17 OCT,2022 | MEDC
Logistics and supply chain management plays a key role in the socioeconomic growth strategy of any nation. The pandemic exposed the vulnerability in global supply chains and the need to strengthen the same at home. Investments in the logistics sector has a multiplier effect, uplifting other parts of the economy, thus eventually helping to control inflation and improve the balance of payments pressures. In this regard, the latest step to accelerate India's growth is the New Logistics Policy (NLP), which will help mitigate costs while maintaining the speed and quality of service necessary for our economy to realize its potential. The NLP is expected to lubricate and revive the growth engine of our economy in a manner creating employment, reducing urban-rural disparities, speeding up movement of goods and services, and thus creating huge monetary savings from efficiency gains.
All indications point towards the pandemic giving way to an era of rapid productivity growth. Businesses are eagerly adopting new processes and technologies, and there are signs that they could pay off. In this scenario, the rationalization of logistics and production processes (facilitated by digitalization) has an important role to play. In this regard, the NLP will reduce logistics costs from an estimated 13-14% of GDP to single-digit levels. The potential savings are huge. A five percentage point saving in a $3 trillion economy translates into efficiency gains of $150 billion, which is more than the GDP of Hungary.
The biggest gainers from the NLP are expected to be small farmers and the MSME sector, as transportation cost is a much heavier burden on them as compared to those in other professions. That is why framing the NLP had to be a national priority. Relatively low-value goods and perishable commodities, in particular, will benefit more from the NLP than others.
Some transformations are likely to stick, and the pandemic quickened the pace of technology adoption. That is good news for the logistics sector. The NLP, along with other policy initiatives such as building high-quality rural roads and highways, improving container turnaround time, dedicated freight corridors will ensure high-quality infrastructure for Indian business. It will help increase exports as well as our overall business engagement with the rest of the world. It will also enable a stronger integration of India with global value chains. All this is possible only on the backbone of efficient logistics.
Looking ahead, the current global storms could turn into hurricanes. Thanks to a relatively enlightened leadership, our economy is in a better position today compared to many other open economies, but it cannot escape global disruptions. Navigating this period of heightened volatility requires both agility and clarity on policy priorities, as well as a willingness for calculated experimentation with technology. In this regard, the NLP is surely a commendable step in the right direction.
The pandemic was a turning point for the Indian economy … but it was already on the cards. Covid merely provided a catalyst for change. The consumer habits of Indians are evolving. The development of high-quality products and their rapid delivery are now not mutually exclusive. A global, digitalized, always-on economy is no longer an idea confined to the future. It is already here, and the NLP will facilitate India’s march into it.
*Picture Credit: Google
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Interactive Meeting with Mr. Jaykumar Rawal Hon'ble Minister for Tourism & Employment Guarantee Scheme Govt. of Maharashtra