Austine Sequeira Mumbai India
Atmanirbhar Bharat - the key is with the Government Authorities!
Recently the Ministry of Textiles, Government of India (GoI) proudly announced that India has become world’s second largest manufacturer for PPE body overalls in a short time span of 2 months. Ever wondered how the local producers could achieve this feat during the lockdown? It is purely due to cutting the red tape of design and quality approvals by DRDO and related agencies involved in fighting the pandemic, allowing procurement of raw material that includes inter-state transportation, permitting factories to operate during lockdown and most importantly buying the production at a reasonable price by the government agencies. If it can happen to PPEs, it can happen to any and every product. After all the Government and its agencies are regulators, buyers and consumers as well! So, who has the key to make India Atma-nirbhar?
Covid 19 pandemic is changing the way business is conducted. A significant collateral damage emanating from the Covid-19 pandemic is the destruction of Global Value Chains (GVCs). Since the 80s, the world of manufacturing and supply has revolved around the GVCs wherein raw materials and intermediate components are shipped across the globe to deliver a finish product at the consumer’s doorstep. GVCs to a large extent have also made India a trading country – large amount of India’s exports are non-value added products. Chinese manufacturing hegemony insured that GVCs stayed under Chinese control.
All this has changed since March 2020. International trade has taken a severe beating due to logistical issues perpetuated by lockdowns in almost all global trading giants. Chinese trade statistics reveal that the Country’s imports and exports were lower by 4 and 17 percent respectively during the period Jan-Feb 2020 and there is no reason to believe any acceleration during March-May 2020 period, although China is said to have resumed business post Wuhan debacle. Scarcity of finished products in major economies of Europe, Asia and Americas can be squarely attributed to their dependence on China and the Chinese domination in fabricating both intermediates as well as finished products. Additionally, the Covid-19 pandemic has built a backlash against Chinese products and services and major world economies led by USA are looking at other geographies for supplies as well as re-location of their own enterprises out of China. This collateral damage is spiralling over global investment as well – according to an IMF Blog, the emerging markets have seen a capital outflows amounting to USD 100 billion on capital investment and portfolio investment. UNCTAD estimates up to 40 percent reduction in FDI flow across the globe.
The resultant situation is forcing nations to look inward and build their own “Local Value Chains (LVCs)” to ensure un-interrupted supplies and create a mechanism to absorb global disruptions. The French Minister of Economy and Finance was the first official to give a clarion call to EU members to have a hard look at the GVCs and urged France to buy local.
Not to left behind, Prime Minister Modi, sensing the early disruptions in medical supplies from China while tackling the pandemic, launched “Atma-nirbhar Bharat” (self-reliant India) program duly supported by a Rs 20 Lakh crores economic package. So far the nation is abuzz with the economic package and has paid little attention to the Atma-Nirbhar Bharat program terming it as one more “jumla” by the Modi Government.
Politics apart, Atma-Nirbhar Bharat is not the “swadeshi” program propounded by the RSS. It is not local protectionism either. Bad quality, lack of innovation and unfair trade practices are the products of Swadeshi and local protectionism. Atma-Nirbhar is the “Internationalisation of Indian Business” wherein India produces world class products in a large quantity at a shortest possible time. That’s exactly what the Japanese did after loosing badly during the World War II, so why not India?
Every business needs efficient factors of production. The economic package is large in volume but falls short in transmission of package components to the factors of production. Extending loans to business will either increase bankruptcies or in-efficiencies. On the other hand, accumulated interest waiver and onetime reduction in taxes on income would revive business confidence manifold. We have seen RBI taking the horse to the pond many times in ‘a financial year’ however the poor horse does not seem to drink the water. Land and labour reforms are slowly progressing. However, the key to entrepreneurial confidence building is regulatory reforms at local levels. 30 years have passed since India embarrassed globalisation of Indian economy. Regulatory mechanism to attract capital has undergone a positive change. However, the environment of approvals and restrictions that an entrepreneur undergoes on a daily basis has not changed for better. Regulatory processes at the State and district levels are same as they were 30 years ago. Ease of doing business exists at the national institutional levels, down below it is the same old India.
