Prathit Misra | India adapting to a post-COVID-19 world
The COVID-19 pandemic is the biggest crisis to hit humanity since World War II. Not only has it cost the world more than 500,000 deaths, it has also led to a sharp economic downturn and countless job losses. In March end India imposed a lockdown to contain the virus. The spread brought the Indian economy to a grinding halt, derailing it from the high-growth path it had followed in the past two decades. However, there is consensus that post-Unlock 1.0 and 2.0 since June 2020 to restart economic activity in India, green shoots have already begun to show. Increased electricity and fuel consumption, inter- and intra-state movement of goods, increased railway freight, tax collections, and retail financial transactions confirm signs of economic revival.
EASE OF DOING BUSINESS IN INDIA
Six years ago, India was ranked 142nd in the World Bank’s Ease of Doing Business. Since then, a vast number of rules, regulations, processes, and over 1,400 laws have been eliminated and as a consequence, India has jumped up 79 positions in the global rankings, the only large country in the world to have made such a quantum jump.
India has reformed its entire Foreign Direct Investment (FDI) regime by liberalising rules and abolishing unnecessary bottlenecks. These reforms have led to the expansion of FDI inflows in India from US $36 billion in 2013-14 to US $74 billion in 2019-20, this, despite the global FDI flows falling sharply during the same period. In a federal country like India, it is the provinces that attract investments. The ranking of states on the basis of steps taken for ease of doing business has led to radical reforms and intense competition among them.
India launched the Start-up India movement. Many of India’s start-ups are finding solutions for the unique challenges of India and the world, and several of them are leveraging technology to enhance health and education outcomes. In a very short time, India has been able to develop one of the best start-up ecosystems in the world with over 21 Unicorns.
India’s micro, small, and medium enterprises form the largest share of India’s manufacturing and employment. The country’s recent steps at labour and land reforms are aimed at making the small and medium businesses cost-competitive and efficient. India has earmarked land pools the size of Luxembourg specifically to address the issue of land acquisition and is moving towards providing plug-and-play models for many sectors. This will significantly reduce the transaction costs of doing business.
Though the COVID-19 crisis has hit global growth, it has also offered an opportunity, and India has demonstrated courage and determination to usher in long-pending radical reforms. Indian Prime Minister Narendra Modi launched a US$300 billion economic package in May under the theme “self-reliant India”. This economic push is to improve domestic production of finished goods, gain from better integration with the global value chain, in line with the principles of free and fair trade. The package focuses on boosting scope for private participation in numerous sectors, increasing FDI in the defence sector, boosting solar manufacturing, etc. Initial success of this push is already visible as India went from manufacturing zero personal protective equipment (PPE) before March 2020 to 250,000 PPE every day by June 2020 for combating COVID-19. The PPE industry has become worth US$980 million in a matter of two months. Some Indian start-ups and technology institutes have also developed affordable ventilators for as low as US$650 and are now scaling it up for mass production.
TRANSFORMING INDIA THROUGH TECHNOLOGY
In India today, one can walk into a bank branch and open a bank account using his or her biometrics in minutes. According to the global index report released by the World Bank, 55 per cent of all bank accounts created across the world during 2014-17 were opened in India. Technological tools like the Unified Payments Interface, Unique Identity Card, and ‘Digilocker’ have expanded financial inclusion and have presented a unique model for the entire world. The emergence of transaction platforms such as Google Pay, Samsung Pay, PhonePe, and Paytm have been responsible for India doing over three billion transactions a month. The effort has been to break silos through real-time governance and move away from a case-to-case approach to systematic governance, with meaningful participation of stakeholders.
A great example of this is the government e-Marketplace, which is the national public-procurement portal, all online end-to-end for open, efficient, and transparent procurement of goods and services by the government. The platform has transformed legacy procurement systems through a disruptive marketplace model and the use of technology, analytics, and the digitisation of processes. Similarly, the National Agriculture Market is an electronic trading portal that networks the existing physical agriculture markets to create a unified national market for agricultural commodities. It removes information asymmetry between buyers and sellers and promotes real-time price discovery based on structural demand and supply.
