all,” so we should focus on each state, i.e, on their strengths & weaknesses, we should plan on increasing the power of each state & focus on reviving back their strength. Also, India’s logistics cost is the max, it should be chopped down & fast tags & fast clearances to be implemented to increase the inter-trade power.
The Centre should act as a financier to resource-starved states, clear dues owed to them fast, and elevate spending to boost demand and reverse a slide in growth at the earliest to protect both lives and livelihoods that are battered by the pandemic.
The idea of floating the Covid bonds is also apt. The amount so raised can be shared between the Centre and states under a formula.
Rationalizing Logistics Cost
Firms in India incur high expenses on account of the escalated level of logistics costs. The ratio of logistics cost to gross domestic product (GDP) — commonly used as a proxy to assess and compare the firms’ expenses on logistics in a country — is around 13–14% in India as compared to a much lower ratio in countries like Germany (8%), US (9–10%) and Japan (11%). The 3–4% higher logistics costs the competitiveness of Indian firms directly. Rail and coastal shipping costs are approximately 70% higher in India than those in the US. The cost of road transport is higher by about 30%. Bringing down logistics cost in India would entail several policy actions, such as the following:
1. Increase the share of Railways and Waterways in the country’s overall transport system (from the mix of road-60%, rail-31%, and waterways- 9% to international benchmark mix of road 25–30%, rail-50–55%, waterways 20–25%).
2. The infra-GDP ratio is currently stuck at around 5%, which needs to gradually move to approximately 10% in the next 3–4 years.
3. Improve the first mile and last-mile connectivity in the provision of logistics services, with enhanced digitization and technology adoption.
4. Reduce dwell time as well as the cost for inter-state cargo movement by road;
5. Unburden businesses from the cross-subsidization of passengers at the expense of freight traffic.
The road to economic development might appear staggering now, but life is all about accepting endless changes and challenges, Storms don’t last forever nor the COVID-19 will.
Expectations from the post Covid world are expectantly high, but for a brighter tomorrow, one needs sustenance today. As an undeniable fact, 40 million urban workers who are the informal economy’s backbone are all suffering, some from Corona and the majority from hunger. We may not be able to save families losing their dear ones to Corona, but at least we can make sure no one dies of hunger, our labourers have helped us many times, it’s our turn now.
Let’s join hands with Sakonsa and make a difference, don’t forget nurturing the hands building economy is as essential as nurturing minds making strategies to revive the economy.
Donate below, be a supporter of our campaign :
Instagram — https://www.instagram.com/sakonsaorg/?hl=en
Facebook — https://www.facebook.com/sakonsaorg