Wednesday, May 25th, 2022 03:18:46

India’s Economic Fight against COVID-19

By Dr. Alok Chakrawal
Updated: December 2, 2020 6:14 pm

Pandemic COVID – 19 has exposed the entire world completely. This event has been a turning point in the history of world economy. On one hand it has revealed the menace of China to the rest of the world and at the same time it has tarnished the reputation of United States of America as a super power. USA is the worst hit country from Corona virus crossing 12 million infected individuals. Believe it or not but it is a fact that India is going to be benefitted by this pandemic in terms of economic growth and development. The world has come to know that there were mala fide intentions of China behind providing cheaper labour, electricity and other production facilities to Trans National, Multi-National Corporations and rest of the world. After the outburst of COVID – 19 most of the sizable foreign companies are planning to move out of China or have already moved.

There has been lot of hue and cries over preparedness and efforts made by the Government of India as well as various state governments. There are all types of opinion, negative as well as positive, flowing in the air in terms of success of governments in tackling the disastrous impact of this pandemic. There are certain facts in terms of Government measure towards tackling COVID – 19 to safeguard the Indian economy. It is a reality that some of the family members have lost their jobs, salaried class people suffering furlough or salary cuts, some vendors had to shifts to different other jobs but at the same time the Government of India has been effortful to subside effects of such incidents.  There are quite a lot supporting evidences to validate India’s positive efforts in fighting against COVID – 19; and its fruitful impact is visible.

 

Low Rate of Unemployment

Centre for Monitoring Indian Economy (CMIE) reported the rate of unemployment Overall 6.5%, Rural 6.2% and Urban 7.2% by the end of November 2020. The same were 8.75%, 8.44% and 9.41% respectively for Overall, Rural and Urban segment during March 2020. The unemployment in India was on its peak during COVID-19 times in the moths of April 2020 i.e. Overall – 23.52%, Rural – 22.89%, and Urban – 24.95%. The Central as well as several State Governments were aware of severity of economic impact of COVID – 19 on socio-economic life of Indians; and hence, appropriate timely measures were taken in the interest of common people. Odisha, Uttar Pradesh, Assam, Madhya Pradesh, Gujarat and Karnataka are the states having lower rate of unemployment that the national average. The overall result is reflected in present decreased unemployment rate which is even lower than per COVID – 19 times.

 

Self-Reliant India

Narendra Modi took a bold decision in declaring unprecedented and historical stimulus package to the nation under Atm Nirbhar Bharat Abhiyan (Self-Reliant India Movement) in the month of May 2020. The total size to the economic stimulus package was Rs. 20,97, 053 lakh crores which is equal to almost 10 percent of Indian Gross Domestic Product (GDP). Since the Government was sincere and serious about bringing the economy on track, it earmarked 25.6% of the total package for the MSME sector. Second largest beneficiaries of the stimulus package were migrant labourers and farmers getting 19% of the fund. Agriculture and allied activities could get 7.1% of the package. The Reserve Bank of India (RBI) has given booster doze to the economy by declaring moratorium on repayment of loans and interests thereof, soft loans to business enterprises and individuals and other financial supports to the economy. The RBI measures amounted to 37.2% of the Atm Nirbhar Bharat stimulus package.

 

Labour Reforms

As many as nine states such as Punjab, Madhya Pradesh, Gujarat, Telangana, Andhra Pradesh, etc. have done drastic labour reforms during COVID – 19 times to attract domestic and international investments in their respective states. There are many more in the cue to take appropriate measures to revive congeniality in terms of industrial vibrancy. Such reforms have motivated industrialists to set new units of productions in theses states. The Government of India has facilitated free flow of labour during this COVID – 19 times. As many as 30 million labour were facilitated free movement with the Government support to various destinations in the country. Of course, this not a direct labour legal reform but this explains that the Governments in India have been sensitive towards labour class in such an unprecedented hard time.

