In the early 90s, India moved towards liberalization, globalization and privatization, and the Indian market opened its doors for foreign investments. The outcomes were too good to expect as the Indian economy started booming, huge foreign funds were invested in Indian Businesses; GDP reached newer heights, India for the 1st time stood next to the world’s biggest economies and also became one of the fastest-growing economies in the world.
But, this liberalization also resulted in increasing imports of machinery, technology and collaborations, resulting in a reduced focus on R&D, especially by the small and medium-size players. Not only this, the Indian market got opened for cheap imports from countries such as China resulting in negatively impacting the small and medium manufacturers. The very concept of self-reliance was ignored, in the belief that it is tantamount to reinventing when advanced technologies could simply be bought from anywhere at lower costs.
Pre & Post Covid Era
The impact of this thought process started getting visible even in the Pre-Covid Era when the Indian economy started showing signs of struggle to maintain its previous GDP levels. And then the Covid Era came in when everything came to a standstill across the globe and every country started looking internally to satisfy their demands. The first and major challenge was faced when a worldwide shortage of PPE kits and Ventilators came up. Even an economy like that of the USA struggled with the same. During that period, the Indian Industry came together and within 3 months time ramped up its production to make India the 2nd largest producer of these items in the World. It not only started meeting its internal demand but also started supporting other countries of the World. It showed its strength to come up in a situation of crisis.
But the Covid Era also brought us face to face with our dependencies on countries like China for most of our requirements. We are one of the largest producers of mobile phones, light consumer electronics, pharmaceutical products and many more items in the world but for the raw material and the technology for producing these items we are dependent on other countries. During the Covid Era, India experienced its major fall in the unemployment levels and GDP, which slipped down to an 11-year low. Suddenly everything came to a halt, businesses started to close down or were struggling for recovery, and people were losing jobs/salary cuts/furloughs due to the closure of businesses and stalling of production.
Opportunities (From Set Back to Come Back)
India still can come out of this situation and keep its growth back on track by converting this crisis into an opportunity with large scale concerted efforts by Government and People together.
Prime Minister Modi in his speech on May 2020 shared his Government’s Vision and gave a call for “Atmanirbhar Bharat” or Self-Reliant India in Post Covid Period. His Vision for Self-reliant India is based on 5 pillars of
He also said that Infrastructure should become the “identity of India,” “the system should be based on 21st-century technology,” that a “vibrant demography is the source of energy” for a self-reliant India, and that the “supply chain should be utilized to full capacity to meet strong demand.” These changes would promote businesses, attract investment, and further strengthen the Make in India mission
Government Initiatives /Support
Various packages had been introduced under Self Reliant India Plan to provide support and strength to various sections of the country, strengthen the supply chain across industries, promote domestic production and give a renewed boost to the development journey of the country in 2020 and 2021. The mission has been to make India self-reliant in key economic sectors such as health care, education, agriculture, food processing, manufacturing, electronics and infrastructure, to name a few, and improve resilience to future geo-economic shocks. In order to prove the determination of a self-reliant India, Land, Labour, Liquidity and Laws have all been emphasized in this package.
The sudden shock to the economy and the resultant recessionary pressures have called for a strong need for re-prioritization of resources. The infrastructural development in the following key areas will warrant immediate attention and can be focused upon:
1. Healthcare to be the foremost priority by way of creating more and more avenues for reasonable healthcare education and facilities, rural healthcare networks, national health protection coverage and adoption of digital technology in the sector.
2. Focus on providing the ideal state of mobility with convenient, affordable and enhanced last-mile connectivity through multi-modal public transport systems.
3. Transformation of the energy mix in favour of renewables and natural gas, reviving the ailing discoms and digital intervention to ensure affordable, clean energy and reliable power and supply.
4. Better urban planning and design, affordable housing, financial sustainability in urban development on a smart cities concept that includes clear land use, industrial corridors and clusters.
5. Strengthening of rural infrastructure and agriculture reforms to promote the growth of agro-based industries, better access to markets for farmers and the creation of job opportunities for the rural population.
6. Recognition of the criticality of digital infrastructure for business continuity and continued focus on the deployment of digital connectivity and platforms.
7. While the bigger cities have been severely impacted due to reverse labour migration due to Covid19, there is an opportunity to reset this geographical imbalance. Centre and states should provide an opportunity to attract industry and create localized employment opportunities.
This unprecedented crisis has forced us to press the pause button. It has presented us with an opportunity to revisit how we conceive, design, regulate, build and operate physical infrastructure in our country. The Atmanirbhar Bharat Mission along with the stimulus packages has provided a blueprint. With post-Covid re-prioritization and strong implementation, building future-ready infrastructure holds the key to reviving the economy and getting back on the growth agenda.
Still, the economic package requires a stimulus enhancing demand across the economy. The lockdown has lowered aggregate demand, and a fiscal stimulus is needed. However, the package, by relying overwhelmingly on credit infusion to boost the economy, has failed to recognize that investment will pick up only when people across income segments have money to spend. The best way forward for this is:
1. To spend on greenfield infrastructure
2. State-funded R&D, including in basic research, by PSUs and research institution and universities, needs to be scaled-up significantly, well above the dismal 1% of GDP currently.
3. Upgraded and re-oriented PSUs would also be crucial given their distinctive place in the ecosystem.
4. Private sector delivery-oriented R&D could also be supported, linked to meaningful participation in manufacturing at appropriate levels of the supply chain.
5. Infrastructure spending uniquely creates structures that raise productivity and extends spending power to the section of the population most affected by the lockdown, i.e., daily wage labourers.
India is today transitioning from a situation where it opened its doors to liberalization and globalization in the ’90s to one where it has to rearm itself to become a competitive manufacturing hub, a self-reliant country that can face war and pandemics, and a comfortable investment destination where the world can relocate to capitalize on its huge and talented manpower and geographic advantages. It is more of a strategy to make India attractive, to make the world believe in regulatory stability and to revive the nation and put it on the world map.