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Corona crisis and opportunity for India

By Dr. Sanjay Kumar | PUBLISHED: 24, Apr 2020, 11:48 am IST | UPDATED: 24, Apr 2020, 11:48 am IST

Corona crisis and opportunity for India
The world is reeling under Corona pandemic. Almost 2 lakh people have surrendered their lives. With just less than 700 casualties, India seems to be well safe, but is still awfully vulnerable to its spread at community level if the chain continues. So many theories are being floated for its spread, from animal carriage to its development in Wuhan laboratory in China. Sometimes even US and Canada are being projected as parallel culprits. Whatever the reality may be, it will certainly come out. But the way WHO and China is acting give ample reason for speculation. Today WHO has once again emphasized Corona to be an animal origin and not lab one. But how it spread into human beings is not clear. The theory of ‘inadvertent or planned escape’ of virus from a lab can not be ruled out completely. 
 
On 21nd of April ‘international crude prices for spot’ plummeted historically to negative. And this is perhaps more dangerous than corona. Never one could imagine even in his wild dream of such kind of happening. COVID-2019 has catapulted the well-established political, economic and societal relations to an unimaginable scale. The real impact is still unassessed but will certainly sink many economies to its nadir. A below 35 to 40 dollar crude per barrel is not sustainable and good enough for any economy. What does it mean? It means crude is even cheaper than a bread packet or water bottle. India is the third largest importer of crude and almost 85 percent of its needs are met through that means. The three big reservoirs of crude in the country is enough for 15 days running inventory. But then what will happen? Do you feel a cheaper crude will enhance its demand? No, absolutely not. The running cost of crude exploration coupled with the actual demand will dangerously put the whole chain meaningless. Except Aramco in UAE, no crude oil company will survive. Moreover, you can’t stop production at once so as to hedge its prices. The only way out is to drastically reduce its production to such a level that it can easily meet its actual cost plus marginal profit. 
 
Then what kind of opportunity does India have in such a scenario? Or realistically, has India any kind of fruitful opportunity. Let’s have a talk on future potential economy. China, almost at the threshold of becoming atop after corona and European states no longer keeping stronger and US certainly doing the worst, India has a real chance of getting benefitted. Whilst the geo-political scene bound to change for almost half a century, the globalization process of economy will certainly keep a low profile. The relevance of WTO, UNO and other related agencies will be put to questions. Twenty-five year journey of WTO will certainly take a halt. Labour and patent related issues will bother the world leaders. Keynesian model of economy will once again prevail as it happened during the great depression of 1930’s. Increased government expenditure with lower tax regime will come into operation for generating demand in the economy. To be honest enough, we have no other way out also. RBI has already started the process of cutting repo and reverse repo rate. It will go down further in the next two years. In US it is almost zero. Spending in health and social sectors will increase substantially. Employment generation would be the biggest challenge for the government. Arguably, the government is sitting on thorny fence where both sides are posing serious problems besides the challenge of GDP growth. World Bank has already projected a 1.1 percent Indian GDP growth for 2020-21 while may be negative for the entire world. The most interesting part of this recession is that it’s not economic but ‘social distancing through the method of de-globalization’. Wage cutting or halting in wage would be another option which government might employ to forward the benefits to the targeted population. It’s not an easy task for any kind of government to make plans for 130 crores of people. In fact, ideas shape the journey of history. We are currently standing at that point of journey. And we are fortunate enough to have a leadership of Modi. He has the mission and vision of shaping India’s future according to the needs of his era.
 
So, does it mean that India would be getting back to the socialistic model of economy coupled with a partial and intermittent mode of LPG model. It seems so. The task of employment generation in itself is the biggest socialistic challenge. Demand generation in economy will put India on LPG model briefly. A major boost up would be coming in the agriculture and rural sector. It is now almost certain that government would make a huge expenditure on this sector keeping its potential power of generating demands. And this is the most sustainable too. Almost 15 percent of GDP is fulfilled by agriculture. The task of becoming 5 trillion economy can’t be achieved without the proper contribution of this sector. China and US are way ahead of us. Only France, Germany and Japan can be catched up in the next five year. Therefore, the Gandhian concept of rural economy is still very much relevant for us. The real demand still lies in rural India. 
 
The pandemic of corona has opened up many avenues for us. The start ups enterprise are bound to rise. Medical and health facilities will definitely see an upswing drastically. Investment in this core area is very much related with the overall concept of Human Development Index. At present we are pathetically lagging behind. With the world’s biggest ‘Ayushmaan Yojna’, the government has already shown its commitment to serve the poor and devoid section of the society. ‘Ujawalla Yojna’ is another venture where India could increase its commitment. But the real strength lies in the fact of our being the world’s biggest democratic country. Herein lies the real chance of post-corona opportunity. The obnoxious and clandestine design of China has put other countries in suspicion. They are no more interested in investing in China. In such a scenario, India would be a natural and fruitful destination for foreign investments. Offices of big companies, situated at China might be shifting to India in coming years. One potential benefit of this pandemic could be the reverse migration of Indian work-force keeping the blatant fact of US and European countries failing in fighting with Corona as expected initially because of their world class health system and facilities. In fact, they have emerged as the most vulnerable and susceptible locations on the globe. In contrast, the Indian leadership has shown utmost maturity and perseverance to testify its longevity. For investment, the stability of governmental and tax structure means a lot, which India fulfills naturally. FDI rules are being made to suit to the needs of the companies. 
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