Several leaders have been looking back at the economic carnage that the COVID lockdown has left in its wake. Not K T Rama Rao. Telangana's vibrant Minister for IT, MA&UD and Industries, has been at the forefront of the southern state's war on Corona and firmly believes that there is a silver lining to all this. In an interview with The New Indian Express Editor G S Vasu, KTR as he is known, said, "Today the world is looking at China and looking to move away from a dependence perspective. I believe we have to bring in a lot of reforms and attract more businesses our way."
Excerpts from a conversation on India after Corona, why the centre needs to do more for the states and why we should be aggressively pitching for businesses to come to India in a post-COVID world.
Post GST, states are more dependent on the centre for release of funds. Do you think the Centre has done enough for states to handle financial aspects that arose from this crisis?
As much as I have a strong opinion, I would defer and not say it openly now. There is a lot of scope for improvement and a lot more that can be done, without question.
As a state, we talked about quantitative easing, and during the video conference held with the PM and all other Chief Ministers, we asked for helicopter money, asked the RBI to take a bold approach. Unfortunately, we haven't heard back yet. But I do believe there is still time for us to work together. This is a time for both the Centre and state to not indulge in politics, and also in the spirit of the country and our people, to work together and not get into a political battle.
Why do states need more power in your opinion?
The real action, when it comes to dealing with migrant workers, improving health infrastructure... when it comes to testing and so on -- all of it is in the domain of the state and not the Centre. The centre at best can be advisory. They need to look at the bigger picture. We have also raised the issue of linking MNREGA with agriculture as it is harvesting time and 60-65 per cent of our economy is dependent on it. Our request has not been heeded so far. And it is the need of the hour. They have to take a pragmatic look at every rupee spent and spend it judiciously in the current situation. They need not worry about percentages but worry about nuanced issues that states have been raising.
Do you think the RBI's steps to manage the crisis have been adequate?
No, I think they should do more. The current situation demands that the RBI, the Ministry of Finance and the Government of India do more. This is not the voice of the state but the voice of entrepreneurs and business owners across the country. On the one hand, we are advising companies to not lay off employees, pay full salaries etc. On the other hand, we burden them with pressures of EMI and cash flow.
A lot of businesses may be looking to exit China. How do you view this?
All the business ministries need to make changes that make India a much, much sought-after destination for business, moving forward from this crisis. Every adversity provides an opportunity. Today, the world is looking at China and looking to move away from a dependence perspective. The world has realised that it's not a smart thing.
What is the next best choice in terms of demographic value, democracy, market size? That would be India. But is India today doing enough to attract these businesses from China in a post-COVID situation? I believe we have to do more.
We have to bring in a lot of reforms and attract these businesses our way. There is a lot of talk about an unemployment crisis emanating from this crisis, but there is always a silver lining to the dark cloud and India can definitely seize opportunities in the sunrise sector -- biotech, life sciences, pharma, medical devices. This is the time that the Centre needs to work with states that are keen on attracting business and further employment creation. It is also the time to think more in the digital sense. We could beef up our networks and our telcos.
What steps do we need to take to attract big businesses that are looking to leave China?
Electronic manufacturing has had a fantastic run in China, but they are looking to move out. They can provide a great deal of employment not just to our engineers but also to our diploma holders and to our polytechnic and +2 graduates. Many of these companies have been talking to us and have been drawing parallels to what is being offered in Malaysia, the Philippines and Indonesia. In comparison, India loses out. This is a huge industry that the centre should look at.
The second industry is textiles. This industry can power our rural economy and offer a lot of employment for women. The centre needs to seize this opportunity because China has been producing 40 per cent of the world's textiles and I don't think we can afford to miss out now.
Pharma and the medical device industry is the third area. The Prime Minister of Japan has said that Japanese companies willing to move away from China will be incentivised. What we need are bold policy reforms that make India very attractive to doing business.
How quickly do you think these reforms should have been made?
I'm saying they should have been done yesterday. We should have been on top of this and if it has not been done yet, I appeal to Piyush Goyal, Nirmala Sitharaman and all the bigwigs out there like NITI Aayog. We are going to miss out. Broad fiscal reforms, agreements and so on are not in the domain of the states. Unless the Government of India does it, we cannot aspire to do it.
What do you foresee as the economic fallout of the virus?
There are three aspects, in my humble opinion.
