There is now more evidence to show that the Indian economy “is pulling out of COVID-19’s deep abyss and is reflating” at a pace that beats most predictions, RBI officials, including Deputy Governor said in an article in the central bank’s monthly bulletin.
RBI released an article titled “State of the Economy” stating that, Economic conditions continued to improve through November on the back of the uptick in agriculture and manufacturing. Financial conditions embodied in interest rates are perhaps at their easiest in decades.
It added that despite headwinds, efforts by all stakeholders could put India on a faster growth trajectory.
In another article in the bulletin on the half-yearly review of government finances, officials of the Fiscal Division of RBI’s Department of Economic and Policy Research warned that notwithstanding the severe impact of COVID-19 on government finances, it was imperative for the Centre and States to continue with the countercyclical fiscal measures to sustain the momentum of the recovery.
Vision of ‘Aatmanirbhar Bharat’:
According to forecasts by the OECD, by end-2021, the US economy is likely to be the same size as it was in 2019, but China is expected to be 10% larger.
Europe and Japan would languish below their pre-pandemic level of output and could do so for several years.
From India’s perspective, recovery in GDP growth is firmly on track and sets the foundation to regain our position as the fastest-growing major economy next year.
For India to claim its rightful position in the new world order, it is imperative that the vision of ‘Aatmanirbhar Bharat’ is globally integrated to harness the opportunities created by the emerging shifts.
At this critical juncture, it is important to set the vision of positioning Aatmanirbhar Bharat in the new world order with priorities closely linked with our global aspirations.
Five pillars of a self-reliant India:
PM iterated that a self-reliant India will stand on five pillars viz.
1) Economy, which brings in quantum jump and not incremental change
2) Infrastructure, which should become the identity of India
3) System, based on 21st-century technology-driven arrangements
4) Vibrant Demography, which is our source of energy for a self-reliant India and
5) Demand, whereby the strength of our demand and supply chain should be utilized to full capacity
Several of the reform measures like opening up more sectors for private participation and enhancing foreign direct investment are not to be seen as part of COVID relief but long-term structural changes.
The effect of these measures will have to be watched carefully.
Social sector support:
Revenue expenditure measures undertaken to enhance social protections to the underprivileged and to address labour market dislocations might need to continue as the recovery is likely to be uneven across sectors.
Capital expenditure, which collapsed in the first half of this fiscal, will need to be scaled up as a priority.
Public investment in healthcare, social housing, education and environmental protection is the need of the hour to build a more resilient and inclusive economy.
Sectors such as auto and capital goods that were severely impacted in lockdown are expecting a turnaround in forward earnings.
Healthcare, information technology and fast moving consumer goods firms were sighting stronger earnings outlook.
Turning crisis situations into opportunities:
- Talking about turning a crisis into an opportunity, gave the example that the production of PPE kits and N-95 masks in India has gone up from almost being negligible to 2 lakh each, daily.
- Remaking that self-reliance is the only way out for India, the PM quoted from our scriptures “Eshah Panthah”, that is – self-sufficient India.
- Self-reliance will make globalization human-centric. The definition of self-reliance has changed in a globalized world and it is different from being self-centred.
- India’s fundamental thinking and tradition of “Vasudhaiva Kutumbakam” provides a ray of hope to the world. This should be seen in the context of Human-Centric Globalization versus Economy Centralized Globalization.
- Self-reliance does not mean cutting India off from the world. India believes in the welfare of the world and India’s progress is linked with the world. The world trusts that India has a lot to contribute to the development of the entire humanity.
- The strategy of Atmanirbhar Bharat Abhiyan seems to give a strong supply-side push by boosting the availability of capital on easy terms and through supporting agriculture and business sectors.
- The additional allocation to MNREGA will help in productively employing returning migrants.
- States are now allowed to borrow within a higher limit but with clear reform conditionalities.
Linking the vision of Aatmanirbhar Bharat with global strategic priorities of enhancing 3Cs of commerce, competitiveness & currency internationalisation can be a cornerstone to strengthen India’s position in the post-pandemic new world order.
India is presently known as one of the most important players in the global economic landscape.
Its trade policies, government reforms and inherent strengths in the economy have attributed to its standing as one of the most sought-after destinations for foreign investments in the world.