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1.Planning to stem a second Covid wave
The move to forge district action plan to control the spread of Covid-19 marks a step forward in tackling the second wave. This effort will be critical not just to avoid state-wide and nation-wide lockdowns but also to target vaccine distribution. It is not just about directing vaccines where most required but also about ensuring supply and minimising wastage. Ten states are registering more than 1,000 new cases a day.
The rollout of vaccines in these states must be part of the action plan that the Centre has asked districts to draw up. But vaccine availability cannot be concentrated in these states or in some cities and towns. The district mapping should help with the equitable distribution. Assam, for instance, has a plan that includes medical colleges, district hospitals and healthcare centres with cold chain facilities at the village, block and district levels.
Additionally, the Assam government is setting up additional vaccine centres in areas with concentrations of vulnerable populations. Such detailed planning, with vaccination appointments that have a lead time that permits coherent logistics, is needed to avoid wastage of precious vaccine doses.
Serum Institute and Bharat Biotech are increasing production, but given the population size, a degree of prioritisation is essential. The approval process for new vaccines, Russia’s Sputnik V and Cadila’s indigenously developed candidate, must be fast without sacrificing thoroughness. The CoWIN app must be robust, and cannot afford to malfunction, to manage the data, before, during and after vaccination, to enable vaccine passports. With India experiencing a second wave of the pandemic, efforts to contain the virus and vaccinate the population have to be systematic and coordinated.
2.May GoI live up to spending boasts
As the new financial year begins, all eyes are on the government living up to its brave expenditure commitments. No spring of recovery is guaranteed to trail behind a winter of economic distress.
A vigorous recovery that brings comatose businesses back to life, restores jobs and generates new ones, while filling the government’s coffers with taxes, depends on effective delivery of the promised growth stimulus. The world’s largest economies — the EU, the US and China — are all focused on generating domestic growth with big State-led spending: on infrastructure, climate resilience, digitalisation of government services and, in China’s case, strengthening the internal circulation, that is, domestic demand, in contrast to the mainstay of past Chinese growth, the external circulation, meaning exports.
Much depends on central banks. The central banks of the US, the EU and Japan have created large pools of liquidity and sent out waves of money washing across the world’s capital markets. This has depressed interest rates, lowered the discount rate for assessing the net present value of future earnings on company stocks, sending price/earning ratios to heights where the oxygen is thin. The prospect of coordinated fiscal expansion focused on infrastructure promises a surge in demand for metals, fuel and other materials.
This could spell cost-push inflation, especially given the liquidity sloshing around the world. Anticipation of inflation has been sufficient to send the 10-year US Treasury yield up by more than a third to over 1.7% over a few weeks. Unless central banks carry conviction, inflation expectations will perform their self-fulfilling harm, and force central banks to raise rates and dampen growth. India’s central bank must look through temporary price surges and keep its attention on boosting growth. Some pricing power will help firms make up their minds to invest, to supplement State spending on infrastructure. At the same time, RBI has to focus on financial stability in a world of footloose capital.
3.Nandigram exam: Mamata versus Suvendu battle could determine the course of Bengal politics
In the most high-profile battle of this Bengal election, Nandigram will go to vote today. Rightly billed as a titanic clash between CM Banerjee and her aide-turned-rival Suvendu Adhikari, the fight here is replete with symbolism. For, it was at Nandigram in East Midnapore district in 2007 that Mamata – then ably aided by Suvendu – sowed the seeds of the 34-year-old Left Front government’s downfall through an anti-land-acquisition agitation. Things have come full circle as the result in Nandigram will once again have repercussions for rest of Bengal.
Both TMC and BJP have pulled out all stops in Nandigram. After all, Mamata’s defeat here would be a huge blow to her legacy. It will also catapult Suvendu to the top of the Bengal BJP leadership, possibly giving him first claim over the CM’s post if the saffron outfit wins the whole state. But a victory for Mamata in Nandigram will considerably boost TMC cadre and put her in control of the political narrative in Bengal, even if TMC is relegated to the opposition after the polls. For, Nandigram will allow Mamata to retreat to her old agitationist mode of politics, ensuring TMC’s survival even outside of power.
