Viewpoint: Building a new India

09 JAN,2022 | MEDC


 

  • The year 2022 is likely to prove to be a stepping-stone to building a new India. Topmost on the policy agenda remains the deft handling of the pandemic. Covid has clarified that pandemic policy is economic policy, and that there is no durable end to the economic crisis without an end to the public health crisis. We need to be smart learners and avoid past mistakes. The first generation of vaccines, as is obvious in hindsight, have afforded only partial protection. Not only do they have limited efficacy against the new variants, but also the timespan for which their defense lasts is unclear. The efficacy of booster doses, if and when taken, is also uncertain. None of this, however, minimizes the sterling contribution of medical research as well as our policymakers in dealing with the changing forms of the virus. Indian scientists are constantly reviewing the new Omicron variant. Every day new data and health-related insights are becoming available, and official policy modified accordingly. However, Covid is not leaving us without exacting a heavy socioeconomic toll, and we all need to realize that no one is going to be safe until everyone is.
  • On the international trade front, India should enhance its ambitions. Our continued observer status in the RCEP could be utilized to examine whether it would be advantageous for the Indian economy to join this Asian alliance. However, regardless of the outcome, Indian policymakers need to develop a keener understanding of the domestic reforms necessary to integrate our economy smoothly with tomorrow’s global value chains. Benefiting from trade is not simply about market access and tariffs anymore – a wider knowledge about the subtleties of cross-border supply chains is imperative for developing a sustained competitive economic advantage.
  • Regarding the reestablishment of financial stability, in a world where private capital flows far outweigh official lending, policy will have a vital role to play in maintaining macroeconomic stabilization. This is a key factor in facilitating deeper integration with the global economy, as well as regaining the confidence of the international investor community. Policy needs to pivot in its core functions, and accept that dealing suitably with the abnormal global situation Covid has created is the topmost priority, despite the rising deficit, inflation, and issues facing the domestic banking sector.
  • The global economy is set to exceed $100 trillion in 2022. By some estimates, India will become the world’s sixth largest economy (regaining that position from France) this year. India is also likely to become the world’s third largest economy (after China and the USA) by 2031. With some skillful management of Covid, India has a real chance to boost its relative growth compared with much of the developed world in the coming years. This is a unique opportunity, which we cannot afford to miss.
  • We will all need to adjust to a new socioeconomic normal in 2022. It is neither possible – nor desirable – to return rapidly to the pre-Covid era. Different regions of India are at different stages of development, but encapsulated within the new normal, there is also a new buoyant mood of hope for the nation as a whole. That sweet spot is what needs optimization. To quote Helen Keller, “A bend in the road is not the end of the road … unless you fail to make the turn”.

*Photo Credit: Google

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