The first is inadequacies with our medical infrastructure, and I speak about the entire world and not just India or Telangana. We are woefully inadequate. That has been exposed and brought to the fore. I'm actually, in a way, happy that governments across the world are now focusing on public health and infrastructure which is the need of the hour. That will give us and the people enough confidence to brace ourselves for the future.
Secondly, the whole hygiene and sanitation aspect in developing and underdeveloped nations has come to the fore and has been a mainstay of the discussion. This is a welcome move because the whole world realises the importance of sanitation and hygiene.
Thirdly, frontline warriors like health workers, police and sanitation workers have been felicitated and appreciated by people and their services are being recognised. These are changes that are much needed in society.
With respect to the economic fallout that can happen, there are two things. I've read a lot of reports from economists, healthcare experts from government officials, from eminent citizens and it appears to be a toss up between lives and livelihood. I don't necessarily conform to that argument. What we have to realise is that human life is the most precious thing and that any government's responsibility is to take care of its most vulnerable sections.
The second thing is to improve healthcare spend and medical infrastructure but to do this the government will need a lot of economic might. This is where Telangana as a state has been talking to the Centre and asking over and over again across the last month and a half to take a renewed approach towards our country, towards our fiscal policy and our monetary policy.
We will, of course, continue to push our agenda, but at the same time, we must come to a consensus that at this point the toss up is not between lives or livelihoods. It has to be both and we have to work together, as we are a developing country and have a massive population which is vulnerable. Governments have to realise that both have to go hand in hand and it is not a zero-sum game.
A lot of economists have advocated that the stimulus should be 7-8 per cent of the GDP. Do you agree that our financial situation notwithstanding, there should be a stimulus along those numbers?
We cannot merely ape the USA or Italy.
In spite of what the world may believe, the US has a bigger and stiffer challenge than what we have today. It is currently under the grip of a terrible epidemic which I find very difficult to understand because of the value they place on each human life. To believe that what people are doing in the US can be copied and pasted here is not accurate. For instance, can we not leverage the money that is available with the government of India in various public sector undertakings and various institutions more effectively? Does it have to be in a measure of the GDP in absolute terms?
I have a different opinion. In a federal republic it's not just the Centre that needs to open its purse strings and do more. They also have to give states the authority and liberty to borrow more, raise more and do more. That is what our CM has been asking for.
To defer all the loans the states have taken and discuss with the RBI on how the states can get a moratorium for the next 6-8 months where their cash flow is not affected. It is important to have a decentralised structure rather than a top-down approach. Right now, the government has allotted Rs 1.7 lakh crores which is about 1.5 per cent of the GDP.
Should it be more? Of course. Should it be 7 or 15 per cent? I believe that it has to be somewhere in between and India has to form its own formula.
Banks are generally reluctant to lend money to MSMEs. What according to you needs to be done in for them in the immediate context?
The importance and understanding that has to be given to the sector is not being given. There has been some relief that has been offered. From a state perspective, we have deferred their power bills and property tax payments and so on. What needs to be done is to get banks to give them a moratorium. Banks have been ruthless when it comes to MSMEs even if they miss one month's payment. RBI needs to step in and advice both public- and private-sector banks very sternly that no bank shall declare any MSME enterprise, at least for the next 3-6 months, as an NPA. The government needs to stitch up a working policy quickly that governs these things.
How long do you think it will take businesses to reach levels that are pre-lockdown? Six months to a year?
For anybody to go back to 100 per cent pre-COVID vs post-COVID will be a very new way of working. You will have to adjust to a new way of life. You will have to work more shifts with fewer employees and work in a batch processing mode and ensure social distancing norms are followed.
Unless a vaccine or drug comes about that gives the workforce the confidence that they're safe from corona, it will be a challenge to operate at pre-COVID levels. We have to have healthcare professionals visiting the workplace and ambulances need to be ready, and so, therefore, it will be new. To assume that we will go back to normalcy immediately will be unwise.
Do you foresee that this will see a sense of nationalism in terms of economic policy?
Honestly, if anything, this virus has humbled us as humanity. Shown us that for the first time in human history the entire world has faced one problem. For the first time, all boundaries in terms of nationalities, races, castes, class, creed, religion, everything has been challenged and redefined. This will tell us that we are one and very alike and not very unlike. This has put a lot of sense into our perspective and made us relook our ways of life and ourselves as a way of life. I've realised that what we have taken for granted as normalcy is absolutely underrated and people are dying for normalcy to return.