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Opinion | An opportunity for India to come out on top from this crisis

Kiran Mazumdar-Shaw is chairperson of Biocon LtdPremium
Kiran Mazumdar-Shaw is chairperson of Biocon Ltd

The complex challenge of reviving India’s economy connects business with society, policy, technology, science and medicine, among other spheres of human endeavour, says Krea University vice-chairman Kapil Viswanathan. In partnership with the university, Mint invited luminaries of its governing council to share their perspectives on the best way forward for the country. This is the first edition of a knowledge series initiative

The shock waves set off by the covid-19 pandemic could lead to a cumulative loss of $9 trillion in global gross domestic product (GDP) over 2020-21. The International Monetary Fund expects India’s GDP to grow at 1.9% in 2020-21, making it the fastest growing major economy in a recession-hit world.

To come out on top, India needs a strategy encompassing health, economics and geopolitics.

In terms of health, the data available at present indicates that India is entering a safe zone, with prompt and urgent measures having succeeded in “flattening the curve". Going ahead, India will need to scale up testing to detect cases early so that the virus can be contained in a defined geographic area, breaking the chain of transmission and preventing its spread to new areas.

On the economic front, India needs coordinated fiscal and monetary policies to tide over the crisis and lay the foundation for a revival of economic growth. We will need some amount of quantitative easing to enhance liquidity in the economy. The huge financial stimulus to boost industrial production across small, medium and large enterprises.

India’s oil import bill could halve from the $105 billion estimated for 2019-20 on account of the collapse in global crude oil prices. It is imperative to allocate $20 billion (0.3% of GDP) of these oil savings to a stimulus package for industry.

The government will also have to come up with investment- and job-linked incentives tailored to the requirements of specific sectors. For example, the real estate sector should get the flexibility to re-purpose residential projects into commercial ones, especially given the success of remote work.

Startups and small and medium enterprises (SMEs) must receive funding for manufacturing, services and innovation. The government may provide such stimulus through advance purchase contracts for covid-specific needs, such as tests, biomedical supplies, hospitalization and immunization. Funds should be earmarked for a big infrastructure push to enhance both physical and cyber connectivity.

From a geopolitical perspective, this crisis has given India an opportunity to position itself as a strategic part of global supply chains. As the world looks to de-risk supply chains originating from China, India can state its competencies and advantages much more emphatically.

Today, we are in a position to negotiate as equal partners with the US, EU or Japan. India is in a good place and confident measures will enable us to emerge from the covid crisis better than many expect.

Kiran Mazumdar-Shaw is chairperson of Biocon Ltd. and a member of the governing council of Krea University

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