Coronavirus – Economic Issues

The stepping stones in the post-pandemic world

Note4Students

From UPSC perspective, the following things are important :

Prelims level : UNCTAD

Mains level : Paper 3- Opportunities for India in post-Pandemic world

Context

The COVID-19 pandemic has profoundly impacted lives and livelihoods across the world. Governments, global institutions, industry, academia and non-profit organisations around the world have joined hands to tackle the global challenge and help countries rebuild their economies.

Criticality of international cooperation and role for India

  • The novel coronavirus pandemic has once again highlighted the criticality of international cooperation in combating current and future challenges.
  • Areas of cooperation: Key among these include economic growth, building competitiveness of the investment climate, ensuring sustainable development paths and adapting to technology acceleration.
  • Strengthening global partnership: Building resilience to cope with the threats posed by pandemics and other man-made and natural disasters has necessitated strengthening global partnerships now more than ever.
  • Global partnerships help in building mutual trust and understanding by agreeing upon common rules and standards and sharing of best practices.

Areas to focus on

[1] Challenge of long term sustainability of growth process

  • While the world economy is rebounding strongly, the long-term sustainability of the growth process needs to be strengthened.
  • Exit from the massive stimulus packages itself may pose risks of economic and financial instability.

[2] Challenges of supply chain management:

  • The pandemic severely disrupted global supply chains and set the global trade trajectory on a downward path.
  • Even as the world emerges from the pandemic, facilitating medical supplies and essentials will continue to remain a top priority and for this, supply chains will need to be kept flowing.
  • For this year, the United Nations Conference on Trade and Development (UNCTAD) indicates an increase of 22.4% in the value of global merchandise trade compared with 2020.
  • World trade is expected to stand about 15% higher than before the COVID-19.
  • FDI flows in developing economies also increased significantly, totalling $427 billion in the first half of 2021.
  •  Cooperation on trade facilitation for enhancing open and transparent markets, technical assistance and reduction of complex process and arrangements must be promoted.

[3] Increasing competitiveness

  • Competitiveness will be key in facilitating growth and inclusive development.
  • New opportunities and avenues across potential high growth sectors such as manufacturing and start-ups must be leveraged.
  • An ecosystem of entrepreneurship and innovation with targeted policies and interventions will contribute to enhancing productivity and generating employment.

[4] Structural changes with the emergence of digital economy

  • Certain structural changes are likely to become permanent in the future and this is especially true of the digital economy
  • Equitable adaptation: The rise of telemedicine, remote work and e-learning, delivery services, etc. necessitates equitable adaptation to advanced technologies and tools, building robust infrastructure, and occupational transitions.
  • Skill development and worker training, investments in education and vocational training, and capacity building would be some key areas of focus for filling technology gaps and nurturing new and existing talent.
  • Investment in innovation: At the same time, investments in innovation will be crucial, especially during a crisis.

[5] Climate change

  • Matter of urgency: Climate change has now acquired urgency from policymakers around the world, as seen in the recent COP26 at Glasgow.
  • International alliances and cooperation on building sustainable solutions, green technology, resource efficiency, sustainable finance, etc., must be promoted to fast-track meeting the sustainable development goals and for ensuring all-round development.

Opportunities for India

  • Attaining faster growth path: India’s recent reforms, role in combating the pandemic, and startup vibrancy, among other factors, have attracted global attention and can help it attain a faster growth path, provided its integration with the world economy and trade gains strategic intensity.
  • Reliable and trusted player: With multiple strategic shifts, India’s role as a reliable and trusted player in the comity of nations stands enhanced.

Way forward

  • In the post-pandemic world, it will be critical for India to improve on its investment climate and systematically target its export capabilities across sectors and regions.
  • Ease of doing business and new free trade agreement with major markets will help it integrate closely with the world through trade and investment partnerships.

Conclusion

The time for India is here and it must leverage international partnerships for ensuring a robust and sustained economic growth path.

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