Little Affected, Most Perturbed: India Ably Tackles The Global Pandemic

Little Affected, Most Perturbed: India Ably Tackles The Global Pandemic

The Covid-19 or Novel Corona virus has found India well prepared. The global pandemic that began in Wuhan, China, is presently also raging in Europe and the US. The epicenter seems to have shifted to Northern Italy from China, though Iran’s Qom is a contender too. So far, over 132,000 have tested positive around the world, and there have been over 5,000 deaths.

In India, the level of counter-action is unprecedented for any disease that has afflicted this country in the past. Not only is a great deal being done, but with almost every media outlet obsessing over this virus, it is the main news item.

With a mortality rate of 3-4% globally, India has however seen a lot worse in earlier famines, scourges and natural disasters, apart from the fatalities from accidents, even in recent times.

The domestic scenario has reported an infection statistic in just two digits, though some quarters have raised concern on the low number of some 52 testing centres. These are now being raised to 55, all government controlled, but this could well be inadequate to assess the magnitude of the spread, if it comes to that.

The number of infected people in India, including visiting tourists, mainly from Italy, is about 85 at present. This is commendable, if the number is correct, in a country with a teeming population of 1.4 billion people.  

There is a good reason why India is not much affected. The prompt precautionary moves undertaken by the government have apparently been very effective. There has been elaborate official concern from the top levels of the government, evacuation of Indians at risk in other countries,  emergency medical facilities, isolation wards and locations, quarantine  protocols and screening of arrivals from abroad. All this work has been exemplary and timely. Old learning have taught the authorities that deadly viruses like this should not be allowed to spread unchecked.

All this action together will likely contain and vastly reduce the impact. In addition, a number of under-utilised flights to and from abroad have been cancelled by the airlines themselves. The government on its part has witheld all non-essential visas. Many land borders have also been closed. The popular IPL cricket and other sporting fixtures have been postponed. Schools, colleges, cinema halls, malls and other places where large numbers might gather have been closed for a spell across the country. Other emergency measures are being considered. Intense monitoring of the situation is in place.

Combined with a steady messaging on dos and donts,  the squashing of rumours, the warming up of the weather as the country goes into summer, is also expected to help. The two fatalities so far have both been  that of elders, with other underlying health issues such as diabetes and hypertension. Young, reasonably fit people tend to recover, and 10 have done so in India already. In medical terms, the virus has also been isolated outside of the body  in India. This in order to develop antibodies and vaccines in due course.

It can certainly be said that India has been doing well in terms of the preventive and other measures against this deadly virus that has only symptomatic treatments so far.

But the threats emerging from the Corona virus has done considerable knock-on economic damage in various sectors already.

The silver lining, though largely unrelated, unless a fall in demand has triggered it, is the recent tumbling of petroleum prices. Saudi Arabia, with immense proven reserves, has decided to strongly increase its output in competition with all other producers. The price of a barrel of crude oil, down sharply, could fall to as little as $ 20, according to experts. This is greatly benefitting India that imports over 80% of its oil.

The global situation economically has hit China and America hardest, with each country directly losing almost a billion dollars in foreign trade till now.

India too has lost a few hundred million dollars in its Indo-Chinese trade, but the domestic impact on tourism, hotels, related services, is very much higher.

Globally, the stock markets have been gyrating in panic. The US has lost almost all the gains, running into billions of dollars, made during the last four Trump administered years.

The Indian market has rewound to figures prevailing two years ago. The rupee has taken a beating, even as the Indian foreign exchange reserves are at nearly $500 billion. The Debt Market and gold bonds have held out well so far but all depends on how much longer this goes on.

The reactions to the pandemic and indeed the disease itself will inevitably fade in the not too distant future, leaving a lot of human misery and economic damage in its wake.

But at the same time, it will provide an opportunity to reassess the foundations of international business afresh. In a near reboot, not seen since the international economic crisis of 2008, there will be new opportunities, as well as significant realignments.

Will the Chinese economy, already plagued by low growth before this disease came along, be able to recover any time soon? Will its Belt and Road initiative already in trouble, and itsa blue water maritime hegemonic ambitions survive? Will the drastic losses in the global equity markets provide new get rich possibilities for intrepid investors wherever they may be?

India could benefit from the reworking of the global economy in the aftermath, though it may not be mainly in terms of Chinese manufacturing relocating to India. This, desirable as it may be from the Indian point of view, is much talked about. But the notion still suffers from substantial infrastructure and utility bottlenecks in India compared to China that may take a few more years to address.

But there could well be a substantial fillip to defence and armaments related manufacturing here, under the Make in India programme.  The negotiations in this regard with various contenders could gain momentum. India is still the second biggest arms and armaments importer in the world, second only to Saudi Arabia.

With recessionary conditions claiming the collaborating countries too, earlier objections to technology transfer, high pricing and the like could be removed and negotiations fast-tracked.

Defence manufacturing has the virtue of being very high unit-value, while offering new, skilled jobs, to an estimated 1.5 lakh people. India has designated an ambitious defence manufacturing corridor in Uttar Pradesh that has been well received by prospective partners. It will shortly build roads and other infrastructure to serve it better.

The export potential of defence equipment too is now prominent in the minds of Indian planners. It has just climbed into the ranks of the top 25 armaments exporters in the world at a modest No. 23. Items such as Indian bullet-proof vests, missiles of various kinds, patrol boats, frigates, radar, missile shields, satellites and  launching facilities, are now in demand.

In future, fighter aircraft, submarines, helicopter gunships, drones, machine guns and other items could come into play as well.   This sector therefore is seen as a major enabler of India’s ambition to become a $ 5 trillion economy by 2024.

The hectic work and massive investment going into new and modernized infrastructure is part of the same thing. 

It is of the greatest importance when the GDP has otherwise slowed to under 5% per annum, compared to the over 7% it was at not so long ago, or even 9% before that. Various sectors of the economy such as banking, real estate and even the 60% that comes from the all sustaining service economy are suffering.

These, along with traditional agriculture or even food processing industries, other manufacturing including that of automobiles and electronics, are unlikely to be the prime movers in the near future.

But paying one third of the earlier cost for India’s huge oil imports, with a robust, nearly $ 500 billion in foreign exchange reserves, will certainly help India rebuild its economy.

Manufacturing more of its military equipment needs here, another major import cost head, and exporting a portion of it, is the way forward. India aspires, after all, to be amongst the top three economies with more than $ 10 trillion in nominal terms by 2032.

While a situation brought on by the Corona virus is far from desirable, the reworkings it may force upon the global economy may not be bad at all for India.

For: WIONEWS

(1,390 words)

March 14^th, 2020

Gautam Mukherjee