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Covid: Black swan event that gives India a pole position in global polity

Covid: Black swan event that gives India a pole position in global polity

We are at war. The Covid pandemic is not regional or limiting. No government or business has business continuity planning or BCP to fight its egalitarian reach, continuing intensity, and black swan impact.

The economy runs on four wheels of demand, supply, capital, and labor. Covid-19 has sucked out demand, obliterated supply, forced capital into protection, and left labor facing unemployment. We are staring at the four-wheeled car being transformed into a bicycle.

Thirty million people in the USA have filed for unemployment benefits the past six weeks. This scourge threatens 22 million jobs US created in the last decade.

The US has stepped in to support its industry with a $2.2-trillion package. Delta’s $5.4-billion bailout, including a $1.6-billion soft loan, South West’s $3.2-billion rescue and Jet Blue’s $936-million bailout are testament to its sagacity. It has further last week passed a $484-billion bill to aid small businesses. Similarly, the UK’s Coronavirus Job Retention Scheme allows companies a grant covering 80 per cent of employee wages as a necessary step to protect its economy.

India has been struggling to find jobs for a million citizens every month at 6.5 per cent GDP. GDP forecasts now range from 1.9 per cent (IMF) to -0.5 per cent (Nomura).

The tourism, hospitality, restaurant, entertainment and aviation sector is 10 per cent of India’s GDP. It is running on depleted oxygen and would be on the ventilator soon if not resuscitated fast.

India needs a $25-billion rescue fund to protect 50 million jobs and 250 million dependents on the sector. It could be structured as a 30 per cent grant over the next four quarters and a linked 70 per cent loan (Libor + 1-2%) over the subsequent four quarters with a two-year moratorium and five-year payback with future warrants for the government to acquire equity in such companies. At 0.9 per cent of the GDP, this is an essential pill to swallow to avoid the nightmare of quarter of a billion Indians left to fend for themselves.

Additionally, the government should allow the goods and services tax or GST to be retained as working capital for the industry for the next four quarters. The central ESI/PF fund should be used to fulfill both the employer and employee obligations for a similar period.

Tourism needs policy reform. It is high time to migrate it from the State list to the Union list for Central guidance, capital support to develop related infrastructure and sustainable jobs creation.

We need a Bharat Darshan campaign to have Indians travel. Prime Minister Narendra Modi’s Swachh Bharat initiative and his foresighted callout of tourism as one of the five key pillars of nation building need to get into school curriculum.

Junior school students need to be taught hygiene and environment protection. High school students need an appreciation tour of the values enshrined in our national temples from Sabarmati to Sriharikota to the Statue of Unity. This will also boost domestic travel and create jobs for teachers and guides in tourism and hygiene.

The Covid pandemic is a clarion call for India to protect its industry and people and take a pole position in global polity that it today has the opportunity to consciously helm.

<img class="wp-image-1605 size-full" src="https://indianarrative.com/wp-content/uploads/2020/05/Photograph-Rahul-Pandit-2.jpg" alt="" width="267" height="400" /> Rahul Pandit

<strong><em>The author is Managing Director &amp; CEO, Hamstede Living Pvt. Ltd. &amp; Member – CII National Committee on Tourism</em></strong>.