New Delhi: The countrywide lockdown in India has been very effective but now is the time to ease it up to save livelihoods and revive the economy, says Dr Mukesh Aghi, President and CEO of USISPF (US- India Strategic Partnership Forum).
Speaking to senior journalist Smita Sharma from New York, Dr Aghi criticised the Trump administration’s lockdown implementation which has now caused more deaths by coronavirus than the Vietnam War in America.
However, he underlined that as global economies shrink sharply, India will have to step up in providing a big fiscal stimulus and give a needed financial push like the Americans are doing.
“Every life is important but numbers are not that high compared to 1.3 billion people we have in the country. More important is that now is the time to start looking at how do you provide livelihood? Our experience of the US is that last quarter of the colony collapsed, contracted by 4.8 per cent while the stimulus package has been trillions of dollars. When you look at the stimulus package in India it is a much lower number. While it is calibrated to try and slowly ease the economy it will be critical that a stimulus package is announced which builds the confidence of the citizens, business community but more important focus on MSMEs and small retail shop keepers. If they start sinking, it will be hard to revive the economy in the next 6-12 months,” said Dr.Aghi.
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Asked if India needed the sudden strict countrywide lockdown and how long should it continue, Dr.Aghi replied, “PM Modi did a stellar job, bureaucracy stepped up and more importantly citizens heard the clarion call, got together and focussed on the lockdown. It has been very effective and has shown positive results but now the easing has to start coming on. You cannot keep locking down citizens and economy and impact livelihoods because India is a 60 per cent consumption-based economy. If you stop at that consumption then the economy completely slows down. So you have to slowly start easing up. The US did a poor job as far as the lockdown is concerned. We could have done a much better job. The US has had more deaths now due to Corona Virus than the Vietnam War. So the US will get an F-grade card from a lockdown perspective as compared to India which has done a very good job.”
He expressed optimism that getting more and more goods into the essential category is a positive sign and in the next two-four weeks India will open up substantially.
On the question of holding China accountable for the pandemic, Dr.Aghi said that the State of Missouri in the US suing the Communist Party of China is a sign that the global community will try to hold Beijing accountable.
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But he underlined that India must get its act together to use this crisis positively and step up on the global supply chain.
“India has to be transparent and predictable in its policymaking. It has to provide not only access to the market but also a level playing field. What happened when Walmart came in and bought Flipkart? Two weeks later they changed the policy. What happened when Andhra Pradesh where the government changed and they completely reversed all the contracts. Contract sanctity has to be there. India has done a great job in trying to get the corporate tax down, manufacturers coming with rates down from a tax perspective. But you have to look at labour reforms, land reforms. If you are going to compete with Vietnam, Cambodia and other geographies, it is important we relook at all of this and make sure there is a sense of predictability moving forward,” he said.
Dr Aghi who has previously held top positions with L&T Infotech and IBM India among others, outlined increasing unemployment as the big concern.
“Last two weeks the unemployment filing in the US has shot to 26 million people. We expect that number to go up dramatically. Which means the current economic unemployment has shot up almost over ten per cent. The US was humming at zero unemployment only three weeks ago. So that is a big concern,” he stressed.
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“The confidence of the businesses, consumers have been shattered. Businesses are locked up, unable to move their goods because stores are shut down. All of those will take a tremendous amount of effort to revive. You will not see 2021 as a year of revival. This will go down up to 2022 or beyond that. So when you look at India which was already struggling to get the economy going beyond 4.5 per cent, the lockdown has had a dramatic impact. You will need a massive stimulus package from the government but more importantly, bringing FDI into the country which can invest and create jobs will be very critical. You have to build at least 100 billion USD investments annually for the next ten years to keep the economy moving forward,” he added.
Asked about the impact of the economic downturn on HI1B visa holders, Dr.Aghi replied that the issue is critical but so is the challenge for those waiting for Green carted.
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“The H1B issue is critical. If they lose their jobs they have 60 days to find a new job otherwise they have to leave the country. Today the number is almost quarter-million of those H1B visa holders. Process for them to find jobs is becoming challenging, More important is another 800,000 Indians who are waiting for their green cards to come in. That has also been stooped for at least 60 days by the President’s Executive Order itself. That is also challenging. The impact of this and also what is happening in the Middle East will have an impact on the remittance to India,” said Dr Aghi.
The USISPF President also called the recent sharp fall of oil prices as a blessing in disguise for India at the moment.
“Lower oil prices is a blessing for India. Every dollar that a barrel price goes up it has the impact of a million dollars on India’s foreign exchange. India is among world’s largest importer of oil so at this point it is a blessing which will hopefully help revive the economy,” he remarked.
