India can come out ahead (How India can pull ahead in the world post-pandemic)

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 India can come out ahead (How India can pull ahead in the world post-pandemic)

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• Lesson from history: Go back to 1962, when the Cuban missile crisis had broken out. Assume that the Spanish flu also arrived, and US was on the Gold Standard! That is what it is for India today.

1. Solution needed is at 3 levels - medical cure to kill the virus's fear, proper economic actions to stir the economy, and smart geopolitical moves.
2. Life can return to normal only after a vaccine is properly deployed (so some time away).

• All unknowns: Mankind doesn't know so many things about this virus - actual fatality rates, whether weather can control it, whether it's mutating etc. 

1. It is certain that we are 18 months away from a mass deployed vaccine
2. When can an anti-viral drug arrive? No one knows.
3. Till these two happen (or any one), economies will remain constrained.

• Economic losses: World economy will lose $10 trillion in 2020 due to the coma it is put into. 

1. The 2008 global financial crisis led to the use of aggressive monetary policy, and it was then exhausted
2. Globally, corporates are leveraged upto $12 trillion now
3. Oil demand crashed, and prices have slumped
4. China helped a lot post 2008, but cannot do so now, as it is restricted to itself, and others don't trust it anymore (like earlier)
5. So every man for himself!

• China is the enemy for US: The past 10 years saw anti-China sentiment gain ground in the US. With this virus tragedy, in an election year, Americans are not likely to be benign towards China at all now. Everyone will be hurt, as battling this virus means "global coordination".
• Why no global coordination: Fiscal response is varying from 1% of GDP to 18%. Health response ranges from total lockdown to limited restrictions. WHO and UN are suffering a crisis of credibility. India can play its game smartly now.
• Three levels of play:

1. Health - The govt. has deployed "jugaad" to use the limited healthcare resources to stop the infection from rapidly spreading. Isolation and social distancing has been brought in. But "testing at scale" and isolation needs to be done consistently now. But locking everyone in won't work for long, as Indians are just too poor, and many survive on a day-to-day basis.
2. Economy - IMF thinks India's GDP growth rate will be highest in the world in 2020. That may be true if India acts properly. Indian BOP is helped due to crashed oil prices (BOP - Balance of Payments). Food stocks are excellent, Rabi crop is good, monsoon may be good too. Since demand is down, inflation would be low. RBI has done a lot to boost liquidity, adjust norms, allow moratoriums and protect firms. Rupee is weak, so exports will grow. Debt to GDP is 73%, so India is better than others. Forget about credit rating for the time being. Take four steps now - FIRST: Print more money and give additional DBT (Rs.2000 for 3 months) to the poor, and give free food from FCI (upto Rs.65000 cr). SECOND: Protect MSMEs by giving working capital, and 80% of staff salaries for 6 months. THIRD: Launch a massive public works programme outside of the Budget, and devote 25% to primary health centres. FOURTH: Push pending reforms in agriculture, power, banks. And ask for gold donations from temples and people (tax free returns). 
3. Geopolitical - India can try and create an alternative to China if we first save ourselves. Then anything is possible to reimagine.

• Summary : The pandemic is redrawing global political boundaries, and India can benefit in a big way provided it can save its own economy first.

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