Truly, this has to change. Atma-Nirbhar Bharat is a necessity to engage and feed India’s burgeoning population. The PPE overall production milestone is a case study for Indian self- reliance. Ease of doing business should not be only during disasters but it should be a daily feature of our lives, only if we want to be atma-nirbhar!!!
"Apolitics" in World's largest Democracy
It is said that during national disasters, one does not indulge in competitive politics. Even if one wants to do politics, one may not find a reason to do so if the disaster management is converted into an apolitical activity.
Take the ongoing case of coronavirus spread across India and the consequent lockdown announced by the government of India. The lockdown project has been successfully sold to the Indian nation as a single remedy to save your life. Lockdown 1.0 was necessary and was welcomed by all. Masses clapped, banged whatever possible to generate sounds and lit lamps and expressed solidarity with Prime Minister Modi. As days passed the economic effects of lockdowns and lack of worthwhile economic package started sinking in. Daily increase in Covid +ve cases, zero growth rate, 35 percent unemployment and plight of migrant workers started hogging airwaves.
However, by then the apolitical nature of the subject had subdued whatever political activity that was left in the world’s largest democracy. The de-facto leader of India’s largest opposition party the Congress, Mr. Rahul Gandhi and his colleague Mr Chidambaram who had wholeheartedly welcomed the Lockdown 1.0 started raising issues of migrant workers and absence of plan to help them overcome their challenges. Genuine subjects!!! however, so subdued were their voices that it was a headline just for a day. By the time talks of Lockdown 2.0 were doing rounds, Congress party president Sonia Gandhi tried to seize the initiative by announcing setting up of a high-level committee to formulate the party's response on critical national issues. The committee chaired by former prime minister Manmohan Singh and comprising eminent members like Mr. Rahul Gandhi, among others were to study the socio-economic impact of the pandemic. So far nothing has come out of the so-called studies. Congress was kind to write a series of letters to Prime Minister Narendra Modi drawing his government's attention to issues related to the lockdown. Today when the migrants issue has become critical the Congress leadership has no voice to even comment on it, let alone suggest measures to get over it.
All walks of media including the diehard Modi detractors too became apolitical and toed the lockdown line conveniently migrating from Lockdown 1.0 to 3.0. Debates on economic implications of lockdown were relegated to non-primetime slots occasionally highlighting the plight of migrants.
Such was the success of the lockdown strategy implementation that acclaimed historians like Mr Ramchandra Guha compared Prime Minister Mr Modi to Late Indira Gandhi and un-compared Rahul Gandhi to Mr Modi. Meanwhile, Mr Rahul Gandhi found his political voice to attack the Government on “writing off” the large bank loans. The attack was a sort of foot in the mouth. Mr. Gandhi’s much publicised comments only cemented his lack of knowledge of banking and finance. Mr Gandhi tried one more occasion to attack the Government by sarcastically “observing surprise” on the While House unfollowing Prime Minister Narendra Modi which again was a sort of foot in the mouth. Intermittently the Congress party also sought expert comments from former RBI Governor Mr. Raghuram Rajan on economic issues. Sadly, no one cared to take note of what Mr Rajan was saying, although his daily discourse on health of India economy was closer to truth.
To summarise, Mr Modi has so far managed the Lockdown sage very well by converting it into a national issue for saving lives and relegated the livelihood issue to the back burner. As India enters Lockdown 3.0, Covid -19 cases are on the rise statistically and the economic damage is mounting day by day. Let’s hope Mr. Modi finds a solution that will be apolitical as well.
By now, the whole world is educated on the characteristics of coronavirus. Firstly, it is contagious and can be transmitted from one human to another and can grow into an epidemic if the infected is not isolated. Secondly, as on date, there is no cure although existing medicines are being repurposed. Vaccine is a year away. Therefore, social distancing and lockdown is perhaps the only way to stop the spread of this dreaded disease.
That several nations are under lockdown is known. Figures relating to cost of such lockdown too are being computed and they seem to be more dreadful than the disease. Handling of Covid-19 spread and imposition of lockdown has also brought to fore various shades of leaderships, their inclines towards material and non-material world and their ability to deal with extremes within a limited timeframe.
