How the economy could roar to life after the lockdown is lifted?
As India is looking forward to emerging from the lockdown that covid-19 forced upon it. Having persuaded a country of over 1.3 billion people to lock themselves indoors, with admirable success, the government now has to do an about-face with the economy troubles brewing simultaneously.
What should be done?
- First, the government should announce a package to provide cash to businesses without many restrictive eligibility criteria—soft loans with a repayment schedule starting a year from now—but impose other long-term quid pro quo terms such as large businesses mandatorily using the Trade Receivables Discounting System (TReDS) to discount suppliers’ bills.
- Second, ways must be to found to lock in the current price of oil for the next few years. Entering long-term contracts at negotiated prices with select supplier countries will confer an economic advantage and offer political leverage. Simultaneously, construction should begin to create extra oil storage capacity for up to six months. This activity would also serve as a stimulus.
- Third, set up a special purpose vehicle (SPV) like Temasek of Singapore to park all government stakes in PSEs and begin monetising it by issuing securities against them. The proceeds from the sale of such stakes could be invested in important sectors such as healthcare and health infrastructure.
- Fourth, there is much talk of attracting companies looking to diversify out of China. More important than getting a few things right is not doing anything wrong. The standard approach of promising plug-and-play facilities, unless they already exist in special economic zones, is unlikely to be effective. Also, one arm of the government should not undermine the efforts of another.
- Fifthly, the Government of India should think of an autonomous body like the Election Commission headed by a strong and competent individual that identifies the 100 or so strategic technologies and industries and annually ranks Indian vendors against the global best and if this body is not corruptible, then companies will start to take the ranking seriously. India must benchmark itself against the best in the world.
Post-lockdown, if the Indian government could re-imagine and relaunch itself thus, then the hardship caused by the virus could become a distant memory soon.
Source – Livemint
QUESTION – Discuss how India can minimise the negative economic impacts of the COVID19. Suggest how India should revive the economy after the lockdown.