The Prime Minister’s address on Tuesday extending the lockdown till May 3 did not offer any new incentive for the industrial and business sectors. While the extension was widely welcomed, there was disappointment that Modi failed to offer succour to the hard-hit small, medium and big businesses.
Without a generous package for retail and wholesale businesses and various sectors of manufacturing, it may be hard to protect these from the losses due to the severe disruption caused by the coronavirus.
A task force formed a couple of weeks ago to consider a comprehensive economic package has as yet not come up with its recommendations. Given that the extended lockdown is due to end early next month in most geographies which are free from the virus, a timely help by way of tax concessions and/or other financial incentives will help revive these labour-intensive sectors of the economy. Tax revenues are dependent on the health of the economy which now needs a generous financial package to get back on its feet.
On Wednesday, the government lifted the lockdown for select sections of the economy, allowing e-commerce companies, trucking of essential and non-essential goods, port and air cargo operations to resume functioning from April 20. Factories in designated industrial sectors, too, will be allowed to work provided they take abundant precautions regarding social distancing and house their workers in nearby premises.
In view of the harvest season for the standing rabi crops, farm sector has been given relaxations. Food processing, mining, packaging, oil and gas and refineries too will get back to work on April 20. Daily workers too can go back to work on farms. All this will help a partial revival of the shutdown economy.
Meanwhile, all authoritative assessments of growth in the current financial year have vastly scaled it down. The IMF reckons that the Indian economy will grow by a mere 1.9 per cent while the World Bank puts it a little higher at 2.8 percent.
Given that the current crisis is building into the worst global recession since the 1930s depression, the IMF has predicted a three per cent dip in the world domestic product.
Some economies such as the US will contract more than others. Indeed, the Indian economy may be better placed to absorb the disruption shock than most developed economies.
Even China is staring at a sharp drop in growth following the pandemic. Indeed, post-pandemic major national economies would seriously consider reducing reliance on China for vital manufacturing goods and services. Reordering of the global economic order due to the pandemic is inevitable. The onus is on the Indian economic planners to make the best of the opportunity to grow its own manufacturing base.
