1. Coronavirus: Restarting early can boost India’s role in global economy

Can India recover quickly from this pandemic induced recession?

How should India restart the economy?

How is anti-China sentiment creating opportunity for India?

What should govt. do to create a strong infrastructural base in India?

UPSC Can list these Questions under

GS paper 3 ( Indian Economy)

What is the context about?

  • The whole world is in a synchronized lockdown. Both advanced and developing economies are grappling with recession precipitated by the Covid-19 crisis.
  • The IMF World Economic Outlook growth projections present a grim reality in terms of the annual percentage change in the real GDP.
  • The Eurozone leading the projected de-growth estimates in the year 2020 at minus 7.5 per cent and modest projected growth of 4.7 per cent next year, assuming that global recovery starts in the second half of the year 2020.

Can India recover quickly from this pandemic induced recession?

  • In India’s context, there is some light at the end of the tunnel with growth projected at 1.9 per cent in 2020 and 7.4 per cent in 2021.
  • While there is hope for a quick recovery in India, we have to make concerted efforts to realise this including an integrated multi-pronged approach through public policy support, private sector participation and citizens’ support.
  • RBI has already stepped up announcing measures to infuse much-needed liquidity apart from incentivising banks to encourage credit flows via NBFCs, HFCs and MFIs to the MSME and consumer segments.

How should India restart the economy?

  • The government should consider the resumption of work on infrastructure and construction projects all over the country that was abruptly halted due to the lockdown. This will have the immediate effect of creating employment and ensure wages to labourers.
  • India needs to step up as a viable alternative. For manufacturing a strong infrastructure base is crucial.

How is anti-China sentiment creating opportunity for India?

  • Supply chain disruption globally has driven multinational companies to look at diversifying their supply chains.
  • Japan recently announced setting up of a $2.2-billion fund to help its manufacturers shift production out of China. US, too, has indicated a strong intent to diversify manufacturing away from China.
  • This anti-China sentiment should be viewed as an opportunity for India that could be monetised by positioning India as an able contender to service the value chains and attract FDI.

What should govt. do to create a strong infrastructural base in India?

  • A task force to provide single clearance window as a point of approval, common application and approval forms for licenses, warehousing and easy compliances.
  • Easy availability of land and power through land acquisition reforms and impetus to renewable energy capacity building.
  • Fiscal incentives could be linked to job creation like income tax relief to companies employing more than 1,000 labourers in the manufacturing sector.
  • Robust dispute resolution mechanism that exhibits a strong commitment to align with International arbitration decisions.