Covid has taught us that life can be much more fragile than we think. This crisis presents a unique opportunity for policymakers to rebuild the economy in the direction of resilience. Covid is not the first black swan event the world has seen and it won’t be the last. Indian policymakers need to use this moment of unprecedented upheaval to push through innovative monetary policy and fiscal stimulus to support difficult reforms such as enhanced debt restructuring mechanisms, improved labour policies, and education and skill development frameworks that could deliver years of sustainable growth and progress in living standards in an increasingly uncertain world.
Comprehensive growth enhancing reforms cutting across several economic sectors will surely aid raising annual GDP growth, and enhance the speed of integration with the global economy. We also need to move in the direction of a circular economy that recycles as much as possible of anything and everything, and minimizes waste. A case in point is the Vehicle Scrappage Policy which will play a key role in the Waste to Wealth programme. That needs to be integrated with an appropriate import and export policy which will enhance India’s economic competitiveness in international markets.
A strategic trade policy can play a key role in ending the pandemic faster by getting vaccines to where they are most needed. This may necessitate a restructuring of tariffs, and the provision of appropriate logistics for the delivery of vaccines and other specialized healthcare interventions throughout the country. This calls for holistic policy measures, including bringing manufacturers along with policymakers and the private sector on a common platform. Our economy is still struggling from the aftermath of the second wave of Covid, and it will need concerted assistance if it is to secure a durable recovery. We cannot afford to take one step forward and two steps backward.
Covid has exposed the chinks in India’s manufacturing sector. The uneven nature of our manufacturing sector raises some uncomfortable questions on how balanced our economic growth has really been over the past 25 years. The pandemic has exacerbated India’s socioeconomic inequality, and getting manufacturing back on track is a key way to combat it. A country of our size and potential should not be at the mercy of global supply chains.
The climate change crisis is real for India’s economy. With an inevitable rise in the earth’s temperature, our agricultural sector’s susceptibility increases, and so does the vulnerability of the millions who depend on it. The annual floods in India (including the Konkan, in Maharashtra) are a wake-up call, which we can disregard only at our risk. While climate change is global, the socioeconomic challenges produced by it are invariably local. The government needs to empower and make every district of India climate-equipped.
Without a concrete plan in place to address the growing socioeconomic divide, Covid will continue to claim lives and affect employment. It will inflict lasting damage to investment, productivity and growth in the most vulnerable parts of India. Narrowing the pandemic-induced divide thus requires integrated and holistic policy action to boost access to vaccines, secure critical financing, and accelerate the transition to a greener, digital, and more inclusive India. This is an idea worth nurturing on the happy occasion of our 75th Independence Day.