New Delhi: The coronavirus crisis has affected economies around the world in an unprecedented way, and the situation is considered to be worse than the depression of the 1930s. While the issue of restoring “normal” life is debatable, the biggest question is how long the recovery will take. to generate meaningful jobs. The pandemic has given the world an opportunity to update the status quo and reshape the world order in a more equitable, transparent and accountable way.
While China’s role in hiding and spreading the pandemic has raised serious questions about its leadership credentials, developing countries such as India, which have come forward to supply any essential medicines it had in its cat, to save mankind, they won praise.
India, despite its fragile and overburdened health infrastructure, has also managed to control the spread of the disease, which has caused huge casualties in developed countries. Indian Prime Minister Narendra Modi, who took the lead from the beginning to fight the pandemic, has managed the economic consequences.
In economic terms, the pandemic has raised a number of challenges and also provided opportunities. Its adverse effect is most visible in terms of job losses for the Indian diaspora, especially in the Middle East. India has almost 31 million non-resident Indians, of whom about 8.5 million work in the Gulf countries.
Indians make up more than 30% of the expatriate workforce in the Gulf states. India is the largest recipient of remittances from its diaspora in the world, just ahead of China. The World Bank has estimated (April 29) that remittances to India will fall from $ 83 billion in 2019 to $ 64 billion this year. However, the situation may change as regards actual receipts from the Corona account; he is likely to retain his leadership position.
The Indian diaspora forms a large group of skilled, semi-skilled and unskilled workers globally. In terms of countries, 82% of total remittances come from seven countries – UAE, USA, Saudi Arabia, Qatar, Kuwait, UK and Oman. Although the southern states of India dominate in terms of remittances, Kerala accounts for about 19% of them.
However, with regard to the choice of workers to go to the Gulf states, the figure showed a steady decline from 7.81 lakh in 2015 to 3.34 lakh in 2019. The reasons for the reduction in the labor market are attributed to slow oil prices. , nationalization policies in many of these countries and an increase in work permit renewal fees. However, one of the important factors for reduced labor-related migration is the reduction of the wage gap.
India’s economic growth has opened up unprecedented opportunities for people who are no longer willing to migrate to the Gulf states for work, especially in areas that do not provide satisfactory living conditions. In fact, it is a positive sign for the country’s economy to be able to absorb its labor force. Interestingly, despite the reduction in the number of such migrants, remittances from these countries increased over the period, indicating a higher increase in income for each migrant.
It is known that in all these countries important sectors, including health and medical, are primarily led by Indians who became indispensable during the crisis. In this scenario, the loss of jobs for migrants due to the pandemic may not be as acute.
The second important visible gain is the fall in oil prices. The lack of oil demand has brought the price to unprecedented low levels. India, which is primarily dependent on imports, has benefited immensely and can keep its import bill under control. While the import bill from the oil account was $ 144.3 billion in 2013-14, it dropped to $ 111.9 billion in 2018-19 and is expected to continue to fall to $ 105.6 billion in 2019-20.
The oil price war, combined with the Corona pandemic, has given India an opportunity to replenish its strategic oil reserves (SPRs). India currently has a capacity of about 5.33 million metric tons in three locations Vishakhapatnam, Mangaluru and Padur. It proposes to increase its storage capacity to 15.33 million metric tons.
The Ministry of Oil and Natural Gas has also allowed domestic public sector refineries to use Strategic Oil Reserves (SPRs) to store their crude oil purchases as well as to buy for the government. The move allows domestic refineries such as Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Mangalore Refinery and Petrochemicals to fill storage facilities with their surplus purchases so that the quantity already contracted is not left at sea. In addition, this would also ensure that refineries do not pay and pay fines for delays in unloading.
In addition, the government may also explore the possibility of giving oil suppliers flexibility to “buy” the future WTI contract for June, take over delivery and deliver it to India. For this, the Government may have to authorize them to block low prices through shipping contracts. As India is a major consumer of oil in Saudi Arabia, Iraq, the United Arab Emirates, Iran, Nigeria, Qatar, Kuwait and the United States, these countries have a long-term interest in India.
Moreover, India’s decision to fill its PRS in this time of crisis not only gave confidence in its ability to turn the crisis into an opportunity, but also offered solace to the reduction in black gold sales.
The government can also use the opportunity to attract investment, as it will likely be diverted from China. It is a fact that the pandemic started in China and Beijing has not taken adequate measures to prevent it from spreading. He refused to allow the WHO or other states to conduct an investigation into the origins of the pandemic, undermining its credibility.
As a result, many Western companies are considering liquidating operations in China and moving to other locations. India could emerge as a place of choice for such a business. In this context, “Make in India” could be juxtaposed with the “Made in China 2025” program. China, through the above program, wants to play a dominant role in global export markets, compared to its previous role as the production yard of the developed world. Its reverse engineering capability and dubious and unethical approach to patents and copyrights threaten the international intellectual property regime.
The important features of the Make in India program could be highlighted to design India as a favorable destination to attract fleeing investment from China.
India is also a leader in the manufacture of pandemic vaccines. The Serum Institute of India, one of the largest facilities to perform this job in the world, has joined hands with Oxford University to produce a vaccine for Covid-19. Due to the low costs, Indian producers offer a ray of hope for the equal availability of the vaccine for both the rich and the poor, at an estimated price of INR 1000; a small amount compared to the cost of a dose of Remdesivir, considered effective in treating patients with Covid, at INR 70,000.
India also took the lead in the South Asian region and paid the SAARC Covid-19 Emergency Fund with a maximum contribution to support efforts to combat the pandemic. While Pakistan has used the crisis to seek dollars from international institutions and donor countries, in addition to debt restructuring in developing countries.