COVID-19 CASES
WorldIndiaConfirmed6,761Deaths206Confirmed1,595,350Deaths95,455By Shailesh Haribhakti
The PM has demonstrated world recognised leadership by announcing a comprehensive 21 day lockdown and three packages to enable citizens and businesses to cope.
Going forward our country will need nine bridges to enable us to emerge out of this crisis as world leaders.
The nine bridges are:
- Further fiscal stimulus
- Further monetary policy interventions and forbearance
- Tracing, testing and treating our COVID-19 affected citizens
- Providing sustenance to our severely disadvantaged daily wage earners and micro businesses
- Keeping our MSME and Export engines firing
- Providing relief to most distressed industries
- Encouraging and providing better hygiene and immunity among our vast population
- Recasting our health and education infrastructure
- Establishing India as the innovation capital of the world
- Below, we spell out some of these ideas in detail
Further Fiscal Stimulus
The Government has announced a Rs 1.7 lakh crore stimulus, which transfers cash using Direct Benefit transfer and delivers food to needy citizens.
Many countries have proposed a stronger stimulus. Germany and USA have proposed a package of 10% of GDP and Britain 15% of GDP. India can take its stimulus up to about 5% of GDP.
The time to rationalise GST rates to four- 0-5-12-18 is now. All encompassing GST, with no exemptions or composition and full offset of ITC will help revive large job-creators like construction, auto & logistics businesses.
Further, all direct taxes and corporate taxes also need to be rationalised and simplified to four rates i.e0-15-20-25, with dividends to be at 20%.
This should ultimately lead to a less litigated, tax determination driven, simple tax regime. Energies of businesses and professionals will be released for more productive purposes like building the startups to take on large risks. This proposal is revenue neutral.
A one time three month grant of a living allowance of Rs 1,500 per person per month to 45 crore migrant workers and micro enterprises may be directly transferred to their Jan Dhan or other bank accounts. This transfer may be supplemented by generous release of food grains to those who make a demand at any of the 5 lakh community kitchens that may be set up on a war footing. This will cost the exchequer Rs 2.75 lakh crore.
Immediate arrangements may be made to either let them restart work after being tested as being free of the COVID-19 infection or to get to their place of choice in their villages or other towns. Free transport may be provided for a period of 30 days for this purpose.
In villages a massive 3-D printed pucca homes initiative may be mounted with the support of MNREGA funds. This may perhaps be managed from the already allocated resources in the recently passed Union Budget.
Rehabilitation of about 10 crore persons back to their own home towns will de-congest cities. The small economies will blossom as a result of this much needed Human Resource availability.
Monetary policy interventions and forbearance
Reserve bank package just announced will provide liquidity of Rs 3.74 lakh crore through the Banking system. The economy is primed for a data-led financing paradigm based on cash flows and red flags picked out from pubic information already available. This is feasible on account of all the e-Governance and public registry-provisions that have been put in place.
RBI May immediately announce a comprehensive forbearance for 3 months on every loan at the choice of the lender in determining the NPA status of the loan. This will lead to confidence in lending and a revival of the animal spirits which will see a resurgence of micro and small enterprises adequately backed by technology and finance.
RBI may permit NABARD and SIDBI to offer a ‘GST Clawback Loan’. This may be calculated based on 70% of the GST paid in the last six months by an enterprise with turnover up to Rs 500 crore. The loan may carry interest @ 7.5% pa. Opt-ins may be estimated at Rs 4,20,000 cr. This may be on a two to three year loan with a 12 month moratorium on repayments. The capital base of the two institutions may be suitably enhanced and global loans with a near sovereign guarantee may be raised to fund this.
Fugitives and known offenders who are incarcerated may be brought back to the path of rectitude if they repay to the banking system the entire amounts misdirected.
The moral hazard in micro lending by state fiat preventing normal collections on agreed due dates must halt forthwith. A completely new climate of trust, integrity and commitment must be created.
Tracing testing and treating all COVID-19 affected citizens
In partnership with Global governments, India should put all available resources into extensive tracing of those who are identified as being at risk. The Arogya Setu is a commendable initiative in this regard.
The entire diagnostics industry must be co-opted into the effort of testing. PCR and NAT tests must be imported in quantity to test all new entrants to the country or those who are entering new geographic locations. Antibody tests may be used to keep the people just relieved from lock downs.
To restart livelihood, communities defined as an economic unit must be comprehensively tested to release the vast majority that is disease free to work. A phased approach to lifting the lockdown will be highly beneficial.
While lockouts are in place, and beyond the lifting of lockouts, testing must continue unabated. The COVID-19 test must become cheap and democratised to ensure universal coverage.
