Why in news?
This article is written by Former Prime Minister Dr Manmohan Singh.
He listed following issues India is facing today:
- Trinity of social disharmony, economic slowdown and a global health epidemic.
- Social unrest and economic ruin are self-inflicted while the health contagion of COVID-19 disease, caused by the novel coronavirus, is an external shock.
- Communal tensions have been stoked and flames of religious intolerance fanned by unruly sections of our society, including the political class.
- University campuses, public places and private homes are bearing the brunt of communal outbursts of violence, reminiscent of the dark periods in India’s history.
- Institutions of law and order have abandoned their dharma to protect citizens.
- Institutions of justice and the fourth pillar of democracy, the media, have also failed us.
- India has slid rapidly from being a global showcase of a model of economic development through liberal democratic methods to a strife ridden majoritarian state in economic despair.
He listed following reasons for above issues.
- lack of new investment by the private sector.
- Investors, industrialists and entrepreneurs are unwilling to undertake new projects and have lost their risk appetite.
- Social harmony, the bedrock of economic development, is now under peril.
- Lack of investment means lack of jobs and incomes, which, in turn, means lack of consumption and demand in the economy.
- A lack of demand will only further suppress private investments.
- This is the vicious cycle that our economy is stuck in.
- Adding to these self-inflicted woes is the real threat of the COVID-19 epidemic
Dealing with COVID-19
- economic impact of COVID-19 will be very big.
- China’s economy may even contract for the first time since 1970’s cultural revolution
- This is sure to impact India’s economic situation too
- Millions of small and medium businesses in India that account for more than three-quarters of all formal employment are part of the global supply chain.
- In such an integrated global economy, the COVID-19 crisis can further slow India’s GDP growth by half to one percentage point, other things being constant.
- India’s economic growth was already tepid and this external health shock is bound to make things much worse.
Bringing in reforms
- First, it should focus all energies and efforts on containing the COVID-19 threat and prepare adequately.
- Two, it should withdraw or amend the Citizenship Act, end the toxic social climate and foster national unity.
- Three, it should put together a detailed and meticulous fiscal stimulus plan to boost consumption demand and revive the economy.
- Prime Minister Narendra Modi must convince the nation, not merely through words but by deeds, that he is cognisant of the dangers we face and reassure the nation that he can help us tide over this as smoothly as we can.
- He must immediately provide details of the contingency plan for the threat of the COVID-19 scare.
Opportunities with India
- Virus contagion and the slowing down of China can potentially open up an opportunity for India to unleash second -generation reforms to become a larger player in the global economy and vastly improve prosperity levels for hundreds of millions of Indians.