COVID-19 has turned into a global pandemic that disturbed the trusted mechanism of demand and supply across the world and in India.
Although primarily a health problem, its impact has transformed into an economic nightmare for an already recovering Indian economy from the impact of demonetization and hasty implementation of GST.
However, there is hope. There will be jobs and the markets will once again open up, especially in sectors like manufacturing, small scale plants, energy, medicine and agriculture.
As per the previous assessment of the World Bank, India is expected to grow 1.5 percent to 2.8 percent during the current fiscal.
Additionally, even the International Monetary Fund (IMF) has projected a GDP growth of 1.9 percent for India in 2020.
So what is India’s biggest strength?
Owing to the well-timed lockdown strategy, India has shown better control in terms of population to active case ratio than other international countries and stands a reasonable chance to recover the economy.
Policy analyst Deepak Talwar says, “We need to take reasonable risks to restore economic prosperity.” With a disrupted import-export curve, policy changes should be the first order on the government’s list. Sanctions and relaxations are required that bridge the newfound gap with an innate domestic push in terms of manufacturers, suppliers as well as technology.
Following this, on a state level, local and foreign investors can be encouraged with lucrative deals on taxes and other rebates. Similar steps can be subsequently taken to generate employment, empower the Make in India narrative, and eventually, improve India’s ease of doing business ratings on a national and international level.
So what’s crucial: Centre and states must think alike, think together.
The goal is to empower the market with affordable products in various sectors that can cater to the demands of a country which draws 60% of its economic functioning from the rural sector and farming, as per the latest report by Nomura Holdings Inc.
So let’s not get unduly worried on local shops opening amid COVID lockdown. Says Deepak Talwar, “they are the backbone of the community.”
COVID-19 pandemic has stressed on the fact that daily wage workers and local shops are the cogs that run the big economic machinery.
In tandem of this, the government announced a relief package with a dedicated focus on Micro, Small and Medium Enterprises worth Rs 4 lakh crore along with agriculture and migrant workers amounting to approximately Rs 4.60 lakh crore to bringing lockdown-hit India’s vast MSME sector back to life.
MSMEs declared NPAs or those stressed will be eligible for equity support as the government will facilitate the provision of Rs 20,000 crore as subordinate debt. The government will also provide Rs 4,000 crore to CGTMSE that will offer partial credit guarantee support to banks for lending to MSMEs.
Government and central public sector enterprises will release all pending MSME payments in 45 days. Fintech enterprises will be used to boost transaction-based lending using the data by the e-marketplace. This e-market for developing linkages for MSMEs will be promoted to replace trade fairs and exhibitions.
In addition, market experts have suggested that awareness among the customers about Indian brands and how they can contribute to the economic revival should be the last piece of the puzzle.
So let’s think local and sell local, India has one of the world’s largest markets.
Touted as the greatest hit to the economy since liberalization, the COVID-19 aftermath is an unpredictable, complex, and humongous challenge for India – to say the least. On a broader level, India needs to pull off a change in its economic mechanism so as to incorporate the lockdown effects and adapt to not just survive, but thrive.
The Indian brands and technology-backed startups started by smart tech-savvy entrepreneurs have proved that the country has the potential to create global companies. Some of the examples of these brands are Paytm, OYO, Ola cabs, and InMobi, among several others that have been successful in becoming billion-dollar businesses in a short span due to the availability of VC funds.
The Prime Minister’s ‘Vocal for Local’ clarion call is to help in expanding the startup ecosystem by multi-folds, thereby aiding the country’s aim to become a $5 trillion economy by 2025. The idea is to create more local brands and take those to the global arena. It is only possible with a focus on technology-based companies that can be scaled-up faster.
With the 20 lakh crore relief package announced by the government, India can live up to the IMF and World Bank expectations at a slow, but steady pace provided that the dirty side of politics observed in the recent past is kept at bay.