Treatment by our brave health professionals and our volunteers must proceed with full PPE which may be ordered at scale. 3-D printing of ventilators and testing equipment must be established in India so that the numbers available today can be multiplied as the demand emerges. All available stocks must be moved to hotspots on an urgent basis.
The making of masks may be assigned to women self help groups which are already producing them. Scale up can happen rapidly if technology and funding are made available immediately.
The Government, along with business, may launch a massive education campaign on television, e-learning platforms and through community lectures daily. This education must cover recognisable symptoms; what individuals should do if they are symptomatic; the nearest center to get tested at, isolated and treated; and the protocol that will be followed in the treatment.
India should launch a massive personal adult immunity enhancement programme. Plant extracts providing natural immunity, and alkaline water and food availability should be rapidly and ceaselessly increased.
India should become the world capital of clinical trials using AI-Ml, Analytics and Block chain technologies. Vaccines and drugs that are already successful in other parts of the world can be swiftly tested and distributed district wide. The risk perception of getting infected has to be reduced to reasonable levels. Work must restart in no more than 30 days from now.
Best practices on isolation, containment, treatment protocols, and slow-release should be shared widely. Governments, Pharma and vaccine manufacturers, hospitals, caregivers and patients will all have to come together shedding all past mindsets!
Swift permission to source critical APIs from alternative sources must be given. As production picks up, critical supplies, should be prioritised. Global trade restrictions should be eased to enhance ventilator quantities available to meet all needs.
Providing sustenance to our most disadvantaged
Migrant workers, out of job construction workers, unemployed youth and indeed every citizen seeking a meal must be provided cooked, healthy meals. For this the community kitchen infrastructure of the mid-day meal scheme may be scaled and deployed immediately. The entire stock of stored food grains amounting to about 60 million tonnes may be moved to the nearest districts from where they are currently stored. From there the PDS and the JAM trinity soft infrastructure may be multiplexed to ensure food is in reach of the hungry everywhere.
India cannot afford to allow our bountiful Rabi crop to go into disarray. Immediate and urgent imports of harvesters and deployment of rural available manpower must be planned to ensure a proper harvest. Silos and storage areas must be designated to garner surpluses. The MSP must be available to all farmers to prevent financial ruin. The only part of our economy that can deliver good growth is Agriculture. This opportunity must not be missed.
Keeping our MSME and export engines firing
MSMEs must receive sub-contracted orders for manufacturing testing equipment, ventilators and masks from the big manufacturing units that are currently beginning work. They also must be prepared to manufacture vaccines and medicines at scale. Current capacities and space must be quickly redeployed to make in India what the world desperately needs in large quantities today.
India should lead the establishment of a Multi sovereign war chest to deal with such events in the future with the right Global Governance mechanisms. This Multi sovereign fund may be a repository of technology, a platform for consolidation by lender and by domain and a provider of equity to the MSME sector. The tie in would be with the contributors to the fund to export badly short and required products at scale.
The rapid transfer of finance and a systematic M&A activity will strengthen this sector to be the real solid backbone of our manufacturing and export capabilities. As digitalisation takes root, accounting, compliance, information and governance practices will also be enhanced to global standards. This will ignite a genuine virtuous cycle.
Relief to our most affected sectors
A reset of the calendar by three months on loan, tax and other financial obligations will provide the window for these sectors to cope with the sudden collapse in demand. Platform based and data led fresh M&A and equity and debt provision will be necessary too.
Global technology and market development support will have to provided by the EXIM bank. Their capabilities can be dramatically valuable in the revival of these sectors.
Recasting our Education and health infrastructure
The GDP spend on health care and education will need to double at least. Resources will have to be found from subsidy reduction, fair taxation of all income and an optimisation of collection mechanisms. The next pandemic must not scare us into sacrificing work for life!
E-learning and the reach of education to every child must be enshrined in every budget. Equally, access to tele health, self awareness about health and symptoms, home testing and a much enhanced immunity and hygiene program will have to become embedded in the health infrastructure of the future.
India as the innovation capital of the world
Indians representing one sixth of the human race have a once in a lifetime opportunity to pivot to a new paradigm driven by converging exponential technolog.
All factories should have access to and embrace technologies that can provide gestalt growth by using additive manufacturing as opposed to the current subtractive practices.
Agriculture will transform by getting dispersed, hyper local and vertical. Soil-less and water light practices can rapidly be deployed.
Autonomous transport driven mobility, clean energy, advanced materials deployment and the use of automated last mile delivery using drones and robotics must be established. The entire way a smart city works should be redefined.
A comprehensive digitalisation of financial services and all record keeping should be instilled. This will pivot paying and spending habits to digital
The time to pivot, innovate and take the entire community along is now!
(The writer is a Chartered Accountant)
Source: indiatimes.com