New Delhi: The coronavirus crisis has affected economies around the world in an unprecedented way, and the situation is considered worse than the depression of the 1930s. While the question of restoring “normal” life is moot, the bigger question is how long it will take to recover to create meaningful employment. The pandemic has given the world the opportunity to overturn the status quo and reshape the world order in a more equitable, transparent and accountable way.
While China’s role in covering up and spreading the pandemic has raised serious questions about its leadership qualities, developing countries like India, which have stepped forward to provide all of the essential medicines they were prepared to save mankind, deserved praise.
India, despite its fragile and overburdened health infrastructure, has also been successful in controlling the spread of the disease, which has taken a heavy toll in developed countries. Indian Prime Minister Narendra Modi, who took charge of the fight against the pandemic from the start, handled the economic fallout.
Economically, the pandemic posed a number of challenges and also offered opportunities. Its negative effect is most visible in terms of loss of employment opportunities for the Indian diaspora, especially in the Middle East. India has nearly 31 million non-resident Indians, of which about 8.5 million work in the Gulf countries.
Indians make up over 30% of the expatriate workforce in the Gulf States. India is the number one recipient of its diaspora remittances in the world, even ahead of China. The World Bank estimated (April 29) that remittances to India will increase from $ 83 billion in 2019 to $ 64 billion this year. However, the situation may change in terms of actual Corona revenue; he will probably keep his leadership position.
The Indian diaspora forms a vast pool of skilled, semi-skilled and unskilled workers in the world. In terms of countries, 82% of total remittances come from seven countries – United Arab Emirates, United States, Saudi Arabia, Qatar, Kuwait, United Kingdom and Oman. Although the southern Indian states dominate in terms of remittances, Kerala accounts for around 19%.
However, when it comes to workers who choose 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 contraction of the labor market are attributable to low oil prices and many of these countries and increased fees for renewing work permits. However, one of the important factors in reducing job-related migration is the reduction of wage differentials.
Economic growth in India has opened up unprecedented opportunities for people who no longer wish to migrate to the Gulf States for jobs, especially in areas that do not offer satisfactory living conditions. In fact, it is a positive sign for the country’s economy to be able to absorb its workforce. Interestingly, despite the reduction in the number of such migrants, remittances from these countries have increased over the period, indicating higher income generation for each migrant.
It is known that in all these countries, sectors of crucial importance, in particular health establishments and medical establishments, are mainly occupied by Indians who became indispensable during the crisis. In this scenario, the loss of jobs for migrants due to the pandemic may not be so acute.
The second significant gain visible is the drop in oil prices. The lack of demand for oil has pushed its price to unprecedented levels. India, which depends mainly on imports, has benefited enormously and can keep its import bill under control. While the petroleum import bill was $ 144.3 billion in 2013-2014, it fell to $ 111.9 billion in 2018-2019 and is expected to decline further to $ 105.6 billion in 2019 -20.
The oil price war, coupled with the Corona pandemic, has provided India with an opportunity to replenish its Strategic Petroleum Reserves (SPRs). India currently has a capacity of around 5.33 million metric tons at three locations: Vishakhapatnam, Mangaluru and Padur. It proposes to increase its storage capacity to 15.33 million tonnes.
The Ministry of Petroleum and Natural Gas has also allowed refiners in the national public sector to use Strategic Petroleum Reserves (SPRs) to store their crude oil purchases as well as to buy for the government. The move allows domestic refiners such as Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Mangalore Refinery and Petrochemicals to fill storage sites with their excess purchases so that the quantity already contracted is not left on the high seas. , it would also ensure that refiners do not default on payment and pay fines for late unloading.
In addition, the government could also explore the possibility of providing flexibility to oil PSUs to “buy” the future WTI contract for June, take delivery and ship to India. This may require the government to allow them to guarantee low prices through shipping contracts. Since India is a major consumer of oil from Saudi Arabia, Iraq, United Arab Emirates, Iran, Nigeria, Qatar, Kuwait and the United States, these countries have an interest in long term for India.
Additionally, India’s decision to refill its SPR in this time of crisis has not only instilled confidence in its ability to turn crisis into opportunity, but has also brought comfort to declining sales of black gold.
The government can also take 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 its spread. He refused to allow the WHO or other states to investigate the origins of the pandemic, undermining his credibility.
As a result, many Western companies are planning to end their operations in China and relocate elsewhere. India could become a prime location for such an enterprise. In this context, the “Make in India” program could be juxtaposed with the “Made in China 2025” program. China, through the above program, wants to play a dominant role in world export markets, compared to its previous role as the manufacturing backyard of the developed world. Its ability to reverse engineer and its dubious and unethical approach to patents and copyright threatens the international intellectual property regime.
The main characteristics of the “Make in India” program could be highlighted to project India as a favorable destination to attract investment fleeing from China.
India has also taken the lead in manufacturing pandemic vaccines. The Serum Institute of India, one of the largest facilities to undertake this work in the world, has partnered with the University of Oxford to make a vaccine against Covid-19. Because of the low costs, Indian manufacturers offer a silver lining for equal availability of the vaccine to the rich and the poor, at an estimated price of INR 1,000; a paltry sum compared to the cost of a dose of Remdesivir, considered effective in treating Covid patients, at INR 70,000.
India has also taken the lead in the South Asian region and launched the ASACR Covid-19 Emergency Fund with maximum contribution to support efforts to fight the pandemic. While Pakistan has used the crisis to seek compensation from international institutions and donor countries in addition to restructuring the debt of developing countries.