As India gradually rolls back the stringent lockdown measures, Prime Minister Narendra Modi seems confident that the economy will return to its pre-covid expansion pace. The country will “definitely" get its growth back, he said on Tuesday while addressing virtually the annual session of the Confederation of Indian Industry. He called upon corporate leaders to redouble their efforts towards making India atmanirbhar, or self-reliant, help boost productivity, and reduce dependence on imports.
Modi’s speech appeared aimed at lifting the spirits of India Inc that have been dampened by the strict curbs on commercial activity in the wake of the lockdown. These have caused large-scale job losses, precipitated a migrant labour crisis and imparted a dual supply- and demand-shock to the economy. His comments indicate the government wants India Inc to build local supply chains through the Make-in-India programme so that these can play a bigger role in global trade. The emphasis he placed on an “atmanirbhar Bharat" seems to underline how all countries have been virtually left to fend for themselves in the aftermath of the coronavirus outbreak. Such a policy could risk turning a country protectionist, although Modi was careful in distinguishing India’s efforts from isolationist policies. Instead, Modi said that self-reliance will give the country the confidence to embrace the global economy more vigorously.
His comments suggest the government has got its priorities right. India needs to return to the path of high economic growth so that jobs growth can be restored and the economic and human crises that we currently face can be eased. But it is unclear if the government’s actions so far can do the job. Most of the measures that it has announced aim at unclogging supply-side constraints. An equally big crisis, however, lies in the demand destruction that the virus has caused. Unless demand is restored, industrialists are unlikely to ramp up investments. For now, the focus should perhaps be on getting the factories operating again. This requires creating the conditions necessary to make migrant labourers feel secure in returning to their work places. This could be key to restarting our economy.