Currently, for India, the health of its people and its economy is intertwined in unexplainable ways. The government accepts the ‘short-term pains for the long-term gains’ to save lives and livelihood. Prior to the virus, the economy was already facing a downturn which was further aggravated by the time the lockdown for the second wave hit. Plus, the unpredictability of the third wave, its intensity and how it can be curbed further deters some businesses to restart with normalcy. But, for some sectors, the focus on businesses has intensified due to the pandemic. These sectors have kept the economy running and, in some cases, brought profitability too. This diversity in business economics initiates a big debate on if the government should invest all its energy into reviving the pandemic-hit sectors? Or should they work towards boosting the sectors that kept them afloat during the pandemic? Let’s analyse it one by one.
According to ET Intelligence Group (ETIG), five major sectors that witnessed massive income erosion during FY 2020-21 as against FY 2019-20 were hospitality (-66%), education (-44%), transport (-32%), real estate (-30%) and retail (-24%), followed by several others, including entertainment & media, paper, leather products, construction, textiles and forging — all in negative territory. The government surely has rolled out relief through its series of ECLGS, but eventually, these are debts that need to be cleared out. The worst-hit sectors need more; the government, along with continuing the schemes, needs to focus on sector-specific incentives, tax waivers, tax holidays, capital subsidy schemes based on minimum business volume, etc. Also, businesses need to be allowed to function in full normalcy while ensuring strict adherence to the safety aspect.
When it comes to the sectors that kept business afloat during the pandemic, such as electronics, pharma, food & beverage, et al. vigil investments need to be made to ensure growth and global competitiveness. These sectors could boost domestic manufacturing in sunrise and tactical sectors, curtail reliance on imports, improve the cost competitiveness of Made in India products, boost domestic capacity and improve India’s image as a supply chain for the globe. Incentives need to be rolled out to ensure these sectors can improve their infrastructure to enhance their domestic capacity and adopt future technologies to keep them at par with the global competitors.
Having a Keynesian Economic approach will certainly aid the country out of the depression. The government should make a consolidated effort to boost the country’s economic growth as a whole rather than focusing only on the pandemic hit sectors. With limited finance, the government will have to walk on the tight rope balancing between the fragile sectors desperately looking for a hand-out and the sectors that have the potential to keep the economy afloat for the time being.