Give your suggestions on how to make Rural
economy more sustainable in India, especially when we
are going through economic break down due to Covid
pandemic.
Answers
Explanation: As the novel coronavirus, Covid-19, rapidly spreads across the world, health services in many nations are increasingly overwhelmed, while the global economy is falling into an unprecedented recession. The International Monetary Fund has cut India’s growth forecast for 2020-21 to 1.9%, down from its earlier estimate of 5.8% in January this year. Informal sector workers and members of lower income groups have been hit particularly hard as their wages disappear. The International Labour Organization estimates that 400 million people in India are at risk of sinking deeper into poverty.
The pandemic has reinforced the links between health, environment and the economy. There is evidence that air pollution has contributed to higher Covid-19 mortality rates. While deforestation has increased our exposure to pathogens carried by wildlife, melting ice due to climate change can release undiscovered viruses frozen in the permafrost.
But this crisis also demonstrates that governments and individuals are capable of strong and rapid action in the face of an overarching challenge. As India looks to shore up its economy, it is worth reflecting on the other systemic actions that are needed to shift towards a more sustainable and resilient economy. Here are five interrelated recommendations.
1. Invest in sustainable infrastructure
Infrastructure investments are an effective way to boost economic activity and create jobs. But what kind of infrastructure should be built? Data from the 2008-09 financial crisis shows that South Korea, which directed nearly 70% of its stimulus towards green measures, rebounded faster than other economies in the Organisation for Economic Co-operation and Development (OECD). In the United States’ 2009 Great Recession recovery package, investments in clean energy and public transport created more jobs than traditional investments.
India too should take this opportunity to increase support for renewable energy, particularly rooftop solar, through appropriate policies and business models. Decentralized solar power can help spread critical services in remote regions if the upfront capital constraints can be addressed. It should revisit the potential import duties on solar panels, since this may not increase domestic production, but may raise the cost of solar power.
Similarly, scaling up the electrification and adoption of public transport will be critically important to reduce traffic congestion and air pollution. This should involve closer coordination with the electricity sector and a greater focus on vehicle charging infrastructure. Continued investment in cold storage facilities and supply chains will ensure the preservation and timely delivery of agricultural produce and reduce losses to farmers.
2. Build the resilience for the most vulnerable
About 90% of India’s workforce is informally employed, which includes gig economy workers. This population is extremely vulnerable to economic shocks and needs greater access to formal credit and social safety nets such as insurance and pension schemes.
Beyond employment guarantees, a universal basic income – broader than current schemes that are conditional upon occupation and land ownership – can help provide vital resources for subsistence, or for investing in education and health. Greater access to bank accounts for the 20% of adults without one, per 2017 data, would help efficiently deliver this income to households.
Lastly, it is critically important to expand access to clean water, clean air and primary health care. These will improve life expectancy and increase economic and physical resilience.
3. Use fiscal mechanisms for recovery and resilience
Fiscal mechanisms can help support recovery and resilience efforts, while promoting low-carbon development. The Indian government has announced an economic stimulus of INR 1.7 trillion ($24 billion), and is exploring another bailout of INR 750 billion for Micro, Small and Medium Enterprises (MSME), among other steps. Though MSMEs need immediate financing to deal with their wage bills, the government can also infuse capital for them to undertake needed industrial energy efficiency upgrades.
Several sectors, like the aviation and auto industries, will need support in order to recover. This will require consideration of the fiscal situation, and it presents an opportunity to encourage greater sustainability by making this support conditional on cleaner technologies and fuel efficiency.
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