The Confederation of Indian Industry (CII) has laid out a 10-point road map to revive growth and navigate the challenges of loss of lives and livelihoods posed by the global pandemic Covid 19 that has forced countries across the world to reset their growth paths. CII’s new theme for 2020- 21 Building India for a New World: Lives, Livelihood, Growth was unveiled by the newly elected president Uday Kotak in an online meeting on Thursday.
Emphasising on the imperative to bring back growth, the CII president said, “Growth is a necessity that should lead to creation of more jobs while CII works as a knowledge partner with the Government for building self-reliant and competitive India that is deeply engaged with the World”. CII’s press conference comes a day after its special Annual General Meeting held, for the first time, on a virtual platform, as CII commemorates and celebrates 125 years. Prime Minister Narendra Modi, who was the chief guest, inaugurated the AGM and laid out his expectations from CII and industry to get back growth.
COVID-19 has changed the status quo of the World and we need to focus our energies to manage growth, lives and livelihoods while considering the challenges associated with life after COVID Kotak said, while presenting the following 10-point roadmap to revive growth in the post Covid world. “We are in uncharted territories and are grappling to find new ways to brave the changes. But we are confident of the resilience of Indian industry and its innovative skills to beat every such challenge,” he said.
1.Protecting lives and livelihoods
India, like many countries, is facing the challenge of saving lives and livelihoods. As India restarts, Centre, State and local authorities must work together to ramp up testing infrastructure along with robust identification of containment zones and an agile health and safety response to control the spread.
As 80% of the employment is in unorganised sector with no social security, addressing the protection of livelihoods will need measures to increase formalisation of employment through labour and regulatory reforms which would also encourage businesses to move towards formal sector.
The government has announced that labour reforms would be brought in the coming days. Some states have already announced new labour laws in the states. Industry will need to work in partnership to help create more jobs while bringing in more of the workforce under formal sector.
2. Prioritisation of Healthcare and Education:
The pandemic heighted the need for a robust healthcare system on the same strategic priority as defence. India’s public health spending at 1.3% of GDP calls certainly for higher investment in public health. A long-term strategy of dealing with future pandemics through high quality preventive healthcare, focus on nutrition, sanitation and hygiene needs to be established. India has tremendous shortage of healthcare professionals at all levels. Education plays a key role in achieving the required levels of standards in delivery of healthcare, nutrition and hygiene.
Given the vast expanse of India and penetration of broadband connectivity, the e- healthcare and e-education interventions alongside the traditional methods of delivery, can play a very vital role.
3. Mother nature
The increase in the incidence and the intensity of natural calamities, locus attacks, and spread of disease calls for maintaining harmony with nature. COVID has shown us that the climate change is for real and that industrial activity is an important contributor to climate change. India has been at the forefront of climate change mitigating measures; however, we would need to deepen our work and accord attention to sustainability in all our economic activities. This is one area that CII has been engaged in deeply in many of our activities as we have helped industry adopt sustainable business operations be it in energy usage and conservation, water use and emissions through our Centres of Excellence.
4. Fiscal deficit and financial stability
Government spending has been supporting the economy over the last few years. For substantive economic recovery, government spending would be crucial. However, this would mean higher fiscal deficit and rising public debt which would run the risk of rating downgrades and flight of capital besides leaving the currency vulnerable. Financial stability should also be an important factor while deciding the fiscal stance. Finding the fine balance will be of utmost importance at this crucial juncture as various stressed sectors of the economy will look for relief and stimulus packages.
5. Distribution of economic pain
The pandemic has caused significant loss to the economic systems including individual & businesses, Governments and the financial sector. While the first loss is taken by individuals and businesses, the government will need bear the heavy burden of losses by stepping in as a key buffer. A battered industry will need support from government in many forms, including investment friendly policies that will drive demand and measures to help tide over the liquidity crisis.
6. Role of digital and physical
The shift to digital during COVID from physical will have a lasting impact in the post COVID times in terms of consumer behaviour. As industry find new business models, the role of Science and Technology becomes important. This tilt in favour of the digital, also has the potential to widen the rural versus urban divide. The rural population is less skilled to participate in an economy with higher digital component and bringing digital skills to rural India is key to enhance rural jobs. The bright side is that connectivity to hinterlands through the telecom and digital services is growing significantly and this can be built upon to work on a more inclusive agenda.
7. Future of jobs and social security
The post COVID world is likely to see some transformational changes in the context of jobs in the typical sense.
CII will work closely with Government to provide incentives and facilitation to companies wanting to shift their manufacturing operations out of China as part of their de-risking strategy. This will help India develop as manufacturing hub for the world. In addition, front loading of the National Infrastructure pipeline will not only create demand for industries like steel and cement but will also provide jobs. Government’ focus on enhancing agriculture infrastructure, linking farm produce to markets by APMC reforms will also help increase farm incomes and livelihoods.
8. Rural-urban re-balance
For the first time in India, reverse migration was experienced with migrant workers going back. Industry should be encouraged to set up operations in the rural hinterland. The reforms announced in the minerals and mining sector should be expedited as most mining projects are in rural areas. Similarly, development of agro based clusters could be expedited in rural areas. A vibrant rural industrial sector will also de-risk the impact of COVID on economic activities as spread of COVID is far less in rural areas. Further, industry and government should make available amenities in terms of housing, education and healthcare for workers who chose to come to the cities to work.
9. Four levers for growth:
Out of the four engines of growth – consumption, investment, net exports and government spending, the economy has been primarily growing on government expenditure. This is not sustainable as the fiscal situation is under pressure. Hence, it is essential to restart the other engines of the economy. Given demand uncertainties, private investment remains a challenge. Exports need a quantum jump and to achieve this integration with global and regional value chains is important besides being competitive.
In this scenario, CII will continuously deliberate on how the private sector can play a role in igniting the growth engines of private investments, exports and the forces of entrepreneurship.
10. Getting growth back is non-negotiable Getting growth back is essential to protect as well as generate jobs and livelihoods. CII will work intensely and closely with all stakeholders to bring back investments. Government spending in public infrastructure and direct benefits cash transfers may help boost demand initially but we need to find ways to sustain demand particularly in such uncertain times when consumers tend to save and get risk averse. The need of the hour is for government and industry to work together to return to a sustainable growth path.
In addition to these challenges, Kotak said that India will have new Governance Standards driven by a Digital world. Industry will have to work with its vendors, especially with MSMEs to ensure that progress is across the value chain. Hence, Industry has a major role to play along with the Government in bringing inclusive and sustainable growth back.
As alluded by the Prime Minister at the CII Annual Session, CII would work as a knowledge partner for the Government to build India for a new world after COVID, Kotak said.
Referring to Prime Minister Modi’s clarion call at the CII AGM to accord importance to five “I”s namely intent, inclusion, investment, infrastructure and innovation, the new CII president said CII’s work through the course of the year, and beyond, will be guided by 10 lenses enumerated above and will be focused towards finding optimum solutions to the challenges that lie ahead.