Industry chamber Confederation of Indian Industry (CII) has laid out a 10-point road map to revive growth and navigate the challenges of loss of lives and livelihoods posed by the COVID-19 global pandemic that has forced countries across the world to reset their growth paths. CII’s new theme for 2020-21 ‘Building India for a New World: Lives, Livelihood, Growth’ was unveiled by the newly elected president Uday Kotak at a press conference held on a virtual platform on June 4.
Emphasising on the imperative to bring back growth, the president of the 125-year old organisation said, “Growth is a necessity that should lead to the creation of more jobs while CII works as a knowledge partner with the government for building self-reliant and competitive India that is deeply engaged with the world.”
COVID-19 has changed the status quo of the world and there was a need to focus on managing growth, lives and livelihoods while considering the challenges associated with life after COVID-19 Kotak said while presenting the 10-point roadmap to revive growth in the post-COVID-19 world. “We are in uncharted territories and are grappling to find new ways to brave the changes. But we are confident of the resilience of the Indian industry and its innovative skills to beat every such challenge,” he said.
In addition to these challenges, Kotak said that India will have new governance standards driven by a digital world. The industry would have to work with its vendors, especially with micro, small and medium enterprises (MSMEs) to ensure that progress is across the value chain. Hence, the industry has a major role to play along with the government in bringing inclusive and sustainable growth back.
Referring to Prime Minister Narendra Modi’s clarion call at the CII AGM to accord importance to five ‘I’s’ namely intent, inclusion, investment, infrastructure and innovation, the new CII president said CII’s work through the course of the year, and beyond, will be guided by 10 lenses enumerated above and will be focused towards finding optimum solutions to the challenges that lie ahead.
CII’s 10-Point Growth Roadmap
Protecting Lives and Livelihoods India, like many countries, was facing the challenge of saving lives and livelihoods. As India restarts, centre, state and local authorities must work together to ramp up testing infrastructure along with robust identification of containment zones and an agile health and safety response to control the spread.
As 80 per cent of the employment was in the unorganised sector with no social security, addressing the protection of livelihoods will need measures to increase formalisation of employment through labour and regulatory reforms, which would also encourage businesses to move towards the formal sector.
The government had announced that labour reforms would be brought in the coming days. Some states have already announced new labour laws in the states. The industry would need to work in partnership to help create more jobs while bringing in more of the workforce into the formal sector.
Prioritisation of Healthcare and Education
The pandemic heightened the need for a robust healthcare system on the same strategic priority as defence. India’s public health spending at 1.3 per cent of GDP certainly called for higher investment in public health. A long-term strategy of dealing with future pandemics through high-quality preventive healthcare focus on nutrition, sanitation and hygiene was required. India had a tremendous shortage of healthcare professionals at all levels. Education played a key role in achieving the required levels of standards in the delivery of healthcare, nutrition and hygiene.
Given the vast expanse of India and penetration of broadband connectivity, the e-healthcare and e-education interventions alongside the traditional methods of delivery could play a very vital role here.
The increase in the incidence and the intensity of natural calamities, locust attacks and spread of a disease called for maintaining harmony with nature. COVID-19 had shown us that climate change was for real and that industrial activity was an important contributor to it. Although India was at the forefront of climate change mitigation measures, the country would need to deepen the work and accord attention to sustainability in all economic activities. This was one area that CII was thoroughly engaged in and had helped industry adopt sustainable business operations be it in energy usage and conservation, water use and emissions through its centres of excellence.
Fiscal Deficit and Financial Stability
Government spending was supporting the economy over the last few years. For substantive economic recovery, government spending would be crucial. However, this would mean higher fiscal deficit and rising public debt, which would run the risk of rating downgrades and flight of capital besides leaving the currency vulnerable. Financial stability should also be an important factor while deciding the fiscal stance. Finding the fine balance will be of utmost importance at this crucial juncture as various stressed sectors of the economy would look for relief and stimulus packages.
Distribution of Economic Pain
The pandemic had caused significant loss to the economic systems including individuals and businesses, governments and the financial sector. While the first loss was taken by individuals and businesses, the government would need to bear the heavy burden of losses by stepping in as a key buffer. A battered industry would need government support in many forms, including investment-friendly policies that will drive demand and measures to help tide over the liquidity crisis.
Role of Digital and Physical
The shift to digital during the pandemic from physical will have a lasting impact on the post-COVID-19 times in terms of consumer behaviour. As industry find new business models, the role of science and technology became important. This tilt in favour of the digital also had the potential to widen the rural versus urban divide. The rural population is less skilled to participate in an economy with higher digital components and bringing digital skills to rural India was key to enhancing rural jobs. The bright side was that connectivity to hinterlands through telecom and digital services was growing significantly and this could be built upon to work on a more inclusive agenda.
Future of Jobs and Social Security
The post-COVID-19 world was likely to see some transformational changes in the context of jobs in a typical sense. CII would work closely with the government to provide incentives and facilitation to companies wanting to shift their manufacturing operations out of China as part of their de-risking strategy. This would help India develop as a manufacturing hub for the world. Besides, front-loading of the National Infrastructure Pipeline (NIP) would not only create demand for industries like steel and cement but will also provide jobs. The government’s focus on enhancing agriculture infrastructure, linking farm produce to markets by Agricultural Produce Market Committee (APMC) reforms will also help increase farm incomes and livelihoods.
For the first time in India, reverse migration was experienced with migrant workers going back. The industry should be encouraged to set up operations in the rural hinterland. The reforms announced in the minerals and mining sector should be expedited as most mining projects were in rural areas. Similarly, the development of agro-based clusters could be expedited in rural areas. A vibrant rural industrial sector would also help de-risk the impact of the pandemic on economic activities as the spread of COVID-19 is far less in rural areas.
Further, the industry and government should make available amenities in terms of housing, education and healthcare for workers who chose to come to the cities to work.
Four Levers of Growth
Out of the four engines of growth, consumption, investment, net exports and government spending, the economy has been primarily growing on government expenditure. This is not sustainable as the fiscal situation is under pressure. Hence, it is essential to re-start the other engines of the economy. Given demand uncertainties, private investment remains a challenge. Exports need a quantum jump and integration with global and regional value chains is important besides being competitive.
In this scenario, CII will continuously deliberate on how the private sector can play a role in igniting the growth engines of private investments, exports and the forces of entrepreneurship.
Getting growth back was essential to protect as well as generate jobs and livelihoods. CII would work intensely and closely with all stakeholders to bring back investments. Government spending in public infrastructure and direct benefits cash transfers may help boost demand initially but there was a need to find ways to sustain demand particularly in such uncertain times when consumers tend to save and get risk-averse. The need of the hour was for the government and industry to work together to return to a sustainable growth path.