Of course, Mamata could win both Nandigram and Bengal, in which case she would have successfully stopped BJP’s inroads into her bastion. But Mamata putting all her chips on Nandigram without a safe seat to fall back on also shows how keen she is to quash Suvendu’s political rise – the Adhikaris are a political dynasty in their own right with Suvendu’s father and brother long representing East Midpanore seats in the assembly and Parliament. Mamata’s victory in Nandigram will diminish their influence while her defeat would make them stronger than ever.
Which is why the campaign here has been quite shrill, particularly in Nandigram II block where both Mamata and Suvendu have been concentrating their energies to woo the majority Hindu vote. But Nandigram’s subpar development status is something both Mamata and Suvendu have to answer for, even though each is blaming the other for the current state of affairs. One thing is certain: After the Nandigram contest, Mamata will be free to campaign more vigorously across other parts of the state. And now focus will shift to Singur – another symbolically significant constituency for the governing party – where too BJP has fielded a former TMC MLA.
4.Future ready? Gig economy promises new jobs. Technological evolution will also throw up surprises
A new report forecasting that India can create millions more jobs over the coming years in the gig economy underscores a fundamental shift in the nature of work. While automation swept through factory floors and BPOs reduced manpower requirements, e-commerce, ride hailing and food delivery apps, streaming media and fintech have created lakhs of temporary jobs in the services sector. Although the jury is still out on the quality of life accorded by such gigs and the social security benefits they accord, recall that informalisation of jobs started much earlier.
The report by Boston Consulting Group and Michael & Susan Dell Foundation predicts 90 million flexi and gig jobs in a decade from 8 million now, contributing transactions valued at more than $250 billion and an additional 1.25% to India’s GDP. Obviously, technological evolutions are hard to predict. A decade ago, few, if any, had divined these new jobs. Accepting change as the sole constant, it is equally critical to create the socio-economic framework that can support such jobs.
Expecting startups fuelled by venture capital and presently unprofitable to treat gig workers as regular employees isn’t practical. Such moves could impede innovation and investment. But if central and state governments could deliver in areas like public health, education, insurance and food security, anxieties generated by unsteady, irregular unemployment can be managed better. Last year’s nationwide lockdown when the suddenly unemployed migrant workers panicked and bolted, untrusting the promises of governments to care for them, served out this lesson in poignant detail. The gig economy does promise flexibility and improved choices for many women and part time workers. Every technological revolution till date has effaced some jobs and created plentiful others. There is room for optimism in the rapidly emerging tech-mediated world, but only upon strengthening the support of educational and health infrastructure.
5.The scars of 2020-2021
The Indian economy’s worst year is over. But 2021-22 will bring its own challenges But 2021-22 will bring its own challenges. Bringing down infections, through enhanced and aggressive vaccination, has to be top priority from both a public health and economic perspective.
Fiscal year 2020-21, which ended on March 31, has been a time of unprecedented economic disruption due to the pandemic. The Indian economy is expected to contract by 8% in 2020-21, its largest-ever contraction on record. To be sure, growth rates have recovered — from a 24.4% contraction in the June 2020 quarter to a 0.4% growth in the December 2020 quarter. But the economic pain caused by the pandemic is lingering. Poverty levels and inequality are likely to have gone up. Labour force participation rates have gone down. The gender gap among workers has worsened. The employment intensive sectors have shown less growth compared to others. And there remains lack of clarity about the pandemic’s adverse impact on the tax base.
But even though the domestic economy suffered a big shock, the external environment remained benign in the past year. Oil prices crashed, which allowed the government to reap a tax windfall without stoking inflation. Since major economies increased their public borrowing and fiscal deficits, global finance did not penalise any country for what would have been seen as an unacceptable deviation in normal times. This favourable environment might start receding in 2021-22, as growth picks up in advanced countries and commodity prices start rising. External factors will be more of a constraint this year.
India is also, now, staring at a delayed, but strong, second wave of Covid-19 infections. The last fiscal year began with a complete lockdown, but a second national lockdown is not feasible. At the same time, rising infections will not just take a toll on human lives but also impact productivity and economy. Bringing down infections, through enhanced and aggressive vaccination, has to be top priority from both a public health and economic perspective. But India will also have to do much more to both boost growth — by ensuring that there is indeed public investment as promised in the budget, and creating a more enabling climate for private capital — and ensure equity, given that there is real concern that the next phase of growth will sharpen inequality and there is a dip in planned welfare expenditure. How India gets back its growth, while taking care of the marginalised, will be the big test of 2021-22.