Even with a GDP growth projection of 1.2% and more than 1 lakh active Coronavirus cases, India is being hailed as one of the strongest economies in this pandemic. However, we have seen how unprecedented changes can be in these grim times. Are our plans good enough for the current crisis or are they long-lasting? Are we ignoring sustainability?
The Great Indian Stimulus
The latest in the series of efforts taken by the government for bringing the economy back on track was pushing states to relax labour laws and boost production in factories. 10 states have increased working hours from 8 to 12 hours. Strong measures by UP and MP are being hotly debated. These states have proposed abolishing more than 35 laws except for minimal provisions such as safety-related provisions, timely payment of wages, minimum wages and provisions related to women and children.
Recently, the government had announced a Rs.20 lakh crore stimulus package, which is the highest of all developing countries at 10% of GDP. It includes a plethora of measures for MSMEs, agriculture, migrant workers and street vendors, energy and other sectors. The RBI also has a share of 8.01 lakh crore in the package, which is dedicated to injecting liquidity through open market operations and other strong measures.
Even at 1.2% India is the only major economy other than China which isn’t poised to shrink this year. Giants like the US, UK, Japan have dismal projections of less than -4%.
A Step Back
India was going through a rough patch even before the lockdown, with a worrisome growth rate of around 4%. In late 2019, the Finance Minister had announced a slew of reforms such as an upfront capital infusion of Rs.70,000 into public sector banks, pushing FDI in retail upto 100%, merging of major public sector banks, and a corporation tax cut of around 5%, effectively.
Whether all of these measures work is a different question.
However, a highly ignored question at the moment is — How sustainable are the results of any of these efforts?
The Real Great “Depression”
It is 2020, and yet, there has hardly been any effort by the government to help the atmosphere of rising anxiety and depression due to the lockdown. India had seen a 20% rise in mental illness cases up till last month, and those are only the reported and recorded ones. As per a WHO estimate, depression and anxiety cost the world economy US$ 1 trillion in lost productivity every year. Numbers like these hardly account for undetected and untreated cases amongst lower classes and unorganised labour. If we are still treating mental health as a secondary concern, it is probably because of the lack of research and solid data proving its effects on actual productivity in India. Lack of research further fuels lack of understanding and erodes the need for research, thus creating a cycle of helplessness. While people like me and the ones reading this are riding the wave of mental health activism and awareness, it hasn’t reached the mass majority.
With the labour law reforms taking back health-related obligations of employers, labour health stands to be neglected even more. It makes little sense in the time of a precarious health situation which should instead increase healthcare for workers, or we risk losing productivity to health problems in the long run.
Learning From South Korea and 2008
After the 2008 recession, South Korea had dedicated a massive 80% of its fiscal stimulus plan to green projects. In 2009, it announced huge investments in clean technologies, creating an estimated one million new jobs and a clean-tech export industry. Korea’s early bounce-back from the crisis is attributed to its green route. The US bailout of GM and Chrysler in 2008 had made these auto companies invest in energy-efficient fleets, and the industry came out much more competitive after it. Instead of just rebuilding, we also need to look at building anew.
Even before the pandemic, power demand was growing at its slowest pace in six years. With non-renewable energy industries being badly hit by the crisis and the effect of an abrupt dip in pollution levels starkly visible in the air, it is our chance to follow Korea’s model. Demand for electric vehicles can be expected to rise in the times to come, and renewable energy costs are already lower. A NITI Aayog analysis has shown that if lithium-ion batteries are manufactured in India, the cost of electric vehicles can go down significantly. This is just one example of a green economy opening up fresher avenues for employment and growth.
The Sustainable Road
It is time to realize that India always had cheaper labour than China, and the reasons we couldn’t attract investment and manufacturing in the past have to be more than labour cost. In a more sustainability-focused future, we need to turn our focus to long-term well-being of our people and our environment. The glorious privatization project which was in the works before the pandemic has a chance with diversion into green industries. It is time to go beyond numbers and think about qualitative welfare and well-being in a world doomed into despair.
It is perhaps time to look at Larry Elliot, who holds the view that economics cannot be reduced to mechanisms operated by rationally thinking people, and that “..perhaps it is time to look to the Romantics for what lies ahead”.
Snehal is Columnist at GGI.
She is a writer, poet, music aficionado, Oxford comma proponent, and a lot of other things. She also writes on personal finance for 'Qrius Creative Labs'. She has worked as a copywriter, content writer, scriptwriter, creative strategist, and direction assistant at multiple organisations in the past.
Snehal is a graduate from the Bachelor in Mass Media, Advertising from St.Xavier's College, Bombay.