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Incremental Or Maximal Reform Strategies?

The government must be ever watchful, must choose maximal reform strategy to incremental, if it has to make a difference.

Photo Credit : Reuters

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Nearly half of the global workforce or 1.6 billion workers in the informal economy, stand in immediate danger of having their livelihoods destroyed, warns the International Labour Organization (ILO) as the world fights the pandemic. The report further states, compared to pre-crisis levels, a 10.5 per cent deterioration is now expected, equivalent to a staggering 305 million full-time jobs, assuming a 48-hour working week. When the world is thus affected, India hasn’t fared any better.

Except for a few communities who are intrinsically entrepreneurs and risk takers, many in the country are risk averse and seek regular employment. Only robust thriving employment markets can sustain the pressure of employment seekers. They never were thriving even before the pandemic, barely providing employment opportunities to 30% of job seekers on year on year basis. Adding to the hardship, millions lost jobs because of the pandemic. A month into the lockdown, 121 million Indians were out of work, according to the Centre for Monitoring Indian Economy (CMIE), an independent think tank and some 19 million salaried, formal economy jobs were lost after the lockdown. Even the ILO and the ADB estimated that more than 4 million Indians below the age of 30 lost their jobs due to the pandemic. 

Where were these jobs? They were in the primary, secondary, tertiary and quaternary sectors. Primary employment sector jobs involve getting raw materials from the natural environment e.g. Mining, farming and fishing. Secondary sector jobs involve manufacturing e.g. making steel and cars. Tertiary jobs involve providing services e.g. teaching, nursing and retail markets. Quaternary jobs involve research and development. Most of these are host to formal job opportunities accounting for only 10%, remaining 90% being in the informal sector comprising domestic workers, home-based workers, street vendors, waste pickers, farm labour and the like. 

Apart from the financial anguish it caused, it has taken a heavy toll on the people’s mood, relationships, and overall mental and emotional health. Our jobs, more than just the way we make a living, influence how we see ourselves, as well as the way others see us. Should we lose heart then? We can step out and look for what other companies are offering. Another company may provide better hours, more benefits, even a friendlier work environment. Maybe, we can file for unemployment doles, check on health insurance options, figure out what to do with a retirement plan, work on a personal budget, sign up for 30 days to a new job, Google for a new opportunity, clean up all social media accounts and revamp the resume with new expertise gained out of value-added courses. Unfortunately, much of this is true in normal times. Neither the pandemic is normal nor the job losses in millions is normal. The site of fending for suddenly with no income can be frustrating and debilitating. 

Charles Caleb Colton an English cleric who was brilliant and eccentric in the same measure once said, ‘anguish of mind has driven thousands to suicide; anguish of body, none. This proves that the health of the mind is of far more consequence to our happiness than the health of the body, although both are deserving of much more attention than either of them receive’. This pandemic has made each one of us realise the truth in this profound statement. 

The economy has since clawed back tens of millions of jobs, mainly in the informal and rural economies. Bulk of the country’s 400-odd million jobs are in the informal economy. The CMIE, which conducts one of the world's largest continuous surveys to track household incomes, expenses and assets, reckons that 70 million such jobs lost at the peak of the lockdown in April have returned mainly due to the bumper harvest that has helped absorb the workforce. 

The COVID mayhem has resulted in economy going sown. As per the recent National Statistical Office (NSO) data, India's GDP growth contracted by 23.9% in the first (April-June) quarter of 2020 compared to the same period (April-June) in 2019. 

Morgan Scott Peck, a psychiatrist and author of a very popular book, The Road Less Travelled, published in 1978 had this to say. “The truth is that our finest moments are most likely to occur when we are feeling deeply uncomfortable, unhappy, or unfulfilled. For it is only in such moments, propelled by our discomfort, that we are likely to step out of our ruts and start searching for different ways or truer answers” Truly in his own words the life has been difficult in these times of the pandemic. Serious questions that seek answers are two. What can we do? What can the government do?  

Wherever we have been or are, our lives have been disrupted. If we’re among the fortunate and have been able to work from home, then Zoom or Skype, text messages, and emails have replaced in-person meetings. If we haven’t been able to work from home, then maybe for the first time in our lives we are on some sort of suspension. We may have even seen our small businesses temporarily and perhaps permanently closed. We need to consolidate the available avenues and get on feet again for we are all innately resilient. We must learn to appreciate life, preserve relationships, look for new possibilities in life, enhance personal strength and bring about a spiritual change. EdTech, Health and Wellness, Financial Services and NBFC’s, SAAS and Remote Working Tools, e commerce and Delivery Based Services, OTT Platforms and Online Gaming, Pharma, Life Sciences, Labs/Pathology, Manged Office Spaces, are all areas that will bring in tremendous opportunities post pandemic. A collective action by all communities of people will be required to make an honourable exit out of the pandemic. 

The Government must actually lift a leaf out of the Chinese experience and make inroads into the ICT market. About one eighth of global ICT exports flow from China. More importantly, for the majority of these imports China is the dominant producer, more than 50% of imports of a single product in electronic and machinery products. Aggressive Make/Made in India campaign and out of box labour/land reforms must ensure a capture of at least 50% of this market.   

The government must lay great emphasis on promoting travel and tourism. Hypermobility and agglomeration around the existing tourism hotspots must be encouraged. New ones must be developed. One way of doing that would be to build new planned cities around places that are historically known but never considered worth developing. Growth of ‘Ayodhya’ as a future tourism spot has yet unexplored potential. Post pandemic, people must be encouraged to move out of cities. Rising production costs, fewer migrant workers, less travel, and the need for social distancing, could all boost automation and digitisation in a post-COVID world.  An all-out automation and digitisation pitch would be an imperative, if China has to be tamed. Equal attention must be paid to pollution, with green policies implemented.

A post-COVID world could possibly disorganise the global economy as a result of trade barriers, reshoring of supply chains, reduced labour migration and foreign direct investment. These changes will have macroeconomic implications. The global business cycles may become less synchronised, while growth and inflation could become more volatile again. The government must be ever watchful, must choose maximal reform strategy to incremental, if it has to make a difference.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Dr. S.S. Mantha

Former Chairman of AICTE, Dr. Mantha is an eminent academician. At present, he is Chancellor KL University and Adjunct Professor, NIAS, Bangalore.

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