Dr. D. Mukhopadhyay
Nothing is permanent but change says Aristotle, the great Greek Philosopher. The whole world is under the perilous claws of Covid-2019 and the world leaders are in the state of constant bewilderment in order to handle and control the individual national issues concerning how to save the lives of people from dangerous attack of Covid -19. As per the World Health organization (WHO) recent bulletin and when this write up was in process number of Corona Virus infected patients is said to have been touched almost three millions across the globe and death toll has already surged on to a figure of more than two lakhs. Yes, the world has sustained two World Wars (1914-1919 and 1939-1945) and the scale of vulnerability and destructibility of Covid-19 is far from imagination and it may even be in much more higher scale than those two World Wars since it is very difficult to ascertain or quantify the volume of loss to the global economy at this critical juncture. Under the prevailing circumstance, the world economy is terribly struggling to provide rescue and relief packages to the people in different kinds, forms , cash and non-cash deliverables. Indian economy is of no exception. National economy was struggling to maintain her 5% or more growth rate in terms of Gross Domestic Product(GDP) in the beginning of current fiscal year and the same is significantly below 2% now. It is definitely a herculean task to put the industrial wheel of the economy on its desired track. The wealth creation of any nation is a continuous process and it is beyond an imagination that the economic operations of a country shall remain non-functional even for a day but the whole nation has been witnessing such a state of unimaginative economic halt with the state of uncertain anxiety for last one month. Indian economy is not performing up to the benchmark parameters for quite some time and everybody consisting of industrialists, policy formulators including government think-tank were remaining busy in brainstorming sessions in order to figure out the ways and means for quick recovery and at such moment, Covid-19 is nothing but the bolt from the blue on our nation. The world is under the claws of global recession as per the International Monetary Fund and the degree of severity of such recession very high.
Now the question of economic sustainability should get a prominent room in the agenda of the policy makers, industrialists and professionals and both the State Governments and the Central Government . It is the high time to work out probable solutions both short term as well as long term in terms economic growth , development and sustainability.
Under the given scenario, securing economic sustainability is possible through advances in technology and economy rebuilding efforts that is evident how world economy attained recovery and growth from the World War II. India’s galloping population growth is surely to retard the power of inherited wealth under the possession of exploded population . Job creation has to be on top priority of the government and it is to ensure smooth and healthy social mobility . People need to be empowered with reasonably moderate to high level of purchasing power. Financial resources must flow constantly in veins and uteri of the national economy and the same must not be allowed to remain stagnant or illiquid. It is necessary to understand that during economic slow-down period, investors hesitate to invest in creating an enterprise with long term earning perspectives on investments and people’s capacity building but they consider it more rewarding and profitable to earn from rent, dividend, real estate , trading on shares and other forms of investment. A country’s economy faces difficulty in earning its sustainability unless there is long term wealth creation process in place. Let us have our eyes for a moment on how the global recession of 2008-2009 was overcome.
Simply speaking, lot of economic austerity measures were adopted and to mention among many were substantial reduction in government expenditures and raising to taxes as a mechanism to bridge the gulf of deficit exchequers. The austerity measures culminated into significant drop of Government investment and consequently the same eclipsed the economic growth. In order to rejuvenate the national economy, perhaps Keynesian Model may be considered to be the relevant driver of economic growth and taking the economy to the direction of full employment under the current economic recessionary stagnation. Moreover, productivity of the factors of production has to be taken care of simultaneously. Increasing productivity is a crucial factor for growth and , of course, sustainability and innovation with the help of technological advancement is the answer to the question of raising productivity. In this context, ‘creative destruction’ advocated by Joseph Schumpeter who advised the policy makers to attach higher degree of prominence on the innovations and entrepreneurships. Though Government of India has adopted similar kind of models but implementation and monitoring need to be intensified in order to generate benefits in time bound manners. Moreover, prominent deficiency in our institutional functioning with effectiveness is quite alarming which is evident from the failures of banks and financial institutions and corporate houses. According to Douglas North, institutions’ efficiency is one of the deciding factors of economic growth, development and long term sustainability. If we look back to the post World War II scenario, it can be observed that institutions’ efficient and effective roles were found to be crucial factors to make certain countries more wealthier than many in the post-war period in the world. India’s institutional effectiveness in policy formulations, implementation and monitoring systems needs to be revisited and necessary measures are to be adopted as early as possible. There are significant eye-catching administrative and monitoring lapses which are to be viewed seriously and rectified in no time. Here it is imperative to refer to the economic Model of Robert Solow who is a prominent neoclassical economist and he needs no introduction . The model of Solow is based on the productivity of people and the investment in productive capital creation in combination with technological advancement which in totality may aptly become the prime mover of the economic wheel of a country like India under the current economic recessionary situation . 2007-2008 Global Recession witnessed a sharp drop in GDP and sluggish economic recovery. It may be worth mentioning that India is still in better position in terms of demographic equation as compared to other nations such as Japan, China, many European Union counties and American countries across the globe and empowering the people with right kind of education, skill, training- mainly vocational training, congenial working environment and forward looking approach for efficient utilization resources may bring about national economy in sustainable shape provided India can act with promptness coming out of bureaucratic red-tape-ism and influence of allied inefficient social, legal and political factors and last but not the least quick decisiveness with regard to what to do and what not do are on the basis cost-benefit analysis may act an effective sustainable model under the prevailing bewildered situation.
The Indian economy is terribly stressed under the pressure of low productivity, low yields and influence of high financial leverage. Still India is showing positive economic growth but it is quite uncertain how long she will be able to manage the impact of huge fiscal deficit. The whole world is experiencing economic bleeding and burring and except India and China has already emerged to be under the canvas deep recession. More than twenty five percent fall in demand for oil and gas as a direct consequence of global lockdown is never experienced by the oil producing countries in the world. Experts may be of the views that oil market demand shall improve once lockdown is lifted. Definitely it is a convincing answer to the problem but none can predict when Covid-19 shall be neutralized . As the direct casualties of Covid-19, tourism and hospitality, aviation and transport, manufacturing , oil and gas, information technology, telecommunication, infrastructure and agriculture are worst affected. The economy rejuvenation models as spoken about above may likely to bring about sustainable results provided central bank of the country comes forward to fuel the investment engine and particularly investment is aggressively committed in digital technology, telecommunication, medical and healthcare, transport, manufacturing , tourism and hospitality and education sector.
Finally, India is likely to be the final destination of the investors in near future and this needs to be welcome by the Government of India by facilitating quick decision making with the help of professionals and reducing involvement of bureaucracy as far as possible. There is enormous possibility of quick recovery of the Indian economy if the decision makers play proactive roles in inviting and welcoming the investors from all over the globe since certain counterparts of India may not be able to earn the confidence of them in terms of transparency and ethical business practice. The foreign investors are to be offered security , safety, transparency and confidence building with long term political stability. Our policy making bodies should work out strategies simultaneously for recovery of the economy while fighting the Covid-19 as experts are very critical to opine that it is very difficult to predict when a country shall be totally free from Corona Virus.
(The Author is Professor of Management and
Dean- Faculty of Management & Faculty of
Humanities & Social Sciences, SMVDU, Katra)
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