India’s recovery should be the world’s priority

India’s crisis is of global consequence

India is a booming economy and the world’s largest democracy with world-class elite institutions. Paradoxically, we’re now bed-ridden because of breaks in the service provision of something as rudimentary as healthcare and service delivery. 

• India's share of the global GDP rose to 7.09 percent in 2019 when adjusted for purchasing power parity (PPP) and was projected to increase to 8.36 percent by 2026. 
• We reached a merchandise trade of $34 billion in March 2021 and stayed over $30 billion in April 2021.
• Economic indicators in automobile sales, electricity, consumption and more, points to a strong recovery after the plunging downturn in 2020.
• India is the fourth-largest energy consumer, heavily dependent on foreign imports to meet energy requirements.
• We’re also the world’s youngest country in terms of demographic dividends. Nearly 64% of the population is around working age. We then add 12 million to that, year on year.

We’ve churned out some of the world’s most brilliant business leaders in Microsoft, Google, IBM, etc. As well as doctors, engineers, scientists, and thinkers. We contribute to the economy of large political powers like the US and nations of the middle-east and Europe. In science, technology, innovation, travel & hospitality, telecom, manufacturing, and multiple other marquee industries, India has been a key contributor. Perched on globally significant economic dividend, we’ve been knocked off course because of the infection, complacency, a few setbacks in anticipating the second wave and its scourge, and planning that went awry. The magnitude of the setbacks has reached a stage where we need global help. 

Chaos as opportunity

Could the coronavirus lead to another set of big-bang reforms like those from 1991? Back then, there was an unleash of Indian entrepreneurial energies, giving consumers a variety of choices in consumption which changed the face of the Indian economy. Former governor of the RBI (India’s Central Bank ) & chairperson of the Economic Advisory to the PM, C Rangarajan argues:

• First, like India’s post-1990 economic strategy, we need to dismantle the blockers that exist in the individual economic industries. This time empowered with innovation, technology, and better governance.
• Second, the government will have to set up public investments to facilitate growth.
• Third, we need non-economic stimuli like discussion, peace, and social cohesion for support and consensus.

But how does one go about economic transformation when all efforts, resources, and energies are spent on relief and rehabilitation on survival mode? The fiscal or the institutional bandwidth to cope with the situation is constrained. 

The havoc in trade, foreign policy and geopolitical strategy

Zooming out further, let’s look at the havoc the virus wreaked on trade relations, foreign policy, and geopolitical affairs.

• With over 1.3 billion people, India accounts for one-sixth of the world population. The crisis cannot be contained within its borders. New viral strains could worsen the global health threat. 
• India’s lost economic productivity will hurt international trade and investment. We provide back-office staff for western Europe and the US. The US Chamber of Commerce is concerned that India’s downturn could create “a drag for the global economy.”
• For the UK, trade links with India are particularly crucial in the wake of Brexit.
• Regional primacy in the SAARC states cannot be maintained as we struggle for material aid and political influence.
• India’s position is shifting in the Indo-Pacific diplomacy, the Quad engagement, foreign direct investments, and industrial production. 
• Our strategies on defence and relationship with the neighbours need to be recalibrated.

Recovery from the bed of languishing

The focus now should be vaccination and recovering from this bed of languishing. Getting our act together is going to need more hands and heads from better-placed nations besides the finest minds within. We’re not paralyzed because of a financial meltdown or administrative corruption. Despite vaccine development, the second wave of coronavirus caught us napping probably because of our complacency, and super-spreader events. Certainly, something to learn from in the future. The inability to foresee a crisis like this hurt us. A great lesson learned for the future. We certainly will be better placed to effectively respond the next time around.

Global powerhouses are better equipped to help India recover. It is now a humanitarian crisis because of the nature of its impact on dimensions as rudimentary as health, economics, and international relations. This isn’t just about oximeters, vaccines, and PPE kits anymore. We need both adaptative and stimulus reforms in the action against COVID. From tech and innovation investments to education, healthcare, and job creation. 

There is huge potential for stimulus investments in the informal sector (81% of the Indian population). This sector is a collective of individual entrepreneurs from the “lower rung of the pyramid.” Making a living with their everyday small trade, this sector is supported by a brilliant but not powerful civil society to organize itself. 

Should support be offered, a resilient India would be more compassionate and resourceful to the world than the one we’re seeing now. The help that India needs is now, as an investment for a better future. Not immediately effective give and take. A weak and ailing India with its political, economic, social, and historical ties makes the world much poorer than what it is today. The world should prioritize and invest in India’s social, economic, and technological agendas.

It’s going to take the kind of work that wipes “every tear from every eye.”