In a pre Covid-19, our economy was not reflecting any encouraging position. The growth rate was around 4.3% and the government has little leeway to provide large stimulus. Now, the Covid-19 pandemic and consequent lock down has totally changed economic equations and life style of the public. Public health, personal hygiene and safety have become order of the life. In this situation, an attempt has been made to look into some issues faced by some selected sectors relevant to our Geographical location.
Covid 19 may revamps the existing model of global chain wherein advanced-economy companies may shift their commercial operations from low wage workers countries to robots as they do not demand wages or benefits like health insurance, sick leave, corona leave, maternity or paternity leave etc….
It is interesting to note that subsequent to 2008 global crisis, developed countries have started deploying robots for their commercial operations eg., In South Korea there are 710 robots per 10,000 workers. There will be acute rise in this numbers due this global epidemic.
In order revive the economy, central banks of advanced countries may reduce the bank interest rates under their monetary policies. This may also boost penetration of robots in their manufacturing industries keeping at stake the low cost manufacturing hubs like India.
We need to observe that since independence the contribution of primary and secondary sectors in Indian economy have been gradually reduced and it was occupied by tertiary sector. In the light of adoption of robots in manufacturing sector globally and artificial intelligence in tertiary sector it is a need of hour to promote labor intensive industries in India to safeguard the labor from unemployment and protection of Indian economy.
In this regard, the agro based industries need to be promoted in India which promotes durability and enhance the value of agricultural commodities providing win to win situation to farmers and industrialists. It also reduces an approximate 30% of food wastage in India. Agro based industries are highly labor intensive with low capital investment. It will have spillover effect in the Indian economy. It is the need of the hour to promote agro based industries in India by providing blanket Income tax exemptions, GST exemptions and lower rate of interest from banks. Food parks and food technological universities need to be established in each and every state of our country. It promotes rural development reduces urban congestion and results in inclusive growth in Indian economy.
Similarly, Government has to promote small scale industries by providing weighted income tax deductions on local purchasers from Indian MSMEs. For example, if any company purchases 80% of the raw material from MSMEs, there shall be a weighted deduction of 125% of their expenditure. This type of incentives will intensify the growth of MSMEs in India and regularize unorganized work force.
Similarly, major foreign contribution to Indian economy is from IT sector. Due to artificial intelligence global protectionism and Covid-19, there may be a blow on the global export of Indian IT services. To protect the Indian IT industry, Government has to promote e-governance in India in a wider scale like digitalization of agricultural records, online transfer of properties, online petitions wherein there should be digitalization of entire centre and state administration in India for which the support of Indian IT industry has to be taken. It not only promotes IT industry but also promotes transparency, accountability, and efficiency in public administration.
Due to Covid-19, there will be a tremor in real estate sector. To protect the Indian real estate sector, Government needs to make large investment in public infrastructure projects i.e. road ways, rail way, water ways, construction of houses to the poor following New Deal Model adopted during Great Depression (1929) in United States of America. The Government need to focus on building things like bridges, roads, schools, highways and parks in eastern and north eastern part of India where they have spillover effect in curbing unemployment and improve standard of living in those areas.
Similarly, there is a need to be increase budget allocations towards Bharat Mala, Sagara Mala projects in India it promotes not only connectivity but also paves path for development of ports and industries in India.
One of the road blocks in development of public infrastructure in India is land acquisition process. So Government needs to pass Revised Land Acquisition Act protecting both aggrieved landowners and entrepreneurs. It will not only reduce the time of construction but also cost of construction in India. As per recent economic survey, 70,000 crore worth of public infrastructure projects turn to NPA due to poor land acquisition policies in India. So enactment of New land acquisition law in India is need of the hour.
Government also needs to increase the budget allocation in health sector from existing 1.5% to 5% of Indian GDP. There is also a need to promote paramedical forces in India by setting up paramedical universities at 1:50 ratio to Indian doctors. Similarly, Indian Medical Council has to reduce the down time of medical courses in India and increase seat allocations as the number of doctors per 10 lakhs of Indian population is very low in comparison to developed countries. Similarly, the ASHA workers need to be equipped with management of telemedicine in rural areas.
Both Central and State Government needs to adopt Austerity measures for revival of Indian economy by suspending electoral schemes like loan waiver to farmers, marriages to minority women, sponsoring religious pilgrimages to minorities, free distribution of TV, Mixes, Grinders. The Government needs to promotes capital driven welfare schemes like Pradhan Mantri Awas Yojana (PMAY), Pradhan Mantri Gram Sadak Yojana (PMGSY), Pradhan Mantri Gram Parivahan Yojana (PMGPY) for sustainable growth in Indian economy.
None of the industries/organizations/economic centers should be closed down for long time. The scale of operations can be curtailed or reduced, but the wheel should be kept in motion always. The availability of cash is to be geared up. Coercive measures of tax collection are to be temporarily suspended. The CSR funds are to be carefully spent and such expenditure should in turn plough back as productive assets. Therefore, Covid 19 provides an opportunity to relook into framework of Indian Economy by setting up a New Deal for addressing economic inequalities, unemployment problems in India and paves path for establishing inclusive growth in Indian economy.
Author Bio
Dear Prudhviraj, Firstly I congratulate you for an apt post reflecting your opinion on methodologies to revive our economy which got aberration post COVID-2019. All issues dealt in are highly relevant and focussed. Pl keep posting various suggestions relating to Incometax amendments for acting as stimulants in setting back the wheel of economy.