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Opinion | Rebuild demand for the economy to recover

Ratan N. Tata is chairman emeritus of Tata SonsPremium
Ratan N. Tata is chairman emeritus of Tata Sons

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

I look at three major areas for the economy’s return to normalcy once the covid crisis ends—healthcare restructuring, industrial recovery and rebuilding growth.

Healthcare restructuring: The first is the impact of the outbreak of the virus, the treatment, continued sanitization of the country, and flattening of the curve; also, how to deal with the stress in the economy because of it.

Industrial recovery: The second area is rebuilding the demand side of the economy. It does not make sense to talk about building back the supply chain and labour force unless there is an increase in demand. The availability of finance, ease of borrowing from banks and perhaps also a considerable easing of the country’s financial climate will be needed.

Further, we will need to look at rebuilding our infrastructure, such as road connectivity and agricultural development. There seems to be a surplus of power in some areas. Broadly, it is about the right things to be done at the right time, more than focusing on capital-expenditure-intensive efforts. Fossil fuels will no longer be in great demand and there will be a large quantity looking for adequate margins. So it will be cheaper to hold reserves under the sea or land and wait for the right time to withdraw the asset. This may alter the whole view on climate change, fossil fuels, and mobility. The intense plans for conversion to electric mobility may also change.

Rebuilding growth: The third and final area of focus is the one that most people will look at; the general regrowth of industries, both business-to-business and business-to-consumer. This will depend on the ability of companies to earn a profit and achieve growth. It will call for large inputs of capital and for opening up international trade. However, there will be areas of market protection that will work against the ease of world trade. Strong organizations will be needed to ensure we overcome protective measures, such as non-tariff barriers, that will start to emerge in various countries.

In my view, there will need to be some rethinking on climate change, some concessions on acceptable levels of pollution, and a reduction in some of the goals that have been set.

Ratan N. Tata is chairman emeritus of Tata Sons and an advisor to the governing council of Krea University

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