Prime Minister Narendra Modi’s strong pitch of India being a trusted economic destination should be the guiding light in times to come. The trust factor in the Indian economy will not only ensure resilience for creating more foreign economic opportunities but also self-sustenance.
Earlier, while addressing the US-India Strategic Partnership Forum through video conferencing, PM Modi had spoken of India’s trust factor. He has reiterated the strength of the trust factor, which India enjoys among the world community — the confidence that India could deliver both internationally and domestically.
Trust helps bring one out of any crisis situation, so there is a need to work further on this strength. Today, the resilience required for coming out of the economic crisis is very different from what it was in the economic meltdown in 2008-09. One has to look out for which shape the resilience takes — will it be U-shaped, V-shaped or Wshaped?
According to Chief Economic Advisor K.V. Subramanian, the worst is over, and the economy suffered a major setback due to Covid, but we are now experiencing a V-shaped recovery. This is quite reassuring, but in 2008-09, when India’s informal economy was strong, the country had managed to take the hit. Now, with longterm visionary reforms such as GST and demonetisation, the situation is quite different. There is a view that the residual black money in the market is holed up and is not being circulated for business transactions.
With the decisive reforms and formalisation of the economy aimed at long term gains, the government doesn’t have the option of taping the underbelly of the economy anymore. Covid is an unprecedented phenomenon and we don’t even have the data to predict any exact recovery.
The good thing is that investors have retained their trust in India and that’s why this year it has received $20 billion of foreign investment. Companies like Google, Amazon and Mubadala have announced their long-term investment plans in India. This is an indicator that companies have now started looking for trust and they are not taking big decisions merely on the cost analysis.
With its organic economic growth, India is becoming a good destination for investment for the US, European and Gulf countries. There is also a need for the self-sustenance push — Aatmanirbhar Bharat. Unlike China, India missed the bus on large-scale production, but should not let go of this opportunity which has come in disguise.
Finance Minister Nirmala Sitharaman recently said that green shoots have started emerging. A Rs 20 lakh crore package announced by the government has focused on small and medium industries. The government aims to strengthen shadow banking and NBFCs. This push has to be leveraged to the best possible extent.
The thing is that benefits from foreign investments would take time to trickle down to the grassroots; in the meantime, making full use of the country’s economic potential is an option — one of which is agriculture, which has shown significant growth patterns even during the pandemic. Leveraging this sector and making capital investments in it would lead to job creation.
India’s arable area as a percentage of national landmark is among the highest in the world — about 43 per cent. However, the problem is with the agricultural output, which is among the lowest in the world, in comparison to the potential resources the country has. But since Independence, very little capital investment has gone into this sector on an institutional level.
What India needs today is agricultural industrialisation. Covid-19 has shown how a majority of Indian population depends on rural India for its sustenance. Due to reverse migration, the work force moved back to rural areas. The workforce had migrated to cities as agricultural income could not sustain them. In the present scenario, there is an opportunity to work on a new strategy and gainfully employ displaced people in the agriculture and food processing sector.
The good thing is that a lot of research is happening in creating a new economic structure which is not entirely dependent on economic hubs like Mumbai and Bangalore. Some organisations are collecting data and becoming a bridge between jobs and employees. They are doing some interesting studies on creating a culture that’s not dependent on migration and an economy that is well distributed, and truly this may be the biggest thing in India in a very long time. These organisations are empowering migrant workers as well as MSMEs by doing skill supply and skill demand assessment, and skill proficiency evaluation and analysis.
Unfortunately, in India, the agricultural footprint has been largely political. Indian farmers are always projected as poor as against a prosperous community in foreign countries. When you come to think of it, how could people who feed others starve to death? The mindset of ek garib kissan tha has to change.
In India, when you talk of agricultural revolution, you can only think of Prime Minister Lal Bahadur Shastri. Subsequently, the Indian political system has been a hostage of the Indian farmers’ vote bank with an emphasis on subsidies and MSPs – until PM Modi brought the sector to the forefront.
Countries like the Netherlands, France, Ukraine and Australia’s agricultural GDP share is between 18 to 19 per cent. In India, the contribution of agriculture to the GVA has decreased from 15 per cent in 2015-16 to 14.4 per cent in 2018-19. GDP from agriculture in India averaged Rs 4231.13 billion, from 2011 until 2020, reaching an all-time high of Rs 6098.83 billion in the fourth quarter of 2019 and a record low of Rs 2690.74 billion in the third quarter of 2011. GDP from agriculture in India decreased to Rs 5306.26 billion in the first quarter of 2020 from Rs 6098.83 billion in the fourth quarter of 2019. It is estimated that India’s agriculture sector accounts only for around 14 per cent of the country’s economy but for 42 per cent of total employment.
India has been identified with a land where farmers commit suicide due to poor micro-financing facilities. But now things are changing. But there is a need to communicate that agriculture is not just about sustainable machinery, it may be a very profitable business venture if done using proper investment, knowledge and facilities.
There is a need to link agriculture with the latest technological development, skilling of farmers with scientific methods, improving micro-financing and cooperative structures with an aim and the scale of an industry. There is also a need for improving processing, supply chains and export facilities. The prime minister has taken some very positive initiatives in this direction, especially the focus on soil testing and creating an environment conducive for the food processing industry.
While the agriculture sector could emerge as a boon, there is also a need to focus on rural household economy. Small and medium enterprises need to be empowered. Every household’s self-sustenance should be the mantra — har ghar aatmanirbhar. And this could possibly be the guiding principle. Household industry could be a good way out, like Mahatma Gandhi did with the hand spinning looms and they became the symbol for sustainability.
India is a remarkable country, where you have amazing success stories. People of this country have achieved amazing success through sheer hard work and determination. Cooperative societies like Amul and Lijjat Papad are truly inspiring. Such examples highlight the power of trust and the confidence which comes with it. The “Yes, we can” spirit can bring about more such new initiatives for achieving sustainability at various levels including the household, rural and urban. While we work towards big-scale and long-term economic revival, there is a need to take quick initiatives, which could help people come out of the crisis situation.