It is reported all over the world that the recession has set in after the COVID-19 disaster. At this stage, no one is clear how and when COVID-19 would end.
After the G20 summit, it appears that there are no strategic and well-coordinated global action plans to overcome the recessionary trends in the post COVID-19 time, except throwing some vague suggestions that 5 trillion US$ should be pumped into the global economy and China suggesting that duty tariffs should be reduced.
While rich nations would somehow manage the situation and recover in due course of time due to their technological and economic strengths built over several years, highly populous and developing country like India with around 25% of the population below the poverty line, is likely to face an extremely difficult time.
The question uppermost in the mind of every Indian is how our prime minister, Mr. Modi would tackle the scenario in the post-COVID-19 period.
Given the “free for all” situation now prevailing in India, every action that the prime minister would take to retrieve the situation would be criticized by one group or the other. The media is also likely to focus more on negatives rather than on the positives.
In such circumstances, it is extremely important that the prime minister should focus on the tasks ahead and act with the courage of conviction to move on, given the mandate that he has received from the people to govern India till 2024.
Major challenges:
The major challenges would be the lack of investment by the private sector, increasing joblessness due to the slowdown in the economy and the government having to spend most of its resources in welfare measures with little money left for investment in setting up manufacturing units or facilities in the services sector.
Constitute think tanks:
It is extremely important to constitute think tanks for several core areas to discuss and work out strategies that should be submitted to the Modi government by the end of May, for its consideration and appropriate action.
These think tanks shouldn’t be a gathering of bureaucrats and economists, who often lack firsthand information on ground realities. The functioning style of Niti Aayog has also given the impression that it is a jack of all trades and master of none.
Total of 20 think tanks should be constituted with ten members for each think tank, with one think tank for each of the following core sector to finalize the strategies:
- Agriculture / plantations
- Steel and metallurgy
- Chemical and petrochemical/ fertilizers / pesticides
- Power / energy
- Mining / Minerals
- Automobiles
- Pharmaceuticals
- Textile
- Sugar
- Paper
- Cement
- Information technology
- Transportation
- Food processing
- Dyestuffs
- Paint & coatings
- Electronics & Instrumentation
- Research & development
- Herbal & traditional medicine
- Miscellaneous (other than the above)
While bureaucrats, economists, and planners could be members of the think tank, people with hands-on experience in the management and shop floor practices and workmen representative should also be part of the think tank. The politicians should be kept out of it.
There are many people in India who are not part of the bureaucracy or in leadership positions in industry associations or known to the governments, but who have an enormous level of experience and understanding, who can come out with original suggestions. The think tank should encourage them to send their views and suggestions for consideration of the think tank.
A firm time schedule of eight weeks should be given to the think tank to submit the suggestions and the think tanks should be disbanded after this period.
Since the task of the members of the think tanks should be carried out with patriotic fervor, no remuneration should be provided but only travel and stay expenses should be reimbursed to the members of the think tank.
India needs massive investments:
India needs massive investments in multiple sectors in the next five years to boost economic growth, generate employment and reduce poverty level.
The question is whether the prime minister can depend upon the Indian investors and entrepreneurs to deliver the goods to the extent needed.
If one would carefully analyze the scenario in the last six years, it can be seen that the investment in the private sector has not been adequate and the government has been spending its resources in building infrastructure facilities, building fertilizer plants, etc.
Obviously, there is a mindset problem amongst large sections of Indian entrepreneurs. The efforts in technology up-gradation front are very poor, making the Indian industries and services sector almost entirely dependent on multinational companies for setting up projects in India, even in some of the medium and small-scale sector.
It is not as if Indian companies do not have enough investment capability. Many have surplus investible resources and have the option of availing bank loans and sourcing money from the public by way of equity. But, most of them are unwilling to commit their resources in setting up projects to the extent needed and they look for easy options for investment. Cases have been seen, where large manufacturing units have stopped production and started importing the same product for trading in India, claiming that they make more money by trading rather than manufacturing!
It is strange to see manufacturing companies in chemical and other sectors with more than Rs. 1000 crore annual turnover and good profit, diversifying into real estate sector or construction of five-star hotels, mutual fund business, communication sector, etc. instead of investing their money in setting up manufacturing outfits.
Can one say that the Indian private sector managements either lack pride or lack confidence about their capability in their core areas of activities?
Of course, the private sector may have several excuses for not venturing into new manufacturing units but what is needed is to strive to overcome the constraints instead of running away.
Follow the Chinese model:
A few decades back, China was in the same position as India is today. Then, the Chinese government took the pragmatic decision to open up their economy and encourage multinational companies and overseas organizations to invest in setting up projects in China with their updated technologies.
Attracted by the huge market potential in China and with the compulsive need to expand operations, many multinational companies from rich regions like the USA, Europe, and Japan rushed to China with investment plans. To the credit of the Chinese government, it should be said that it prepared the proper climate and framed appropriate regulations for the entry and smooth operations of multinational companies in China.
In the process, China gained significantly in acquiring technological strength and in making a big leap forward in industrial and economic growth. Now, China is in a position to dominate the world not only in the supply of goods and services but also on the technology front.
Inability to exploit the slowdown in China:
After the US-China trade war, the Chinese economy slowed down to some extent and many overseas companies in China decided to shift the manufacturing base out of China and unfortunately India was not the destination for most of them.
It is true that in the last few months, the prime minister has considerably liberalized the regulations for overseas investments in India and he has been touring abroad frequently to invite the global entrepreneurs to invest in India. But the results are not coming to the level needed.
Vietnam and Thailand gained the most due to the Chinese slowdown. So many China-based ventures have moved to Vietnam and it is now reported that there is a labour shortage in the country.
India has to examine as to why this has happened. It is the task of the think tank to carefully study the challenges and undo the mistakes and constraints in getting the investments and technology from abroad.
Need to assess the conditions at the micro-level:
The think tank that will have a membership of cross-section of thinkers should go deep into the subject and evolve plans at the micro-level. A broad-based approach would not be enough.
Is democracy a bottleneck for progress?
In recent times, several running projects have been closed down and new projects have been prevented due to sponsored agitations by the so-called environmentalists and activists.
Several judgments of the judiciary with regard to the acceptability of the projects have been defied by mob protests. Many state governments have obliged the protestors and the project schemes have become the victim of politics.
Strong leadership at the center and state level with adequate credibility amongst common people is the need of the day and they should study the issues in proper perspective and take decisions in the national interest and defy the vested interests that block the projects for whatever reason.
It remains a question as to whether the central and state governments can manage such situations in “free for all democracy” that we have in India.
State governments need quality leadership. Corruption is still prevailing in India mostly at state government levels that are blocking the progress of the Indian economy in several ways. People and investors get frustrated.
In several cases, politicians at various levels have an active role in corruption and nepotism.
One way to overcome the situation is that those involved in the economic and welfare activities should voice their protests vehemently in various forums, instead of reconciling themselves to the disturbing situation or even in some cases trying to snatch some advantages for themselves by pleasing the forces of corruption. The question is whether Indian investors, entrepreneurs and all those who understand the importance of massive investments in India in multiple sectors can raise their voices effectively to protect the economics and industrial interests of the country, which is a pre-condition for growth.
