Monday, 25 May 2020

COVID – 19 Effects: India to Become World Economic Hub

By Dr. Alok Chakrawal
Updated: April 14, 2020 11:50 am

Standard and Poor (S&P) predicted on March 22, 2020, that Asia Pacific region will face an
economic loss of $ 620 billion. The Chief U. S. economist for Oxford Economists Greg Daco
stated that U. S. may register 12 percent fall in its GDP by the second quarter. Goldman
Sachs has given even grim estimates of decrease of 24% in the GDP. Tom, Jamie, Maeva and
Hong predicted, almost a month ago, with a certain methodology that the world will face a
GDP loss of about $ 2.7 trillion. Economists and financial experts are busy in predicting
expected economical damage by the end of Novel Corona Pandemic. World Bank, IMF, ADB
and Central Banks of various countries are busy in assessing probable economic loss. Statista
stated that the world has to bare $ 810.7 billion loss in global business travel revenue due to
COVID-19. China’s GDP is facing a loss in its projected GDP of 2.4% during this pandemic
period. As per an estimate India is losing at least Rs. 32000 crores of GDP every day in the 21
days lockdown period. The total comes to $ 95 billion – a huge financial loss from India’s
economic point of view.

China’s Lost Credentials
The entire world is suspicious about China’s behaviour so far as the global outbreak of Novel
Corona virus is concerned. There are plenty of conspiracy theories moving around in global
media and newsprint for the last three months. Some of the political and strategic experts
have gone to the extent saying that this is nothing but a biological war against United States
of America and its allies initiated by China. It is quite strange that the Hollywood movie
‘Contagion’ might have predicted present Corona virus outbreak long back in the year 2011.
One cannot say it is mere coincidence. There was something going on in the beginning of
the 21 st century in the Micro Biology labs of China and its natural strategic partners. Nobody
has the answer to the question that how come COVID – 19 didn’t affect Beijing and
Shanghai despite being so close to Wuhan.

The first patient of Corona COVID -19 was reported by the China to rest of the world on
December 31 st , 2019, stating that doctors of Wuhan city of Hubei province has noted symptoms of Corona in a patient. However, reports say that the first Corona patient was a
55 years old male identified on November 17 th , 2019, as reported by the South Morning
China Post. The question is that why did they not sounded World Health Organisation
(WHO) at the very first point. Such behaviour raises doubt over the intentions of China in
terms of guarding the world against the Corona pandemic.

China claims that Wuhan Institute of Virology (WIV) is fully protected and has Level 4
Security maintained. United States rejects China’s claim and states that it has only Level 2
Security arrangements. A theory in the air reveals that Novel Corona COVID – 19 virus might
have leaked out of the WIV due to security lapses. China’s ambitious project of becoming
master of Micro Biology became a threat to the world due to poor administration of its
sensitive Bio labs.

Further, China did not coordinate well with the other part of the world after revelation of
Corona Virus threats. Sharing of sensitive information over the pandemic has been highly
insignificant by the China with the majorly affected countries such as USA, Italy, Spain,
Germany and France. China’s non-cooperative approach has created a kind of irk among the
developed nations viz. Japan, USA, UK, Australia, etc.

There are even more scary stories in relation to Corona pandemic coming from China. Three
Chinese journalists who reported COVID-19 updates from China aggressively are found
missing for several weeks. Chinese authorities accused Dr. Li Wenliang of spreading rumors
against China and arrested him. Dr. Wenliang was the first person who told his friends on V
Chat on December 30 th , 2019, that he had noticed some virus like SARS spreading in Wuhan.
As a matter of fact Dr. Li Wenliang passed away due to Corona virus in the month of
February 2020.

Corona pandemic is no less than a World War III, the only difference is that the weapon is
invisible to common men of all countries. The sad part is that the originator of the Corona
virus is not ready to own it. Most of the countries have their own assessment of the Corona
outbreak; and indication goes in the directions of China.

North Korea, Russia and other allies of China are least affected by Corona virus which is
quite surprising and does not stand to any logic. The virus travelled from Wuhan to New
York, Lombardi, Paris and London but could not get a gateway to St Petersburg and
Pyongyang. Even a layman can find China’s act fishy.

Upset with anticipated Chinese conspiracy of Corona virus global outbreak, American firms
Freedom Watch and Buzz Photos have filed a suit of $ 20 trillion against China, Chinese
army, the Wuhan Institute of Virology, Director of Wuhan Institute of Virology Shi Zhengli
and Chinese army's Major General Chen Wei.

An Australian citizen was shouting and abusing Chinese Government just out the Chinese
Consulate in Sydney last week. The entire Europe is unhappy with China over COVID-19
travel from Hubei to their continent.

There appears exchange of blames between China and the USA. The USA intelligence alleges
China of using Corona virus as biological weapon. On the contrary, the Chinese Government
counter blames the American Army for spreading it in China.

India: New Global Economic Hub
The Corona COVID – 19 pandemic appears to be an economic blessing in disguise for India.
Chain’s thirty years of efforts to attract economically and industrially powerful countries for
setting up their commercial centres in the country seem to end up just because of pandemic
menace. The countries like USA, Japan, Germany, France, South Korea and other such
nations are looking for an alternate destination to divert their investments from China. India
is the hot favorite country for them in recent times.

