A multisector road map for recovery
Invest in key sectors to create jobs for millions of people. Focus on futuristic growth, allocate funds
The government and the Reserve Bank of India (RBI) have initiated many activities for economic recovery. What is most needed is a proactive action plan for growth to bounce back to 6-7% in 2021-22. International economists have predicted a major decline in all economies, except India and China, where growth will dip, but may not contract. As Germany and Japan displayed willpower and determination after World War II, we can overcome the impact of the coronavirus disease (Covid-19) if we pull together nationally, as a team. There are 10 major reforms which will pay off for the economy.
One, usher in the next green revolution. While the green revolution in the 1960s resulted in massive productivity enhancement, India still ranks 103 of 119 countries on the Global Hunger Index. Hence, we must enhance farm productivity and introduce more automation in agriculture. Boosting the agricultural processing industry with integrated cold chain, streamlining logistics and building mega food parks will lead to the stated goal of doubling farm incomes.
Two, we must set up smart villages with essential services. This will involve modernising over 600,000 villages, and it can transform the lives of at least 500 million citizens. It will also decongest cities. Ten essential services are required in villages — pucca housing, allweather roads, 100% electrification, potable water, affordable gas, broadband infrastructure, medical clinics, primary and secondary schools, kisan shops and cattle farms.
Three, we must set up more special economic zones (SEZs). Following the government’s announcement of lower taxes for new units, and an attractive Make in India policy for the electronics sector, all other sectors need aggressive manufacturing policies to build a supply chain base which is not dependent on China. India is a far superior choice over the smaller Asian countries due to its huge domestic market that needs to be served first. This can be achieved by upgrading the present SEZs and establishing new SEZs similar to Shenzhen and Pudong to make them large employment enclaves. Power and logistics will have to be regionally competitive, and backed by a streamlined approval and clearance process.
Four, schools and undergraduate education must be upgraded. Many children still do not have access to higher secondary education and universities, especially girls. We need much more investment in middle, higher secondary schools and undergraduate universities, with future-oriented and digital curriculums.
Five, we must invest in modern health care infrastructure. India ranks 145th globally as per the health care access and quality index, 2018, with a single State-run hospital for every 55,591 people, a deficit of 500,000 doctors and only 0.55 beds per 1,000 people. After the gaps in India’s health care system have been laid bare by Covid-19, we cannot delay vital infrastructure investment any longer. Also, telemedicine services must be boosted.
Six, we must focus on superior technology development. India is lagging and must focus on research and development. The government has allocated ~8,000 crore under the National Mission on Quantum Technologies, launched a digital platform to facilitate the application of intellectual property rights, set up knowledge translation clusters for diverse technology sectors, and provided ~6,000 crore for BharatNet to link 100,000 gram panchayats. Together, with the private sector, the government must push ahead with the 2030 national technology agenda.
Seven, ensure a big thrust in infrastructure development. The next decade will see investments in infrastructure such as roads, bridges, ports, airports and metros. The government has already made a budgetary allocation of ~102,000 crores for the next five years. Considering that a similar amount may be allocated in the following five years, the total amount will be a huge stimulus for infrastructure development as well as employment.
Eight, more sectors should be open to 51%-100% foreign direct investment (FDI). India has a huge requirement for international capital, and there is considerable liquidity with many global sovereign funds. There are many sectors where foreign investment is allowed only up to 49%. This needs to be enhanced to 74% or even 100%. Also, we have to provide a red carpet for foreign investors by setting up single-window clearance facilities in the states and Centre. The focus should be on renewable energy, storage, biotech, electric vehicles, artificial intelligence and cybersecurity.
Nine, we must globalise national champions. We should assist large Indian companies to grow into large global multinational corporations (MNCs). Companies and industrial houses in the private sector (Tatas, Birlas, Reliance, HDFC and Mahindras) and in the public sector (NTPC, ONGC, BHEL, SAIL and SBI) should be supported to upscale globally.
Last, we must showcase industry leadership role models. We should nominate top leaders from the government, MNCs, large domestic companies, the public sector and startups, to promote key qualities of entrepreneurship, deep planning, rapid execution, innovation and transparency aimed at international success. This way, young engineers and managers who are the leaders of the future will be inspired.
The best is yet to come for the Indian economy. We just need to prioritise new investments in key sectors for the creation of millions of jobs to achieve the target of becoming a $5-trillion economy. Charlie Chaplin once said, “Nothing is permanent in this wicked world — not even our troubles.” Keep this in mind going forward.