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Sunday, October 25, 2020

Covid crisis underlines need to invest in healthcare, infrastructure, environment

COVID is here to stay and we must learn to live with it, and not completely ignore the psychological needs and emotions of our workers.

Written by Sunil Alagh | Updated: September 26, 2020 9:14:29 am
covid-19, india coronavirus crisis, covid 19 infrastructure, india gdp spend on health, work from home, mental healthHealthcare workers test for Covid-19 in Mumbai. (Express Photo: Prashant Nadkar)

Anyone making meticulous long-term life or economic plans at the beginning of 2019 has seen them go awry. The new norm, in my opinion, should be to focus on immediate and medium-term (two-three year) scenarios. COVID-19 is unfortunately the new reality and will impact our lives through 2021 at the very least. The situation is analogous to crossing a road — one cannot cross with closed eyes due to high risk of getting hit by a passing vehicle. With a cautious approach, looking to the left and right before crossing, we still run the risk of being hit, but at least this is reduced. With our new reality, the government has to take the following steps to mitigate risks and move forward.

It is important to keep in mind the environmental impact of policies. The current Monsoon Season demonstrates the impact of global warming on previously predictable climate patterns and the economic activities that rely on it. We must remember that the environment is the parent of the economy and not vice-versa. Our focus on economic development at the expense of global warming will have dire consequences. The situation is comparable to the impact of alcohol use on the liver. I have been told by esteemed doctors that even if the liver is damaged up to 75 per cent as a consequence of alcohol consumption, it can regenerate after alcohol cessation. But beyond 75 per cent, you reach a point of no return.

By damaging the environment in the name of the economy, we are now getting closer to the point of no return. The government must pay attention to this and not continue the current policy, which allows industrial development to continue unchecked without caring for environmental consequences. Deforestation to set up a factory has an immediate environmental impact, which replanting trees will take years to mitigate. There is a middle path which allows for both job creation and preserving our ecosystem.

The government must take active steps to promote demand. So far, it has rightly looked after the poor, the agriculture sector and the supply side of the economy. But this is not enough as non-agriculture income, even in rural areas, has not grown.

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Demand is the oil in the engine of growth — without it, the economy will come to a grinding halt. The 300 million Indians who comprise the middle class are the major source for this demand. We must incentivise them to spend. I have been promoting this balanced approach of looking after supply and demand ad nauseam. Little investment and capital expenditure will take place if there is no demand for products. I agree that in the initial stages of the pandemic, it was important to provide for the poor and ensure the agricultural supply chain remained intact. But we cannot afford to ignore the urban middle-class any longer.

In the current uncertain economic environment, providing money into consumers’ hands is likely to be inadequate — the middle class is more apt to save it for a rainy day rather than spend. We will therefore need to devise creative solutions to promote spending, such as tax incentives for expenditure on cars, flats, white goods, travel etc. The government must continue to increase expenditure on infrastructure projects to provide stable employment. A Keynesian model of funding is required. It is only then that our economic trajectory will resume its upward trend.

While the government has increased healthcare spending to the tune of Rs 14,000 crore, this remains woefully inadequate. As the focus has been on creating large COVID isolation centres and reserving ICU beds, routine preventive services such as immunisation have fallen. Resources devoted to other, more critical, healthcare needs such as cancer screening and treatment have also been crippled. While COVID-related infrastructure spending should continue to be a top priority, a healthcare crisis should spur a critical look at all the healthcare needs of the growing population, both urban and rural. India spends only 1.3 per cent of its GDP on healthcare whereas healthcare spending in the developed world is between 10-18 per cent. Even China and Nigeria spend 4-6 per cent.

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A less important consideration is how we navigate working from home going forward. The vast majority of workers I encounter are longing to break free from the confines of their homes and collaborate with colleagues in the same physical environment. We must find a way to safely allow this and mitigate risks through solutions like mandatory masks, working on alternating days and social distancing within the workplace. Wearing a mask is the single most effective preventive measure until a vaccine is widely available.

Working from home is a poor substitute in a fast-paced world where collaboration is key. COVID is here to stay and we must learn to live with it, and not completely ignore the psychological needs and emotions of our workers.

Any crisis brings opportunities for growth and change. This is an opportunity for the government to cut wasteful expenditure and costs, increase expenditure on much-needed infrastructure like roads, ports and airports, insure poor farmers against vagaries of weather and provide food/shelters for the 800 million poor. In doing so, we must never forget the growing middle-class who help to generate demand and keep our factories running. This will increase the fiscal deficit – but it can be reversed in the coming years.

Government and industry leaders have their work cut out for them. In a democracy, we must stop merely criticising but instead offer solutions. As former President A P J Abdul Kalam said, “We must behave like a billion people and not like a million people”. We will make mistakes along the way but we must learn from them and move ahead as one — government, Industry and the people of our country.

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This article first appeared in the print edition on September 26, 2020 under the title ‘A better normal’. The writer is a business and brand consultant.

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