We are in an unprecedented situation and in a global recession, says UN Chief, Antonio Guterres.
The Corona virus, which is the cause of the Corona Virus Disease COVID 19 that is said to have been originated in Wuhan, China, has now moved its epicentre from China into over 150 countries. The virus has infected more than 800000 people so far and the numbers are growing every day.
The COVID19 has turned into an international pandemic and impacted lifestyle, health, society and the entire population at large. It has battered general business, employment, financial markets and economic growth globally.
Top automakers Ford, General Motors and Fiat Chrysler have shut down their plants in the USA. The forthcoming Tokyo Olympics 2020 have been cancelled. Monaco cancelled its prestigious Formula One Grand Prix. The spirit of people across the world in all kinds of professions has been hammered.
Almost all reports, statistical analytics and prognostic studies being reported seem depressing. They all pretty much make us feel vulnerable and defeated by a virus, which on its own cannot even survive 12 hours. Can we accept or even expect it to damage our confidence to such an extent?
Social distancing has become the new norm and will probably drive the manner how people socialize from now on. Queen Elizabeth has said that families will have to find new ways to stay in touch, safely. Her Highness is certain that “we are up to that challenge”.
Difficult times bring forth challenges; and challenges bring along with them opportunities in the form of problems. The opportunities are available to be taken by those who first see the problem and then move towards solving them effectively.
In the 1990’s all will remember that the world was faced with a challenge that emerged from digitisation and computerisation. The two digit date and year numbering format that created an issue known as Y2K. India and its emerging IT industry took up the challenge and successfully solved it.
Following this India became the IT services hub of the world.
Post COVID19 life will probably not be the same again. Patterns of living, doing business, manufacturing activities and globalised interdependencies will definitely change.
Major nations will be forced to take a relook at globalisation and focus towards improving self-reliant production or at least be interdependent on multiple nations rather than a single nation. This U turn on globalisation could mean the restart of protectionism.
Senior bureaucrat Sudeep Jain, IAS, points out “Post COVID19 all important countries will redevelop manufacturing capacities for strategic products, including those of major health equipment and medicines, and would import from multiple countries rather than from China alone for items that they cannot themselves manufacture. This will open up a huge manufacturing opportunity outside of China, and that is the opportunity that India could seize”.
Recalling his earlier experience in the ICT industry, Sudeep feels that “countries would now invest in real time citizens’ health monitoring, and Indian IT companies should grab this opportunity to provide the software for this, while ITES companies should become the global back office for the required data mining on this health data.”
“The sinking crude oil prices are a big worry for the oil and petroleum industry”, remarks V Ramachandran, Advisor – Nayara Energy (a unit of Rosneft – the world’s largest publicly traded petroleum company). The oil industry is amongst the highly stressed sectors in the global arena.
Another visibly affected segment is the travel and hospitality segment. Indian Association of Tour Operators (IATO) estimates the hotel, aviation and travel sector together may incur loss of about ₹85 billion due to travel restrictions imposed on foreign tourists.
International business travelers will drop substantially and travel only when necessary. As they did during the lockout period, executives will shift to other means of communication reducing personal movement and travelling only when necessary and compulsory.
“The tourism and hospitality industry will take at least 8 months to revive” says Sneha Jain, CEO of In80 - a Chennai based travel consultancy.
The apt handling of the pandemic, including a total lock down very early by India has made India a leader in the fight against COVID19. Can India play a lead role in international relations and global economics, in the immediate future? China, the world’s second largest economy accounts for 16.9% of the worlds GDP and India being the 5th largest economy accounts for 7.45% of global share of GDP. Germany at number 4 is marginally ahead of India.
USA leads the chart with a whopping $21.44 trillion in GDP. USA will intend to reduce its dependency on China, which could make it look towards India to fulfil the gap or shift in production lines from China to India. Taiwanese companies in China are amongst the largest investors in China. They could also find a more friendly investment atmosphere in India.
Growing consumer anger in US and Europe against China will affect China’s exports negatively.
This could also be the start of a cold war all over again. Germany is expected to dip -2% towards an economic slowdown in 2020, while India might see a reduced growth estimated at 3%, down from the present level of 7% growth. Europe has been plagued with economic stagnation for a decade. If the European Union doesn’t act soon European countries could well be comparable to the third world in the 21st century.
The booming service sector contributes to a major 54.4% (check figures from Economy Survey 2020) of India’s GDP, while agriculture chips in an alarmingly low 15.87% but with a potential to go back to 19%. The manufacturing sector of India adds up a modest 29.73% of GDP.
The government thrust to boost the MSME sector, programs like Make in India, Start Up India, etc can be worth the effort and hype if they can manage to systematically and in a geographically spread out manner increase manufacturing activities and thereby exports.
This would not just increase productivity and self-reliance, improve the economy taking it towards the aimed 5 trillion dollar economy and also create the employment opportunities required by young India. Historically, the MSME sector coupled with skill development was the major reason for the transformation of many developing countries to becoming a developed nation. 2020 will be a turning point in the economic growth of India, where we can truly move a notch up in the world economic rank as a major power just after the hegemonic super powers. India has to revive and restore its natural resources including water bodies and to shed the ‘developing country’ tag that we acquired on independence. India can transform to be a ‘developed country’ which we aim, aspire and deserve to be.
The writer, Sumit Bothra is a Smart City consultant based in Chennai, working with social engineering solutions. He has a passion to work with technology and is very keen to develop Smart Villages which he beleives would truly modernise India and reduce the burden of urbanisation on our cities and urban bodies. He can be contacted on [email protected]
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