India looking at renewal, not revival, of the economy through major structural reforms
Amitabh Kant, CEO, NITI Ayog
5 May 2020, New Delhi
Amitabh Kant, CEO, NITI Ayog has told industrialists and professionals that the government is aiming at a transformation of Indian economy after Covid crisis and not merely its revival. “The government is working on a package of structural reforms across sunrise sectors to convert India into a global manufacturing and exporting hub,” he said.
Kant addressed an interactive online session organized by All India Management Association (AIMA) on post-Covid scenario for Indian economy. The session was chaired by AIMA President, Sanjay Kirloskar and many eminent business leaders interacted with NITI Ayog CEO. They included Rajive Kaul, Sunil Kant Munjal, Preetha Reddy, Harsh Pati Singhania and CK Ranganthan. More than 800 participants logged into the session from all over India.
Kant listed healthcare, education, mobility, genomics, AI, 5G network, fintech and manufacturing as high priority areas for rapid and radical structural reforms. “These are the new areas of growth where disruption is inevitable and where speed, scale and size are required,” he said. He identified education for a particularly rapid transformation. “The crisis has created a great opportunity to make our education online in six months. It will be the biggest quantum jump we will make,” he said.
Manufacturing would be a key focus area for the government in the post-Covid period, as India wants to take advantage of the supply chain disruptions in China, NITI Ayog CEO said.
According to him, the government has contacted about 1450 companies across the world for manufacturing in India but facilities need to be created for global manufacturers to invest quickly and move forward. The plan includes creating 2-3 autonomous zones without regular labour and land laws. India also needs to make its ports more efficient, he said.
To promote manufacturing, Kant suggested that the states should fix electricity and land rates which would not escalate for the next 25 years. “Manufacturing is penalized to subsidize agriculture,” he said. He also suggested that for the next three years, every single tender of the government must be given only to Indian companies. “India has to beg, borrow, steal technology from abroad. China did that and that is why it could produce at low costs,” Kant said.
On the issue of MSMEs, Kant said that the unorganized sector can be allowed to become organized in a dignified way by making the organized sector less regulated and tempering labour rules and employers’ contributions.
To promote startup economy, the government will set up seven groups to look at technology to drive the new India led by startups, Kant said. These groups will work on reforms in areas such as digital payments, farm to fork, healthcare, education, AI etc.
On the impact of Covid and reviving the economy, Kant said that India’s GDP will definitely take a hit but India has to protect both the life and the livelihood. It would not be possible to revive economy without social distancing and other health safeguards, he remarked. “The countries that tried to protect their economies had both life and the economy infected,” he remarked.
Kant said that India had flattened the curve and contained both the infections and the deaths at extremely low levels by imposing the most stringent lockdowns in the world. He pointed out that India’s share of the global Covid fatalities was only 0.6% and its infection rate had actually gone down to 3.4% after increasing testing from the early testing level of 4.7%.
According to Kant, India’s commercial hubs were facing a bad situation and until the virus was contained there, the economy would not return to normal. “Without a vaccine, full-fledged economic activity is very difficult,” he said.