Now to Put Up a Firefight

The Indian Express 2nd September 2020 Save

CONTEXT: With the recent estimates suggesting a sharp decline in the Gross Domestic Product (GDP), the need to recreate growth in the mid-term should focus on key sectors that contribute the most in the GDP.

Challenges to Indian Economy:

Declining GDP: with 23.9% contraction, India’s potential growth recession is projected to be around 6-10%. - Ministry of Statistics and Programme Implementation’s (MoSPI’s) GDP Data.
The crisis of migrant workers: Returning to their hometowns, exposing an economy that was both shallow and lopsided.
Shallow and Lopsided nature of economy: is exposed due to the pandemic and resultant lockdown.
- Top 100 districts, consisting of 77% of COVID cases, are responsible for 50% of India’s GDP.
- The north and east of the country home 52% of India’s population, contributing only 30% to the national GDP.

Opportunities showcased amid crisis:

Provision of Safety net: with smart, direct benefit transfer highlighted the government’s targeted approach.
- For, E.g. While the Micro, Small and Medium Enterprises were visibly hit, the government provided early relief.
Societal Resilience: shown in the form of resolve of the front line workers.
Decentralization, with the use of digitization, was a visible theme impacting many sectors.
Agriculture Resilience: providing a respite with a 3.4% growth this last quarter.
India’s ‘full potential’ can be an average of 9% or more.

Way forward:

Recreating growth in the medium term is likely to come across ten key sectors constituting most of India’s GDP.
- Dormant resources should be put to use, requiring a special focus on balance sheets.
Reconfiguration of organizations by all segments of employees, for revival and growth, since no single organization can refill the economic lake of the country.
- For, E.g. corporate sector must realize that its interest in the economy cannot be biased by its focus on metropolitan and Tier 1 districts.
Targeted investments by governments in digital and physical platforms deeper and wider will be an important component of the revival approach; This will be helpful in :
- Creating employment in the right locations,
- Critically building enabling capabilities in society.
Enhancing the reach of the corporate sector in the economy:
- Corporate sector must realize that its interest in the economy cannot be biased by its focus on metropolitan and Tier 1 districts.
- Using technology stacks — like the Unified Payments Interface (UPI), companies can go deeper into the economy, increasing India’s economic volume and productivity.