Vaccination key for GDP to bounce back faster

India's economic growth, in the current Financial Year 2021-22, may suffer a setback due to the ongoing Covid-19 pandemic but industry experts are optimistic that sectors such as agriculture will beat Covid blues and perform well in the Kharif and Rabi season. Deepak Sood, Secretary-General, The Associated Chambers of Commerce and Industry of India (Assocham, India), spoke to Bizz Buzz on the challenges faced by the rural segment and unorganised sector for the current financial year

Covid 2nd wave is taking heavy toll on the rural economy, how do you think agri sector will fare in this quarter and also this financial year?

When you broadly compare last wave and this wave- Last year, at the stroke of hammer everything was shut down. Yet there was enough procurement, there was sowing that took place. Therefore, enough business came up. Government took lot of steps to ensure rural economy continues. The rural economy is robust with financing schemes, inputs from central government, from fiscal and monetary side and also because of the avid sense of the agriculture. This time,the rural areas are hit but logistic chains have not stopped, supply chains have not broken, processed food, food industry, everything is in order. So, you may find a small dip during the first quarter, possibly because of the pandemic that has hit the rural areas. I think rural economy will catch up as we have enough time left in this fiscal year. Kharif and Rabi crop will be much more than what you had in the past. What will be more important is not just the cereals but horticulture, flowers and non-farm prospects that one has to look at.

Should the central government come out with a relief package for agriculture, fisheries and other related sectors?

Not just fisheries (farming), I think we can add dairy, poultry, fishers as well, when we talk about non-agri Items. There should be enough and more schemes given to ensure that we are tuned to health standards, quality standards and investment in technologies are done in these areas so that output yield and productivity improves. This is the time to provide that so you are able to increase the rural income, business. And remember, all this is not just consumed within the country but also exported. So, there is a huge chance to help the entrepreneur at the local level. This helps you to stop migration. These are the areas where the government should give emphasis and is giving emphasis. If you recall the Union budget highlights,enough allocation was made for rural areas. Of course, there is more room for it. Quite a few things are already being done through National Dairy Development Board and NABARD.They are already having enough flow of government funds for the schemes related to rural agri sector.

Manufacturing sector is seeking cuts in GST rates on raw materials. Your thoughts on rationalisation of GST rates and lower taxation on raw material imports.

While the IGST has been reduced on a number of imported medical items, a Group of Ministers (GoM) has been formed after the last GST Council meeting to suggest ways to reduce GST on the vital domestic manufacture of healthcare items in order to reach the benefits to the end-users who are the patients. This idea has been well articulated by Finance Minister Nirmala Sitharaman.

Given the surge of cases in 2ndwave, there is an immediate need to speed up the vaccination drive. That can only happen if vaccine supplies increase. Why are industry bodies not mounting pressure on the central government to make efforts to ramp up vaccine production?

I don't think that the government is waiting for the pressure. The government is fully aware of the problem. There are allied issues that go with the vaccination. You can't produce so much vaccine at one go. You have to gradually ramp the production up. There are so many issues like raw materials, rules and regulations and IPR issues. Further, technology transfer takes time. So, ramping up is the top priority. But it takes its own course. More and more research is going to happen to see if there are more ways to vaccinate people, look for more alternatives to address the problem. The only solution for this disease is to get 60 to 70 per cent of the population vaccinated. Waves after waves of the disease are expected to hit and hence it is pertinent and important for us to be prepared, that is to get vaccinated.

Where do you see India's economy heading in the current fiscal, given the raging Covid 2.0 and the likely Covid 3.0 in near future?

Till now, we have not seen any industry largely getting impacted or the supply chain disrupted in a big way, since consumption seems to be quite okay. This is a very distributive disease which is going on right now. But you will see certain impacts coming in the first quarter, you might see some dip in the first few months of second quarter. But remember, demand is something that doesn't vanish. It can be only be postponed. But the latent demand will kick-start and bring the economy back on growth track. This time, the rural economy has been hit and the government in its wisdom should support the rural economy in a very large sense. We have been saying this since last year - and other chambers are saying it now - that the government should support the urban and rural poor, go for direct transfer and should line up more loans for MSMEs. People who were impacted last year are yet to come out of it. And they are getting hit again this year. So, they are the ones who need support. As the world opens up, we will have to get our industries opened and as that happens, you will see that we will catch up with our growth numbers.

Which sectors will need the government support?

The smaller ones would require help. Restaurants, traders, shopkeepers, small business keepers, consultants, independent people, professionals who were doing small jobs, serving the industries, these were ones who are badly affected. This is where I think packages should be targeted. There is a lot of liquidity, monetary support that RBI has given. Money isn't reaching to the right people because some don't have good financial tract record. But that doesn't mean you don't help them. You have to find a way to help them.

How long will it take for the Indian economy to come out of Covid crisis?

I think when 60-70 per cent of Indians get vaccinated, we will come out of the Covid crisis.

Despite being the pharmacy capital of the world, India suffered the shortage of medical oxygen and life-saving medicines. In this context, do you think India should increase its R&D spend on pharmaceutical sector?

The government has already announced a Production Linked Incentive (PLI) scheme for the pharmaceutical and medical device manufacturers to scale up domestic manufacturing. However, there is always a scope to scale up the R and D in India especially in the wake of health emergencies. We need to scale up expenditure on R&D (Research & Development) at all levels - in government labs, private sector enterprises and universities.