Time for structural reforms
As the medical fraternity races to synthesise a viable cure for the COVID-19, there is a pressing need to adjust to the new normal that the world has been pushed towards. On Sunday, Prime Minister Modi once again stressed on the need for social distancing through his radio address and the country well acknowledges that masks will have to be a part of our lives in the near future. There is an increasing rush to adjust to the new normal since livelihoods are halted and each passing day of inactivity hurts a large number of people. Farmers, small traders, daily wage workers, etc., who form the country's vast unorganised sector are bearing the brunt of the lockdown. Economic indicators are red but the government is moving step by step to avoid any complication. We ought to note that prevention is better than cure and as such the numbers tell the tale for had India not imposed a timely lockdown, we would have also suffered the same fate as the developed nations of the West. But it is important to look in the future and make prudent decisions that will shape our recovery. The staggered exit strategy will take its course and gradually, districts will resume lives. But there are two sectors in particular that require our immediate attention as we enter the last leg of lockdown. Agriculture and Industry, both are central to rural and semi-urban livelihoods. The agriculture sector employs 53 per cent of the population in India. And, as it has been observed, most of the districts untouched by COVID-19 or those which now have zero cases are primarily rural and semi-urban districts of India. The April 20 relaxations were a good start and the list will keep getting longer as rural India resumes work. But at the same time, the government ought to ensure that these two sectors — Agriculture and Industry — can function without any hiccups. While the Services sector — which has the largest share in India's GVA — will take more time to kickstart, the collective pace of primary and secondary sectors will begin the recovery process of the Indian economy. In the meantime, the Centre can also deliberate on bringing in reforms to reinvigorate the two sectors, as it did back in 1991 during the BoP crisis. We have seen a lot of small reforms to cater to the cyclic slowdown in recent times but COVID-19 threatens to bring a structural slowdown, necessitating major policy changes to strengthen our economy — as was done with LPG in 1991.
Though the Union government has given the green signal for agricultural activities, farmers' woes are not over. On account of bumper produce, they lack the workforce for timely harvest and transportation. The lockdown has deprived them of labourers and restrictions in transportation threaten their produce. The visible lag between farms to beneficiaries can be detrimental to the system, especially when the country needs to ensure food security. It is imperative that rural India commences operations without any hiccups so that FCI can procure food and the same can reach the beneficiaries on time. A similar condition is prevalent in the industry sector where government permits are causing unnecessary delay in supply chains. While the Centre's precautionary stance is laudable, at the same time there must be smooth movement of raw materials and goods. Unless men and material are freely moving across, there will be disruptions and they will bring down the efficiency of industries. CII's recommendation to waive permits in non-containment zones can be heeded as more attention towards restrictions is to be levied in hotspots of the country. Both agriculture and industry require smooth functionality in order to contribute their share to India's GVA, especially when the Services sector is drawing nil on account of restrictions. And, as the new normal delves in, structural reforms must be ushered to turn the situation to our advantage.
