25/04/2020 - Governance

KEY POINTS

·         As covid-19 spreads across the world, the global economy is falling into an unprecedented recession. The World Bank expects India’s growth in 2020-21 to slow to 2.8% from 5% in 2019-20.

·         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.

interrelated recommendations for sustainable growth

·         First, invest in sustainable infrastructure. Infrastructure investments are an effective way of boosting economic activity and creating jobs. India should increase support for renewable energy, particularly rooftop solar.

·         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.

·         Build resilience of 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.

·         It is also critical to expand the access to clean water, clean air, and primary healthcare. These will improve life expectancy and increase economic and physical resilience.

·         Use fiscal mechanisms for recovery and resilience. These mechanisms can help support recovery and resilience efforts, while promoting low-carbon development. The Indian government has announced an economic stimulus of 1.7 trillion ($24 billion), and is exploring another bailout of 750 billion for micro, small and medium enterprises (MSME).

·         Meanwhile, the government can increase taxes on luxury sectors with high environmental impact. It can also use this opportunity to rationalize fertilizer subsidy and increase taxes on fossil fuels, with the savings and proceeds returned to the target populations through cash transfers or social safety nets.

·         Encourage long-term change in behaviour. The current crisis has changed patterns of consumption. Electricity usage patterns have shifted as people are working from home on more flexible schedules. Non-essential purchases have temporarily ceased.

This pandemic has reinforced the relation between Health, environment and economy.  'Sustainable Development' means development that meets present generation needs without compromising future generation needs. Yes, this pandemic has given chance for a systemic change in 5 possible ways.

Sustainable Infrastructure- In general investments in infrastructure provides more jobs. Data from the 2008-09 financial crisis shows that South Korea, which directed 80% of its stimulus towards green measures, rebounded faster than other economies in the Organisation for Economic Co-operation and Development (OECD).

Resilient fiscal measures-  Government has announced economic stimulus of 1.7 Trillion. In this $750 Bn for MSME revamping as these occupy significant portion of economy.

Nudge Policies- The current crisis has changed patterns of consumption.Non-essential purchases have temporarily ceased. These offer an opportunity to implement demand-side solutions to drive long-term behavioural changes for more sustainable development.

Next Generation Technologies- Future may see more employment in gig economy & e-commerce. New technologies that can help support future response and resilience mechanisms. Data privacy and consumer protection needs proper regulation too.

Gig Economy- 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.

As blessing in disguise this opportunity is seen as a new way out to build a resilient society where secured economy and sustainable society are seen as new normal.