Mitigating The Economic Effects of CoVID-19

COVID era is unprecedented and has caught governments and people unaware, worldwide. A new form of warfare has just begun. This may well be the form in of future conflicts. Not a single shot fired, no expenses, economy crippled, people have their faces covered and imprisoned. All the wealth accumulated is futile, all savings hold little relevance, people have been separated from people, technology has dominated means of communication.

Will the economy be impacted, well the answer is in the obvious. Is there a mitigation strategy, once again the answer is in the obvious.

It is time to fight the virus with vaccines and reach medical aid to geography at large. This is the time to step up and export vaccines to countries in need, health-care diplomacy.

It is time for the government to pump money into the industry and allow industry to bounce back. Defence is a monosomy, only the government can help revive, so hope lies on the government. How will the government do this?

The lockdown across must continue and IT/ITES professionals/consultants and those that can continue to work from home by effective use of technology must be encouraged to work from home, for longer duration, say October or so. Agriculture, Industry and essential services be allowed forthwith cautioning them with use of appropriate measures to allow them to bounce back soon, a free access to roads, transportation and logistics.

Time to exploit the anti-China sentiment that is growing across the world. Provide an alternative destination for investments, encourage JVs, bring in technologies, display forethought and vision as never before and infuse FDI into the Defence Sector with minimal hurdles. This is the time for appeasement of industry, time to revisit our FDI regulations, make changes to labour laws, allow 100% FDI with 100% Indian workforce.

The government may like to call the top 100 of industrialists listed in say the BSE and make them offers to take over few of the assets in public sector, like few DRDO labs, few DPSUs, all of the OFs and the Army Base Workshops and Base Repair Depots of IAF. This is time for consolidation, creating winning relationships in PPP mode and this way the government also makes money that they so very much need at this point in time.

Our Armed Forces may like to accept only India made products, even if they are costly, let us discard the defence finance dictated L-1 and follow what I call as cost to country. When we spend INR 100 to buy from abroad(so called L-1) we have lost INR 100 from our country. This money goes to make up for the jobs in the destination country, their economy, their well-being, their purchasing power, their industry and their supply chain. If however, an Indian company is L-2 and we spend INR 200 (assuming double the cost, which is not always the case) into the Indian supplier, this INR 200 goes into Indian industry, Indian jobs, Indian stomachs that are fed, Indian supply chain, Indian purchasing power, well-being of Indians. The multiple effect of INR 200 is somewhere between 3 to 4 times, as the money is put into circulation and the government also gains more than 50% of this through tax in various forms. Virtually while the government has made good at least 50%, it has also multiplied the value of this money in the Indian economy. Let us learn from CORONA; it is only “We” that are first responders to “Us” ; let us therefore strengthen “Us”.

The entire economy will be booming before Deepavali.

Author: Col. KV Kuber (Retd.)
An alumnus of the prestigious National Defence Academy and the Technical Staff College, super specialised in Electronic Warfare. Chief architect of the offset policy since its inception in 2005. He was an Advisor with NSIC and DRDO, and is presently CEO, Sugosha.