Diverse economy, sweeping reforms and credible policy frameworks set the stage for post-pandemic priorities.
When Covid-19 struck at the heart of countries around the world last year, it not only spread an unknown contagion at an unprecedented speed, but also severely disrupted public policy-making – forcing nations to focus on battling the pandemic with all their might instead of long-term development and geostrategic goals. With the increasing pressures on governments to undertake austerity measures and with dwindling fiscal space, several nations abandoned many of their long-term projects.
But India – where the Covid-19 caseloads are gradually receding and the mass rollout of at least two vaccines are on the anvil – managed to retain a delicate balance between securing public health, economic reforms and diplomatic outreach.
Indeed, there are several areas where aggressive Indian policymaking flourished during the pandemic – from boosting the close governmental and commercial rapport with Gulf states such as the UAE and Saudi Arabia in the backdrop of the Abraham Accords, to undertaking global collaborations in vaccine development and manufacturing to sweeping reforms of key sectors of the Indian economy to boost investments.
The latter includes relaxation of foreign direct investment (FDI) limit in defence, the privatisation of six more airports, and fully opening up coal mining to the private sector, as part of the fourth instalment of an expansive economic stimulus package to offset the impact of the Covid-19 outbreak.
The FDI limit in defence production through automatic route has been increased to 74 per cent from 49 per cent, while private sector participation has been allowed in space exploration as part of structural reforms that were announced for a variety of sectors including mineral mining, civil aviation and atomic energy.
According to Indian Finance Minister Nirmala Sitharaman, an empowered group of secretaries will be responsible for expeditious clearance of investment proposals, with each ministry setting up a project development cell to prepare investible projects. The government has also embarked on a massive uplift of industrial infrastructure after ranking all 3,376 industrial parks and special economic zones with 5 lakh hectares or more of land.
It is through this recalibration of policies, Covid-19 contingency measures and the aggressive push for boosting FDIs that the government has prepared its economic priorities for post-pandemic India.
And this goal of planning for the new normal as the coronavirus pandemic eventually abates is not limited to government agencies – even corporate India has engaged in a pragmatic assessment of priorities and opportunities.
“The COVID-19 crisis has brought new urgency to some of corporate India’s longstanding challenges, and companies which act now to address these priorities could emerge stronger from the crisis,” said Rajat Dhawan, a senior partner in McKinsey, in a policy outlook for the global consultancy. “These priorities include making balance sheets and cost structures more resilient, reshaping business portfolios for greater value creation and building greater safety, flexibility, and productivity into operations,” he said.
With the combination of efforts by the government and the private sector, India is thus more than well-prepared for life after the pandemic and poised to record an even better curve than its fabled graph of growth, according to analysts.
“Many of the deep-rooted structural factors that helped fuel the economy’s sustained growth during the past decades seem intact: demography, a large and diversified economy, still low-income levels that signify the potential to grow, a dynamic entrepreneurial class, political and geopolitical stability, a strong institutional base and credible policy frameworks,” said Poonam Gupta and Dhruv Sharma, lead economists of World Bank writing for Economic Times. “With continued policy attention on reforms — which spur private investment, increase the economy’s competitiveness, promote greater integration into the global economy, and ensure an efficient financial sector — India will revert to the growth path of the past,” they said.