Even as the country was seeing visions of a return to normal growth from the slowdown that had a crippling effect on the economy in recent months, the outbreak of COVID-19 or coronavirus has sent shivers down the spine of much of the world including India. With no cure in sight from this affliction typified by high fever, running nose and cough, and an estimated 5,000 plus deaths and over 1,00,000 cases of attack, the source of it, Wuhan in China, and much of the world is groping as never before. It is not merely the extent of it so far but the potential spread in coming months that is the cause of worldwide panic. Yet, there are countries in Europe and the world’s lone superpower, the US, that are not realising the gravity of it to the full extent. India’s decision to stop issuing visas to tourists from the high risk countries for a month was received with shock. Many called it an over-reaction, but the last word on what is now recognised by the World Health Organisation as a pandemic is yet to be said. Exhortations to the public to follow basic hygiene standards and sanitary dos and don’ts are being heeded more seriously than before.
The much-applauded annual event in India, the Indian Premier League (IPL) of the game of cricket has been suspended until April 15 and attendance at international cricket matches and other sporting events has thinned to a trickle. While the fury of the pandemic has settled down somewhat in China, other countries like Italy, the US, France, Iran, Spain and Germany have overtaken China in number of new cases. The economic costs of the pandemic has been incalculably high. Stock markets across the world including India have crashed, wiping out much of the net worth of the world’s richest even as it affected people across the board. Companies are advising their staff to work from home even as international gatherings have thinned out. Religious congregations are strongly hit. There is a great danger that world economic growth could take a beating due to the virus as China accounts for 12 per cent of world's GDP growth rate. There could be a severe indirect impact on many producers (outside China) who source their raw materials or components from China.
Economists say the disruption caused by the virus in China could pave way for more foreign investments in emerging economies like India, Bangladesh, and Vietnam as the world looks to reduce dependency on China, the largest manufacturing hub in the world. Experts feel that India has a good chance of becoming an attractive manufacturing hub given the present situation, provided the government tweaks some of its trade policies to bring down commodity prices. According to analytics firm Dun & Bradstreet, at least 51,000, including 163 Fortune 1,000 companies around the world, have one or more direct (or tier-1) suppliers in the impacted region (China’s Hubei province) and at least five million companies have one or more tier-2 suppliers in and around the epicentre of the outbreak in China.
Consequently, while India is not immune to cataclysmic changes due to the adverse effect of coronavirus, there is also a silver lining to the dark clouds if this country responds to the challenges that the pandemic has thrown up. One hopes the Narendra Modi government will rise to the occasion and combat the situation with positivity and foresight. The Indian small scale sector has been severely hit by Chinese tactic of flooding the markets with cheap but often sub-standard products. With production in Chinese factories affected grievously, India should look to reviving the small scale sector with imaginative governmental policies and display of enterprise by Indian entrepreneurs. Public-private partnerships must pick up opportunities with the right motivation and dynamism. The Indian pharma industry is dependent on Chinese imports to make medicines — the APIs (active pharma ingredients) come from China. The $30 billion domestic smartphone market, world’s second largest now, will see major disruptions as it is heavily dependent on imports. On the flip side, these facts could further cripple India’s ailing industrial sector. India is indeed at the crossroads. The current slide must give way to a new burning desire to fill any vacuum that may be created by the effect of coronavirus on the Chinese manufacturers.
