Team B&C | NT
The Confederation of Indian Industry (CII) has laid out a 10-point road map to revive growth and navigate the challenges of loss of lives and livelihoods posed by the global pandemic The roadmap for 2020-21, was unveiled by the newly elected president Uday Kotak recently.
Emphasising on the imperative to bring back growth, the CII president said, “Growth is a necessity that should lead to creation of more jobs. COVID-19 has changed the status quo of the world and we need to focus our energies to manage growth, lives and livelihoods while considering the challenges associated with life after the pandemic.”
Protecting lives and livelihoods
The centre, state and local authorities must work together to ramp up testing infrastructure along with robust identification of containment zones and an agile health and safety response to control the spread. As 80 per cent of the employment is in unorganised sector with no social security, addressing the protection of livelihoods will need measures to increase formalisation of employment through labour and regulatory reforms which would also encourage businesses to move towards formal sector. The government has announced that labour reforms would be brought in the coming days. Some states have already announced new labour laws in the states. Industry will need to work in partnership to help create more jobs while bringing in more of the workforce under formal sector..
Prioritisation of healthcare and education:
The pandemic highlights the need for a robust healthcare system on the same strategic priority as defence. A long-term strategy of dealing with future pandemics through high quality preventive healthcare, focus on nutrition, sanitation and hygiene needs to be established. India has tremendous shortage of healthcare professionals at all levels. Education plays a key role in achieving the required levels of standards in delivery of healthcare, nutrition and hygiene. Given the vast expanse of India and penetration of broadband connectivity, the e- healthcare and e-education interventions alongside the traditional methods of delivery, can play a very vital role.
The increase in the incidence and the intensity of natural calamities, locus attacks, and spread of disease calls for maintaining harmony with nature. COVID-19 has shown that the climate change is for real and that industrial activity is an important contributor to climate change. India has been at the forefront of climate change mitigating measures; however, we would need to deepen our work and accord attention to sustainability in all our economic activities.
Fiscal deficit and financial stability
Government spending has been supporting the economy over the last few years. For substantive economic recovery, government spending would be crucial. However, this would mean higher fiscal deficit and rising public debt which would run the risk of rating downgrades and flight of capital besides leaving the currency vulnerable. Financial stability should also be an important factor while deciding the fiscal stance. Finding the fine balance will be of utmost importance at this crucial juncture as various stressed sectors of the economy will look for relief and stimulus packages.
Distribution of economic pain
The pandemic has caused significant loss to the economic systems including individual and businesses, governments and the financial sector. While the first loss is taken by individuals and businesses, the government will need bear the heavy burden of losses by stepping in as a key buffer. A battered industry will need support from government in many forms, including investment friendly policies that will drive demand and measures to help tide over the liquidity crisis.
Role of digital and physical
The shift to digital from physical will have a lasting impact in the post COVID times in terms of consumer behaviour. As industry find new business models, the role of science and technology becomes important. This tilt in favour of the digital, also has the potential to widen the rural versus urban divide. The rural population is less skilled to participate in an economy with higher digital component and bringing digital skills to rural India is key to enhance rural jobs. The bright side is that connectivity to hinterlands through the telecom and digital services is growing significantly and this can be built upon to work on a more inclusive agenda.
Future of jobs and social security
The post COVID world is likely to see some transformational changes in the context of jobs in the typical sense. CII will work closely with the government to provide incentives and facilitation to companies wanting to shift their manufacturing operations out of China as part of their de-risking strategy. This will help India develop as manufacturing hub for the world. In addition, front loading of the National Infrastructure pipeline will not only create demand for industries like steel and cement but will also provide jobs. Government’ focus on enhancing agriculture infrastructure, linking farm produce to markets by APMC reforms will also help increase farm incomes and livelihoods.
For the first time reverse migration was experienced with migrant workers going back. Industry should be encouraged to set up operations in the rural hinterland. The reforms announced in the minerals and mining sector should be expedited as most mining projects are in rural areas. Similarly, development of agro based clusters could be expedited in rural areas. A vibrant rural industrial sector will also de-risk the impact of COVID on economic activities as spread of COVID is far less in rural areas.
Four levers for growth:
Out of the four engines of growth, consumption, investment, net exports and government spending, the economy has been primarily growing on government expenditure. This is not sustainable as the fiscal situation is under pressure. Hence, it is essential to re-start the other engines of the economy. Given demand uncertainties, private investment remains a challenge. Exports need a quantum jump and to achieve this integration with global and regional value chains is important besides being competitive.
Getting growth back is non-negotiable
Getting growth back is essential to protect as well as generate jobs and livelihoods. Government spending in public infrastructure and direct benefits cash transfers may help boost demand initially but we need to find ways to sustain demand particularly in such uncertain times when consumers tend to save and get risk averse. The need of the hour is for government and industry to work together to return to a sustainable growth path.
In addition to these challenges, Kotak said that industry will have to work with its vendors, especially with MSMEs to ensure that progress is across the value chain.