First, this global pandemic shows us the benefits of ‘Be Indian and Buy Indian’. As we isolate ourselves from the world, we have become critically aware of our own supply chain. We know now that relying on other countries for critical items – food, medicines, energy – ultimately puts you at their mercy. To avoid scenarios like this for ourselves, it is more important than ever that we become self-reliant and reduce our dependence on the vagaries of other countries. And for this, the mind-set of the affording Indian consumer must first change; we should prioritize domestic vacations instead of international destinations, buy more Indian brands and yes, even continue to support the local bhajjiwala who has been a critical pillar in this crisis.
There is also much that the government can do to bolster this effort. If we are to become more swadeshi – and we should – domestic production and domestic entrepreneurs must be given a real boost in the form of protection and tax incentives. Instead of being a global outlier in terms of heavy taxation, it is time that GST, corporate tax, and personal taxation on corporate dividends are brought down to reasonable rates. 25%-30% should be the maximum tax rate for Indian entrepreneurs and similarly, the personal tax regime should be capped at 30% with no further surcharges. These measures will not only make us truly competitive but will further add more people to the formal economy which in itself becomes a virtuous cycle of benefit.
Secondly, It’s clear that the economic impact of Covid-19 will be massive. Not just Japan, the US and other Western economies will look to diversify production away from China. India must leverage this to fast track its economic recovery, else it will miss the bus once again even as its Asian neighbours capture the benefits. Government must avoid the old errors that led to an economic slowdown, and hobbled Indian competitiveness and exports — such as several rounds of import tariff increases or the inability to get on top of the bad loan problem. Instead, it should go for full throttle reforms to free up factors of production, and drastically cut red tape to attract foreign investments.
This will be an enormous boon to both the domestic and export-oriented industry, which are ultimately two sides of the same coin. There is no better time than now and if we can make India a domestic consumption powerhouse that makes for India, Indians can also export to the world.
At some point, this COVID threat will pass and immediately after will be the time for the government to dust off its Rs 102 lac crore National Infrastructure Plan and start building with a bang. And there is so much to be done: the Central Vista, joining of the rivers, multiplying our roads and highways, completing the national gas grid and the digital grid. As we rise from the greatest threat of our times, it will be the time to build greater than ever before. This build-out has the ability to stimulate the economy quickly and expeditiously with stupendous long-term results. History tells us that the greatest wins have always come from the greatest threats. And as India faces the greatest threat in her modern history, our country is uniquely poised to turn this into Great Opportunity that our children can thank us for. The time is now.
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