Coronavirus disaster started at China. Being an authoritarian system of governance, very little is known about the way China handled the disaster. Nevertheless, the speed at which it moved to isolate the epic centre viz. Wuhan and Hubie province and shield the countrywide growth centres is laudable. Equally commendable is their decision to re-open the economy including the epic centre for day-to-day business. Today all of China is humming with activity and supplying all sorts of material to globally affected countries including USA, UK and India to fight the virus. The approach of the leadership was clearly to swiftly isolate and contain the disease in “a geography” and shield the rest of the country with a focus on minimum economic damage.
Lockdown in India now extended for two more weeks is touted to be world’ largest lockdown and carries a huge economic cost. As per rating agencies and independent analysts, the 21-day Lockdown 1.0 is expected shave off US$ 98 billion of India’s GDP and up the unemployment rate at 24 percent. Economists are estimating up to 60 percent of micro, small and medium enterprises to go down under. India’s huge migrant labour force is idle and restless creating social cataclysms. According to Barclays, extension of the nationwide lockdown till May 3 will inflict an economic loss of USD 234.4 billion and stagnate the GDP growth during 2020. However, what is noteworthy is the speed at which the Indian Prime Minister has taken a call on the subject. Despite pressures from industry and trade bodies, swimming against the tide he took a humane approach. In his virtual address to G20 leaders on March 26, the Indian Premier clearly stated his intention to focus on humanity rather than economics while tackling the coronavirus pandemic. What followed was 21 days countrywide lockdown, high decibel campaign to educate and discipline the masses and economic support package for poor. Keeping in mind the federal structure of the company, the Indian Premier increased the lockdown after consulting state chief ministers. Surely, India is quite a different country by governance, social fabric, geographical size and population behaviour. Despite modest globalisation since 1991, the World’s largest democracy is largely governed by electoral politics and is strongly rooted in regionalism, caste reservation and subsidised socialism. Currently it is life over livelihood. Could the Indian leadership have looked the other way? Only time will tell.
The story of China and India though diagonally apart are in deep contrast with the happenings in the block of developed countries notably the USA, UK, Italy and Spain. To begin with, one wonders why Italy and Spain are tagged into the developed nations club. Both the political leadership and independent administration machinery in these countries was found to be lacking in response to initial spread of coronavirus cases. Delayed understanding, lack of proactiveness and resources to ramp up efforts of containment on a day to day basis has resulted in large scale deaths and spread of disease beyond their geographical boundaries. In contrast same sized countries viz. S. Korea and Taiwan have shown swift containment and near-total return to normalcy.
Another story that baffles the world is the response of USA to Covid-19 containment. USA with its highly acclaimed healthcare system is struggling to cope up with the pandemic and currently is the world’s epicentre of disease with highest infections and deaths. Some press reports emanating from US suggests that despite being world’s most powerful person, the US President has no power to declare and enforce country-wide lockdown due to federal democratic system. That power is vested with the respective State Governors. The President can only use his high office to prevail upon them. Therefore, President Trump did what he is best at doing- create confusion, a likely path will emerge. Despite horrifying prospects of 200,000 deaths by end April 2020 due to peaking of coronavirus, President Trump initially adamantly declared to keep the economy going. Later, accepting the advisory from the local health care sector notably the doctors and hospital operators and increased mortality rates due to coronavirus spread flipped to say “bad weeks ahead”. As states moved ahead to enforce lockdowns, the Country was flooded with economic analytics. Investment firm Goldman Sachs was quick predict US unemployment rate to shoot up to 15 percent during the second quarter of the year and GDP to fall at an annualized rate of 34 percent due to the coronavirus pandemic. Such pressure groups again reshaped President Trumps response to Corona pandemic. He wasted no time to introduce wonder drug Hydroxychloroquine and pressurised India to clear large consignment bound to USA. Nevertheless, as on date, the US corona death count is highest in the world. But that’s not stopping the President in planning the opening of economic activity across the States.
World economy has taken a huge beating. IMF says the world economy has “entered a recession as bad or worse than in 2009”. Morgan Stanley research report expects global GDP growth to decelerate by 2.3 per cent over the previous year in the first half of 2020. Coronavirus and the resultant lockdowns and social distancing so far has resulted in large scale disruptions to the economic activity globally. It is defining moment for every leader. Their response to Covid-19 handling as well as shaping the revival in the near future will permanently engrave their names in the world history.