NEW DELHI :
India is preparing to deal with the aftermath of the coronavirus pandemic with Prime Minister Narendra Modi on Monday directing his cabinet to work on a graded plan to slowly open the country for business. Modi asked ministers to prepare a list of 10 major decisions and 10 priority areas to focus on once the lockdown is lifted. The decision captures the difficult trade-off that India needs to make between prioritizing saving lives and containing the economic damage in the wake of the coronavirus pandemic that has killed more than 100 people in the country.
The Union government is, however, looking at a phased unwinding of the 21-day lockdown that has shuttered businesses and brought life to a standstill.
“Prime Minister said that it is essential to strategize for the emergent conditions once lockdown ends," an official statement said n Monday.
India, home to a fifth of the world’s population, has seen its manufacturing sector growth slow to a four-month low in March as economic activity slumped, according to the Purchasing Managers’ Index for India.
S&P Global Ratings cut its estimate for India’s gross domestic product growth to 3.5% from its earlier estimate of 5.2%, as it expects the damage to the economy from the covid-19 pandemic for the Asia-Pacific region to be as severe as the one during the Asian financial crisis of 1997-98.
India is also looking to leverage this crisis as an opportunity to attract investors away from China to promote manufacturing here.
“While mentioning that due to the emergent challenges, the country needs to lessen its dependence on other nations, he asked all departments to maintain an objective index on how their work will promote Make in India," the statement said.
Economist Indira Rajaraman said that in India, the fiscal space to announce a stimulus package similar to the ones Western economies have adopted, is limited. India should instead, give states more discretionary powers to deal with the situation and leverage the disaster relief mechanism to address the pain points, she said.
India was placed under a 21-day lockdown on 25 March.
“Industrial and commercial activities as well as employer-worker relations are far more organised in industrialised nations than in India. Those nations have standard operating procedures in place to give a helping hand to businesses during a shock and protect jobs while the company gets back to its feet. However, in India, with a large unorganized sector, it will be very difficult to identify specific industries to give fiscal support without extending the same to a host of others keeping in mind the need for fairness," said Rajaraman.
More than 90% of the country’s workforce is estimated to be in the informal sector. The Economic Survey 2017-18 had said that 87% of the firms in the country, representing 21% of total turnover, are outside both the tax and social security nets.
“Highlighting the impact on India’s exports, he (Modi) asked ministers to submit actionable suggestions on boosting manufacturing and exports and ensure that new sectors and countries are added in India’s export net," the statement said.