Bold measures are needed for Indian economy to recover
London, United Kingdom:
Global management consultancy Arthur D. Little (ADL), today released a new report that aims to provide a realistic picture of the economic impact COVID-19 has had on India, and what is needed to rebuild a dynamic and equitable economy. The report, titled India: Surmounting the economic challenges posed by COVID-19,provides a 10-point program to revive and power India’s post-COVID-19 economy.
The report states that as India starts to open for business, the worst of COVID-19’s impact will be felt by the country’s most vulnerable in terms of job loss, poverty increases and reduced per capita income, all of which will be reflected in a steep decline in GDP. Up to 135 million jobs could be lost and around 120 million people could be pushed into poverty, all of which will reduce consumer income, spending and savings.
“India is headed towards a W-shaped economic recovery with a potential GDP contraction of 10.8 percent in FY21,” says Barnik Chitran Maitra, lead author of the report and Managing Partner of Arthur D. Little India and South Asia.“India faces a potential loss of USD 1 trillion and this report seeks to inform policy makers about the range of measures they can take to avert this disaster, while also protecting the neediest people.
“For India to reach its USD 5 trillion vision, a radical economic approach is needed, centered on immediate stimulus and structural reforms. It is encouraging to see the prime minister’s visionary, Atmanirbhar Bharat Abhiyan, already putting plans in place for this new approach.”
Thomas Kuruvilla, Global Board Member and Managing Partner of Arthur D. Little Middle East ,says, “India has a unique window of opportunity to take advantage of a geostrategic realignment of the world order and strengthen its global investment corridors, particularly with the Middle East. The government should work with international investors to create strategic manufacturing, infrastructure and technology assets focused on serving domestic customers and fulfilling global demand. We are aware of many investors with excess funds that are keen on India; we need transparent, consistent and predictable regulation to attract them.”
Ashwini Deshpande, Professor of Economics at Ashoka and Director of the Centre for Economic Data and Analysis (CEDA), as well as one of the co-authors of a counterpoint included in the report, adds, “The government recovery program needs to provide a comprehensive safety net for vulnerable sections and support micro, small and medium enterprises. Clear policy announcements, comprehensive safety nets and decentralized systems of governance will be essential to not only flatten the curve, but also reverse the economic trajectory.”
While COVID-19 presents a grave threat to India’s economic potential, it equally provides an opportunity to revisit all the obstacles that lie in its path to greater prosperity. The report proposes a bold 10-point program which suggests an initial outlay of USD 280 billion (roughly 10 percent of India’s GDP). This will help jumpstart the economy, manage the recovery and secure a sustainable economic future for India’s citizens.