India Needs Calibrated Economic Reconstruction Post-Covid-19: Finance Ministry
It’s critical to re-orient India’s policy towards calibrated reconstruction of the economy, and emphasise on improving areas such as supply chain, healthcare, among other sectors, the Finance Ministry has said.
The world, post Covid-19, will be different with structural changes in production, consumption and work patterns, the ministry said in its monthly economic report, adding India needs specific attention on:
- Agrarian supply chains: Policy priority for building sustainable agrarian supply chains to increase farmer incomes.
- Factor markets: Wide-ranging structural reforms needed in land, legal, labour and capital markets to reverse the slowdown in manufacturing and to boost risk appetite.
- Infrastructure: Push to targeted infrastructure projects under the National Infrastructure Pipeline to reignite the manufacturing sector.
- Information and communication technology: Upscaling Digital India at an unrivalled pace to make services sector resilient.
- Startups: Capitalising ‘Start-up India’ programme to unlock India’s entrepreneurial energies.
- Global Value Chain: Re-aligning policy incentives in favour of labour-intensive export sectors. Strengthen area of generic drugs and pharmaceuticals exports, and regain its market share in active pharmaceutical ingredients.
- Financial Inclusion: Widespread deployment of online and offline digital payment acceptance infrastructure, especially in remote areas, to unleash the potential of financial inclusion in digitised post-Covid-19 world. Expanding digital retail space to gradually regain the pre-Covid-19 consumption momentum.
- Skilling: Moving away from fixed job roles, and promoting role flexibility in the workforce will enable businesses to better meet post-pandemic challenges. Skilling, upskilling and reskilling of the labour force to help adapt to changing business environment.
- Healthcare: Building a preventive healthcare ecosystem to provide the much-needed stimulus to economic activity by creating more employment and mitigating labour productivity losses.
“Progress in these areas will sustainably boost economic growth in years to come,” the report said.
A high contraction in India’s GDP in the quarter ended June, the report said, resulted from the stringent lockdown. India enforced the most stringent lockdown as pointed out in the Government Response Stringency Index developed by Oxford University, the report said. India’s GDP contracted the most among countries of its size and other advanced countries by 23.9% in April-June.
India’s Bright Spot
The report states that agricultural sector continues to remain a “bright and resilient spot” aided by a healthy monsoon.
The cumulative monsoon rainfall was 9.2% above the long-period average up to Sep. 2. A bumper kharif harvest—that contributes one-third of gross value addition in agriculture in the third quarter—will provide the much-needed boost to GDP in 2020-21, the report said.