Eyeing the bright side
It has been a shaky start to a new decade. The pandemic has wreaked havoc across nations and economies have come under tremendous stress. IMF has projected a global GDP contraction of 3 per cent. While public health is the priority for nations, economic health closely follows behind. Livelihoods have come under jeopardy since the onset of what would be infamously recalled 'The Great Lockdown' and trillions of dollars would have to be pledged to cover losses that cannot be measured right now. Perhaps the only silver lining in all this mayhem is the healing environment. As countries brace the pandemic, racing to develop a vaccine, there are constant deliberations over restarting economic activities. Relief packages as a stimulus to the great downturn borne by the economy are both a necessary and popular step. All countries have earmarked a certain amount to steer their citizens through the crisis and begin the economic clockwork as soon as possible. India too has brought in principle a package worth 1.7 lakh crore to act as a safety net for the downfall that the pandemic and the consequential lockdown has brought. But while the executive assesses the situation and administers dynamic remedies to both save lives and revive the economy, long-term plans have to be crafted. It is well understood that macroeconomic decisions play out the real impact in the longer run. The lockdown imposed on March 24 accrued a relatively flatter transmission curve, bringing the total cases after 5 lakh tests to around 20,000 on April 22. Similarly, prudent economic decisions are imperative to accrue dividends that would redirect the Indian economy towards a high growth trajectory in the next financial year. And this is no rocket science. Experts know that India has to devise a strategy to rebound and post-high GDP growth as it still eyes a $5 trillion economy by 2025. Of course, there has been a great lag. But just as the IMF predicts for India, and the RBI governor proudly reiterated, India would be the lone nation in the G20 posting the highest growth rate at 1.9 per cent for FY2020-21 while rebounding to climb to 7.2 per cent in the next financial year. This would not happen merely by business as usual. India requires policy changes that can provide a conducive environment for the economy to register such a sharp turnaround. And, here lies India's personal silver lining in these grave times. With the global order mulling over alternatives to China for their manufacturing requirements, India has the opportunity to rise as the answer and not just offer the international community a new manufacturing hub but also to remedy one of its perennially low factor for growth: Net exports.
Thousands of companies across a variety of sectors are eyeing India as a potential hub for manufacturing against China. With a similar cheap labour environment, low cost of production, easily procurable raw materials and ease of doing business that the country has been focussing on, India can emerge as the next manufacturing hub for the world. In short, India has all the features to compete with China and the pandemic has the capacity to bring a drastic shift in market share for both the countries. Heeding such developments, even the Centre ought to be mulling over the country's manufacturing policy, eyeing an overhaul. India has already risen in stature by offering aid to countries while catering to its own domestic needs. Regionally, India has played the role of a big brother, sending financial and material aid to nearby countries. Further, the Facebook-Jio FDI deal also cites how foreign companies store faith in India's growing economy. Collectively, a post-COVID-19 world can witness India emerging as a big player in the manufacturing hub and in the process, reversing its traditionally negative net exports. The paradigm shift that India needs to rebound and register a high-growth trajectory might be a byproduct of the pandemic itself.
