Similarly, the change in definition of MSMEs by raising the investment limit and adding the criteria of annual turnover will encourage them to grow. Collateral free loans, special liquidity windows for NBFCs (non-banking financial companies), partial guarantee schemes will ensure smooth flow of credit. Liquidity infusion for power distribution firms to ensure dues are paid to generation companies will not only help the power sector, but the banking sector as well.
Therefore, I believe the package balances the needs of both the demand side and the supply side of the economy. Combined with reforms, there is no reason why India cannot bounce back to a sustained high growth trajectory that will drive our socio-economic transformation.
Do you think India has been able to build a health care system that can handle an exponential rise in critical Covid-19 cases?
I think that India has done remarkably well in handling this crisis. Even before the nationwide lockdown was announced, the Centre and states became pro-active and screening at airports had started. Certain states put restrictions in place in the run up to the nationwide lockdown. To my mind, the decision to go into a lockdown was extremely bold — if we had not initiated it and had continued to grow at the pre-lockdown doubling rate, we could have crossed one million cases by April 25. We have been able to prevent our health infrastructure from getting overwhelmed. If you compare how India has performed with the rest of the world, our share in global Covid-related fatalities is just 1 per cent. We have an extremely low number of cases per million population – about 73 as against almost 6,000 for Spain and 4,500 for the US. Even in terms of those who are testing positive for Covid-19, the mortality rate is 3 as compared to 14 for Italy and the UK. If we look at the total deaths per million population, we are at just 2 deaths per million, compared to over 500 for Spain, Italy and the UK each.
With the PM talking about Atma Nirbhar Bharat, is protectionism the right strategy to go with?
A misconception that needs to be cleared at the outset is that Atma Nirbhar Bharat in no way implies protectionism or isolationism from the global economy. On the contrary, it means making an India that is self-confident and self-reliant to take global competition head on. Therefore, Atma Nirbhar Bharat is not about looking inward, it is about unleashing the potential of Indian firms and workers. India has several local champions that can be transformed into global ones.
We must learn from global experiences. Japan created a policy environment allowing their auto industry to dominate the globe. South Korea did that for consumer durables. India can and must do the same. It is essential to create an ecosystem that allows private enterprises to thrive and compete on the global stage.
How is India planning to tap the opportunity of attracting firms moving out of China?
Our focus is to actively encourage companies to move their manufacturing
base to India. It needs to be understood that encouraging foreign investment is not just about raising limits for foreign direct investment (FDI) or opening up new sectors to FDI. It is about creating an enabling environment for the private sector to thrive. Land and labour have been traditional constraints.
To make this a reality, both the central and state governments have to work together. Several states have already done away with their archaic labour laws. We must recognise it was these very laws that discouraged largescale manufacturing
and encouraged informality. The Centre is in the advanced stage of codifying the multitude of labour laws into four codes.
The new labour laws will need to balance both the needs of employers and employees to make India a manufacturing
powerhouse. In terms of land, large tracts are being identified and developed with necessary infrastructure to ease the acquisition process. In terms of power, we need to ensure reliable and affordable power to industries. The National Infrastructure Pipeline has been envisaged to elevate our connectivity to world-class standards, thereby reducing cost of logistics.
We must rationalise the number of forms a business needs to fill, we must radically improve the time taken to provide clearances. For this, both the central and state governments must work together. It is only through cooperative federalism that will we see firms moving their manufacturing bases to India.
Some industry leaders and experts have said the abolition of labour laws may impact quality of products.
Will this discourage global firms from making India their manufacturing base?
I believe that the previous regime of multiple and complex labour laws were one of the major factors that discouraged largescale manufacturing in India. Despite labour laws that were heavily in favour of labour, it led to a situation wherein 80-90 per cent of our workforce was informal, therefore not covered by the laws that were enacted to protect their rights in the first place. Therefore, we must recognise that the existing system fell far short. The Labour Codes being discussed in Parliament are addressing these shortcomings.
As for quality, again, the old labour laws hardly encouraged quality manufacturing. It is about adopting global quality standards, efficient manufacturing processes, innovation, and adopting latest technologies. It is a combination of labour and capital that will result in an overall improvement in quality.
Your idea of opening up the defence sector further has become a reality. What impact do you see on the ground?
I think this is great news because this takes the Make in India journey a step further. We will have more companies coming in and investing, setting up their manufacturing bases and creating local jobs. Over time, this will lead to healthy competition.
To reiterate, raising quality is about innovation and adoption of cutting edge technologies. This is exactly what opening up the defence sector to foreign investment will achieve. It is also important to note that no industry exists in a vacuum — there is an entire supply chain that caters to the industry. Let us take the auto industry as an example. When did India start manufacturing cars and parts that we would export to the world? It was only after we allowed foreign investment.
Will the public sector policy take off, with the government’s divestment efforts facing headwinds due to lack of buyers now?
The disinvestment process is about driving efficiencies in areas where inefficiency dominates. Yes, we are facing economic headwinds. But in every crisis, there lies an opportunity. The success of the disinvestment process will not just depend on which firms are listed for disinvestment and when, but also on easing the business environment. It is about driving home the right signals to investors. There exists significant investor enthusiasm. To tap this, we must create an environment where these can thrive.