Reinventing the Indian Economy
Reimagining and reinventing the Indian economy
WHY IN NEWS:
‘India needs to minimise the damage caused by the pandemic while rebooting the country by exploiting new opportunities unleashed by evolving business scenarios’
SYLLABUS COVERED: GS 3: Economy
For MAINS can you prepare an socio-economic action plan or a chart of a district as a DM for post COVID management scenario . This article will drench you with hope and solutions . Let us dive in !
REINVENTING THE INDIAN ECONOMY
- CONTRACTION : The significant reduction in domestic demand caused by the nationwide lockdown has pushed the economy towards contraction in the first quarter of 2020-21.
- CREDIT AVAILABILITY : The stimulus package can help revive businesses, which are finding it difficult to operate without adequate availability of credit.
- LIQUIDITY CRUNCH : This is especially true for India’s 60,000-odd start-ups, which are facing an acute liquidity crunch.
- JOBLESS MARKETS : The situation presents an opportunity to take bold action to promote investments, protect existing jobs and create new jobs.
A lot more needs to be done, however, to resuscitate the country’s growth engine.
India needs is a two-pronged strategy to successfully navigate the current crisis.
- First, minimise the damage caused by the COVID-19 and clear a path to recovery.
- Second, rebooting and reimagining India by promptly exploiting new opportunities unleashed by evolving business scenarios.
The strategy should address four major economic cylinders:
a) Big Business Houses which are a major contributor to GDP and large employment generators.
b) MSMEs which are the lifeline of the country, generating wealth for the middle class.
c) Start-ups, which bring innovation and transformation to our country’s economy.
d) Our Indian brothers and sisters living abroad.
1. KICK START : Big business houses should be supported by the government to reopen their operations by way of tax incentives.
2. MONETARY POLICY : The RBI should consider single one-time window for restructuring business loans, as required, by all banks.
3. MANUFACTURING KIT : The Centre can prepare a five-year plan on getting at least 60% of those companies, desiring to move manufacturing out of China to India.
4. BEST TRADING PRACTISES : Making India a global trading hub — devise an incentive regime for companies setting up global trading operations from India.
5. INDUSTRIAL HUBS : The States should think of establishing self-contained “industrial cities” that earmark space for manufacturing, commercial, educational, residential and social infrastructure.
6. CORE SECTOR REFORMS : The 10 sectors identified by the government fit into the Make in India campaign — electrical, pharmaceuticals, medical devices, automotive, mining, electronics, heavy engineering, renewable energy, food processing, chemicals and textiles.
7. LEVERAGING TECHNOLOGY : The government can also consider giving impetus to “Deep Tech”-leveraged businesses — blockchain, robotics, AI, machine learning, augmented reality, big data analytics, cyber security, etc.
8. DRIVING INNOVATION : Several of them are in pre-Angel or Angel-Funding stages and are under significant pressure to stay afloat in view of a lack of adequate liquidity.
9. SPECIAL CARE : The auto industry which contributes significantly to GDP (nearly 9%) deserves special treatment.
10. PLUG-AND-PLAY MODEL: Maharashtra has created a turn key ‘plug-and-play’ model for foreign investors.
11.LAND REFORMS : Land should be made available for projects with all necessary pre-clearances — at Centre’s level (including Environmental), State’s and Municipal dispensations.
11. LABOUR REFORMS : Reforms in labour laws do not only mean permission to hire and fire. Strictly enforcement of discipline within the factory premises and demand higher productivity is important.
12. FDI : Investments of NRIs and OCIs in India should be treated on par with those of Resident Indians as regards interest and dividend repatriation and management control of Indian companies.
- TAX HEAVEN : The government may also consider providing tax exemption on passive income like dividends, interest , mutual funds etc.
- CAPITAL GAINS : Also, capital gains should be taxed at 50% of applicable rates for next 3 years.
- ROYALTIES : We need to reconsider the approach to taxing interest, dividends and royalty paid to overseas investors.
- CAPITALIZATION NORMS : The government could consider a 3 to 5-year moratorium on the applicability of thin capitalization norms .
- OFF SHORE INVESTMENT : An off-shore investment centre like Singapore can be opened in Mumbai, where Indian domestic laws and taxation will not be applicable.