Context
To revive and sustain growth, action is needed both at the international and national levels.
Hopes of V-shaped recovery of Indian economy
- The National Statistical Office (NSO) had recently estimated that India’s economic growth has surged to 20.1% in the April-June quarter.
- In its recently launched Trade and Development Report 2021, UNCTAD has estimated global growth to hit 5.3% in 2021 and growth in India to hit 7.2%.
- According to the report, India showed strong quarterly growth of 1.9% in the first quarter of 2021, on the back of the momentum of the second half of 2020 and supported by government spending in goods and services.
- Given the inherent fragilities, India’s growth in 2021 as a whole is estimated at 7.2%, which is one of the fastest compared to most countries in the analysis.
- But it is still not sufficient to regain the pre-COVID-19 income level.
- However, going forward, the economy is likely to experience a deceleration of growth to 6.7% growth in 2022.
Ways to sustain growth
1) Efforts at the International level
- To revive and sustain growth, action is needed both at the international and national levels.
- TRIPS waiver: The report strongly supports India’s proposed temporary suspension of the World Trade Organization TRIPS waiver.
- Waiver is considered as a necessary step to enable the local manufacture of vaccines in developing countries
2) Steps to be taken at the national level
- Resilience: At the national level, COVID-19 has reinforced the idea that resilience is a public good and responsibility of the state.
- It has to be delivered through a robust public sector with the resources to make the necessary investments, provide the complementary services and coordinate the multiple activities that building resilience involves.
- Mobilising financial resources: We need a financial system that accords a more significant role to public banks, breaks up and guards against the emergence of megabanks, and exercises stronger regulatory oversight is more likely to deliver a healthier investment climate.
- Minimum wage: Wages are a critical source of demand and their growth can stimulate productivity and underpin a strong social contract.
- Minimum wages and related labour legislation are needed for appropriate protection against abusive practices.
- Policies for informal sector: Policies targeting informality are of particular importance, especially for a country like India with a large informal economy.
Conclusion
It is important to build a healthy, diversified economy. For this, a strong industrial policy focusing on building digital capacities is needed. A resilient economy goes beyond offering a residual category of safety nets designed to stop those left behind from falling further.
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