In the last few years, the convergence of all government programmes and real-time monitoring and ranking of districts (parishes) on 49 different indicators has led to transformative changes across health and nutrition, education, financial inclusion, and basic infrastructure. This flow of data on a real-time basis and the use of technology have been the hallmark of reforms and restructuring of governance. This technological leapfrogging of governance is driving efficiency and effectiveness and is yielding rich dividends in productivity on a sustained basis. The allocation of 80 million cooking gas connections to below-poverty-line families; distribution of 123 million LED bulbs, which save 43 million kilowatt hours per day; and ensuring electrification to all villages are examples of speedy time-bound implementation on the ground in India.
INTERNATIONAL ECONOMIC COOPERATION
The tax regime has been restructured. The country has slashed corporate tax structure to 15 per cent for new manufacturing companies and 22 per cent for all companies. The new rates are on par with most OECD and other emerging countries. The lower rates will reduce the cost of capital and catalyse investments.
Two of the biggest recent economic reforms are the Goods and Services Tax (GST) and the Bankruptcy Code. The GST subsumed 17 taxes and multiple cesses, aligning India with global regimes, and created a seamless national market. The Insolvency and Bankruptcy Code has also been a key economic reform, leading to faster recovery of stressed assets and quicker resolution. The Government is also providing incentives and other advantages for foreign investors to operate in the 231 operational Special Economic Zones, which has led to an increase in the number of foreign firms investing in India.
As far as global economic cooperation is concerned, New Delhi has stepped up talks for a slew of “balanced and fair” trade pacts. India is working on trade deals with the USA, the EU, European Free Trade Association members, ASEAN, the UK, Australia, South Africa, Mexico, Japan, Malaysia, and South Korea. According to the Asian Development Bank Institute, India has 42 trade agreements, where 13 are in effect, 16 are under negotiation, 12 are proposed or under negotiation or study, and one is signed but not yet implemented.
Despite domestic problems, India has stood out for its globalism during the ongoing COVID-19 pandemic. At the start of the crisis, a regional cooperation programme was launched in South Asia under which US$10 million was pledged towards an emergency fund and an information-exchange platform to facilitate exchange of expertise among professionals. In the post-coronavirus world, such exchange of information and multilateral collaboration would be crucial; not just in resisting a relapse of the virus, but also in preventing a future pandemic. Since the COVID-19 crisis, the PM has spoken to over 50 heads of state regarding cooperation, and India’s foreign minister has discussed a collective response to the COVID-19 crisis with over 100 of his counterparts from other countries. India has also provided essential medicine and medical gear to over 153 countries to combat the COVID-19 crisis.
INDIA AND JAMAICA
Trade and development between Jamaica and India have picked up in the last few years, and the current COVID-19 crisis provides us an opportunity to re-evaluate our economic relationship and focus on complementarities to further boost cooperation. In fact, since the COVID-19 crisis began, the number of trade queries from both countries for commercial contacts on the other side has increased manifold. This aspect of the relationship will receive a further boost with the opening of the Jamaican High Commission in India soon.
Recently, Indian Foreign Minister Dr S. Jaishankar and Jamaican Foreign Minister Kamina Johnson Smith spoke on the phone, and India gave the assurance that it would be a consistent and reliable supplier of pharmaceutical products to Jamaica, generally, and for the COVID-19 crisis in particular. The medical assistance containing essential medicines and immunity boosters, as well as protective medical gear, has started to arrive in many Caribbean and Latin American countries and is expected to arrive in Jamaica in short order.
Apart from this, India has also invited Jamaican healthcare professionals to join short e-courses aimed at sharing the medical experience and expertise on COVID-19. India has always led the way in medical R&D, and at least two Indian companies have already proceeded to the human-trial phase in the development of a COVID-19 vaccine. Once developed, India will be happy to share its benefits with other countries, including in the Caribbean region, so as to contain the COVID-19 crisis.
It is undeniable that the COVID-19 crisis has caused the world immense damage, but it has also taught us invaluable lessons. Let us hope that this crisis will serve to strengthen our systems, our resolve, and global cooperation. In the words of PM Modi, “We must always remember that the present and future of 7.8 billion people will never be dictated by an adversity. We will decide our present and our future.”
Prathit Misra is second secretary at the High Commission of India in Jamaica. Send feedback to firstname.lastname@example.org.