 

Booming SENSEX

The Indian economy is strong enough to sustain unprecedented jolts like COVID – 19. One of the prominent supporting evidence is booming Indian Capital Market. The SENSEX was 30864 on March 2, 2020. It dipped almost 3000 points during the start of Corona period. But its recovery was surprising as Indian stock market indices touched its all-time high in the month of November 2020. The most popularly referred index i.e. SENSEX reached to the level of 43,621 on 24 November, 2020. This figure is almost 13,000 points higher than the level it was in the beginning of March 2020. In addition to Reliance, Adani, and many blue-chip stocks, Midcap scrips have performed extraordinarily to take the indices to all-time high. Such a fantastic performance of Indian stock market is attributed to not only domestic investors; but the reality is that Foreign Institutional Investors (FIIs) are playing a very important in such wonderful performance. Besides, Domestic Institutional Investors (DIIs) have contributed their due role in lifting the stock market in COVID – 19 times.

 

Foreign Direct Investment (FDI)

Indian Foreign Secretary Harsh Vardhan Shringla stated, in September this year, in his virtual address to a CII event, “The success of the reforms launched by the Government is evident in the numbers. Even during the pandemic, we have received over USD 20 billion of FDI this year. While the global FDI declined by one per cent in 2019, FDI into India rose by 20 per cent in the same period”. The foreign secretary said several global technology majors have announced significant investments in India including USD 10 billion by Google, USD 5 billion by Facebook and USD 1.2 billion by Mubadala the UAE Sovereign Wealth Fund. As matter of fact, investment proposals worth Rs. 11 lakh crores by Multi-National Corporations (MNCs) was received the Government of India in the month of August 2020. COVID -19 has created a new world economic order. Most of the Fortune 500 companies which were having their set-ups in China have started shifting it to India or willing to do so in a very near future.

 

Production Linked Incentives (PLI)

Production Linked Incentives (PLI) scheme was launched by the Government of India to boost Indian export to rest of the world. Proposals under this scheme are supposed to be approved by an Empowered Committee consisting of Niti Ayog CEO, secretaries of Economic Affairs, Expenditure, Revenue, Ministry of Electronics and Information Technology, Department for Promotion of Industry and Internal Trade (DPIIT) and Directorate General of Foreign Trade (DGFT). In a landmark development during COVID – 19 times, the Empowered Committee on PLI has cleared a significant deal of exporting mobile phones worth $ 100 billion (Rs. 7.3 lakh crore approximately) to the rest of the world. This export of mobiles is to be completed over next five years. An interesting fact in the entire episode is that the bidding companies are stalwarts in the segment i.e. Samsung, Karbon, Lava, Dixon and iPhone contract makers – Foxcon, Pegatron, and Wistron. This entire export is to be carried out roughly in 50:50 ratio by Indian and foreign companies.

 

Ease of Doing Business

The Government of India is cautious about clearing hurdles in setting-up new industrial units or a business enterprise. This is possible by eliminating various restrictions and approval formalities. Even during COVID – 19 times Government of India as well as state governments have made their efforts to clear off hurdles of business. Such efforts have resulted in India’s better position in Global Ease of Doing Business Ranking. India has scored 71 points in 2020, 3.5 points higher as compared to the 2019 score (67.5) in the World Bank’s Ease of Doing Business score; and reaching to the position of 63rd rank.

 

Unlocking the Economy

Despite all odds India has not opted for lockdown of the economy after 30 June this year. Instead, the Government of India decided to unlock the economy phase economy phase wise categorizing the entire nation in three zones i.e. green zone, orange zone and red zone. Subsequently, the Government of India delegated powers to the State Governments to issue guidelines for unlocking the economy under the umbrella of Central Government’s directives. There are countries like USA, Germany and France still facing the hardships of lockdown. Protests are going on in different countries of the world for not managing pandemic effectively. On the contrary, there is no unrest and protest in India in terms of governments efforts and measures.

The Government of India is relentlessly injecting money and stimulus to keep the economy alive. India is standing rock solid in such tough times of COVID – 19 just because the Government agencies have taken appropriate and effective measures to safeguard the economy.

 

By Dr. Alok Chakrawal

(The writer is a Professor, Saurashtra University, Rajkot, Gujarat)

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