The Coronavirus Economy
Rajeev Dubey April 15, 2020
From here on, the world history will probably be quoted in pre-coronavirus and post-coronavirus eon stamps. For it is not just a healthcare shock to humanity. It's an economic shock, humanitarian and livelihood shock, a consumption shock, a stock market shock, fractured supply chain shock - all rolled into one.
UNCTAD believes that India and China are among the few world economies least likely to fall into recession. But don't be surprised if it chooses to revise India outlook. World Bank already has - to the most pessimistic outlook yet - a near flat growth of 1.5 per cent for FY21.
Even though India has a host of positives going for itself. First, whether it is the Modi government's precocious, pre-emptive lockdown (now sealing), the warm weather, the universal BCG vaccination policy at birth, or just luckily a weaker strain of the virus, India remains a model of containment for the coronavirus-stricken world - notwithstanding the economic and humanitarian fallout it has to endure.
Two, domestic economy accounts for more than two-thirds of India's GDP. That not just makes us the masters of our destiny but also ring-fences our economy from the impact of a global downturn to just one-third of our GDP.
Three, this crisis is empowering India Inc with new capabilities, new business models and new opportunities that may not have been imagined before. Mahindra, a conglomerate, may see a business in medical equipment such as ventilators, PPEs, face shields, masks and gloves; Arvind Mills in technical textiles, an emerging field; CavinKare and Dabur have new business lines in sanitisers; home delivery platforms - Swiggy, Zomato and Dunzo - have realised even FMCG distribution can be a business line; for Lybrate and Healthassure, the spike in video medical consultation is their Paytm-during-DeMo moment; Bulk Drug Parks aimed at promoting local manufacturing of active pharma ingredients will encourage local raw material production; and local medical devices firms believe tie-ups forged in this hour of need will stay for a long time, giving them a new lease of life.
India's apprehensive and gingerly introduction to the drone industry is now exposed to enormous possibilities as hourly drone surveillance of sealed localities has become the norm. Do read Sumant Banerji and P.B. Jayakumar's reports in the following pages.
Or, take a bow for India's US FDA-paranoid pharmaceutical industry. Its global reputation as a producer of quality pharmaceuticals has risen several notches since the sudden surge in world demand for Hydroxychloroquine (HCQ) - the most-hyped hope against coronavirus in the absence of a vaccine. It's a huge leg-up for the sector which is paranoid of the whimsical pounding from the US and British FDAs. The same drug administrator has now allowed re-opening of an HCQ plant by Ipca that had been shut for allegedly producing medicines unfit for human consumption. From US to Brazil to Israel and Indonesia, patients will be administered "Made-in-India" HCQs.
Given India's latent economic potential, economists expect a sharp recovery post-lockdown. But how can we ensure that the universal expectation of a V-shaped recovery does not turn out to be a prolonged U-shaped one? Clearly, India needs to jump-start its economy post lockdown.
We asked P. Chidambaram, Bimal Jalan, Meghnad Desai, D. Subbarao and Junaid Ahmad for their prescriptions on how to restart India's post-coronavirus economy. Read on.