Towards Building A Robust Global Economy Post COVID-19
“The most challenging times bring us the most empowering lessons”
Everyone will agree that the country is now grappling with the biggest and the most daunting health crisis we have ever come across during our lifetime. The deadly virus is likely to peak- reach its height of spread and severity- in the days to come. We are finding new ways of experiencing joy and love amid the loss of life, livelihoods, and lifestyles. We have now realized that we might not need all of what we thought we needed. However, this challenging situation shouldn’t deter us from finding some of the most effective ways of creating a resilient and sustainable future.
While it is imperative for citizens of the country to remain at home in the near future and strictly adhere to government guidelines, the policymakers must keep in mind that the number of people suffering from hunger-related fatalities doesn’t escalate. We should be well- prepared for a prolonged lag for economic recovery. The profound loss of normal life of the famed Middle Class in India or abroad cannot be underestimated by any government- be it local or national.
Prepare and Plan
The virus now seems to challenge researchers and doctors to identify it, contain it and develop a vaccine, thereby dishing out huge sums of money towards this formidable task. The gloomy and far-reaching effects of the forced shutdown of economic activities have brought about unprecedented revenue loss across the globe. The coronavirus pandemic is sending the unemployment figures around the world to levels that could rival the Great Depression. The economic situation in Developed Countries is just as grim and nebulous.
France, for instance, estimates that its economy has contracted by 6% in the first quarter, the worst plunge since 1945. Prominent German economic institutes anticipate a bump in Germany’s unemployment this year ranging from 0.2 to 0.5 percentage points. JPMorgan Chase estimates unemployment in the United States could hit 20% in the second quarter.
There are other warning signs as well. Trade war among countries, rising pollution levels across nations, climate change and related hazards and cyber crimes and population explosion in Asia pose grave threats to the well-being of the entire world. So, we need to be better prepared and plan for a strong and buoyant economy.
Change in Global Strategy
Curbing Layoffs: In Germany, 650000 employers had informed employment agencies of their intention to make the best use of the country’s short-time work program. Under the system, employees have their hours scaled back and the government pays them up to two-thirds of their normal salary, while the employer pays little or nothing. Once the employer is ready to pay full wages again, everything returns to normal – there are no layoffs. Hard-hit Italy, meanwhile, has simply banned its companies from making layoffs for 90 days. In Britain, the government has promised to subsidize up to 80% of workers’ salaries so long as they are not laid off, but it is struggling to get its program up and running.
The Indian Scenario
The unprecedented public health mayhem triggered by the COVID -19 pandemic and its multifaceted- cum- drastic impact on public life is taking a heavy toll in India. Experts are already pointing out that the Indian economy will see a complete recalibration as the fallout of the crisis. Our country is striving to mitigate the massive socioeconomic impact of the pandemic. There is an urgent need to bolster health emergency spending. We also need a transition toward a growth path that ensures we bequeath a healthy planet to future generations. With GDP growth in 2020 in the short-term unlikely to rise beyond 2.5%, there is a dire need to have a shift in the paradigm of production and consumption which is at the core of all economic activities.
The government should design economic stimulus packages with social inclusion. Measures like a moratorium on tax payments, tax relief on the import and manufacturing of essential healthcare equipment and modification to the insolvency and bankruptcy regulations will go a long way in getting things in the right perspective. Environmental sustainability should be at the heart of all future policies. All of us- as consumers- must understand the importance of switching to sustainable lifestyles. This will begin with increasing awareness of the impact of consumer choices on people and the planet.
Source: Fortune India, The Diplomat