China has lost its credentials and trust as the entire world is skeptical about its intentions in
dealing with the Corona outbreak worldwide. Countries like the United States, Japan and
Australia have directly blamed China for this global crisis. The USA has gone far beyond
blaming China to manipulate WHO to cover up China’s malicious act of spreading the virus.
Multi National Corporations (MNCs) look for their financial and corporate interest first. But
business and commercial activities are run ultimately by the human being; how come an
MNC will survive without human beings? This pandemic has brought a paradigm shift in the
approaches of MNCs across the globe. MNCs are now more interested in the safety of their
human capital along with financial interests. Apple’s manufacturing partner in China –
Wistron Corporation hinted just two weeks ago that it is going to shift half of its production
capacity from China. The most likely new destination of iPhone production is India.
Heavyweights such as Hewlett Packard, Dell, Samsung, Intel, and others are in the process
of shifting their production activities from China to other Asian countries gradually. In fact,
there are hundreds of Fortune 500 companies in the process of moving out of China.
Nevertheless, some of the big techies, Tile and Fitbit Inc had already started the process of
shifting from China due to stringent US policies.

Indian Strategy
The present Corona pandemic scenario reminds about the Singur Tata Nano plant
phenomenon. Tata Motors had to face huge political opposition in West Bengal and had to
bare considerable financial loss. Tata Motors decided to shift its Nano plant from West
Bengal to either Maharashtra or Uttarakhand. In the meantime the then Chief Minister of                                      Gujarat – Narendra Modi deployed some of their top bureaucrats on the job to bring Tata
Nano plant in Gujarat. Gujarat offered Tata motors a big piece of land on token rent with
plenty of other relaxations. Ultimately, Ratan Tata decided to relocate Nano Plant in
Gujarat. Interestingly, this time also the Government of Gujarat has already deployed its top
IAS officers on the job to maneuver business dealings with the countries like USA and Japan.
But such efforts the state level will fetch only a limited economic favour for India.
The need of the hour is that the Central Government should chalk out a concrete plan to
fetch MNCs to different states of India for relocating their production facilities from China to
India.

This is the high time when Government of India should form a task force out of key
ministries to maneuver top MNCs to give a final shape of their investments in India. Ministry
of Finance, Ministry of Corporate Affairs, Ministry of Commerce and Industries, Ministry of
Environment and Forests, Ministry of Labour and Employment, Ministry of Micro, Small and
Medium Enterprises, and other ministries should be brought together to chalk down a
speedy and hassle free approval to the willing MNCs to inject capital in Indian economy.
If needed, the Government of India may think of setting up of a committee to revise the
norms of Capital Account Convertibility of forex in coordination with Reserve Bank of India
and Ministry of Finance. SEBI has to play an important role in terms of allowing ventures
capital to be infused by the intended corporations.

Ministry of Home Affairs and Ministry of Commerce and Industries should coordinate with
various states for facilitating industrial land and infrastructure for Global Corporations
willing to establish their commercial units in India.
In the first tenure of Prime Minister Narendra Modi, India has done great brand positioning
of its political and economic stability worldwide. India has proven its credibility in times of
natural calamities, Corona pandemic, war crisis in the Middle East, and on various other
events and avenues. India, as compared to China, is a reliable and transparent country.
Modi has made it sure as part of Indian foreign policy that more and more neutral countries
should become India’s friend on a long term basis.

Nirmala Sitaraman, the Cabinet Minister of Finance, declared in her budget speech that
India will honor General Agreement on Trade in Services (GATS) commitment and allow
foreign universities to set up their units in India. Ministry of Human Resource Development
has got the opportunity to bring in top intellectual entities i.e. Oxford, Stanford, MIT,
Harvard, Cambridge, etc.

If needed, the Government of India may think of setting up Special Economic Zone (SEZ) for
such MNCs shifting from China to India. Needless to say that tax complications have to be
resolved at the first place for making things smooth and convenient. By offering Tax holidays
through SEZs to the prospective international corporations India will not be at loss; on the contrary they will contribute substantial GDP, millions of new jobs shall be created and a
considerable amount of GST will be added to the central and state exchequers.
India has shown its commitment toward environment and bio-diversity continuously.
However, the Government has to ensure better carbon neutrality and environment
protection while inviting global corporations from China. The Government needs to chalk
down a clear road map for ensuring sustainable development by bringing in new players in
the economy.

We must remember that China did not focus only on production aspect but it made
simultaneous efforts for bringing in financial giants, IT leaders, educational legendaries, and
strategic entities to China. Of course, India is in a better position in terms of IT sector but
there are chances that star companies like Google, Facebook, Windows, Oracle, and others
may think of setting up big set ups in India in this changed scenario.

The present days are painful because complete lockdown has hampered economic activities
grossly. Millions of farm laborers and industrial workers are facing hardships nationwide.
Micro, small and medium scale industries are severely affected. The Government treasury is
getting drained. But it is for sure that India is going to be a super heavyweight economy in
the near future after control over Corona pandemic.

 

By Dr. Alok Chakrawal

 

 

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