India got $38 billion in foreign investments amid COVID-19: Amitabh Kant of NITI Aayog

Amitabh Kant: No, we were expecting this. There was no alternative to this because India had a very stringent lock down during that period. And there was no economic activity taking place. There was no industrial activity, there was no manufacturing activity, there was no service activity.

It was an unprecedented scenario; the main challenge was to save lives. What use of growth when you can’t protect lives? Therefore, the Prime Minister’s and the government’s first priority was to save lives of people. Then, nobody knew the character of the pandemic.

Many experts say that annual growth rate is also going down. Your views?

Look, around the world, actually, when you compare us to the financial crisis of 2008 -- even when you compare it with the 1928 depression -- this crisis is much bigger worldwide. During the 2008 crisis, the global economy declined by 1%.

This pandemic has already led to a decline of over 7.5% -- across the world. There’s been a fall of over 50 times more of what we had seen in the 2008 crisis. So it’s not just India, every single country across the world has been impacted by this.

Do you think India’s lockdown was too stringent and hit the economy very hard?

You are speaking with the benefit of hindsight. At that point of time, nobody knew the nature of the pandemic. As we went along, the lockdown was eased up and we said along with lives, we have to protect livelihoods and therefore the economy was gradually and slowly opened up.

Today, while COVID-19 has grown in some Indian states, economic activity is going on. The Centre has asked states not to go for (full) lockdowns. We have now come to understand that this pandemic is best handled by face covering (masks), by physical distancing, by testing, by contact tracing.

It has been a learning process for everyone across the world. But because of the lockdown, we were able to suppress the virus for a long period and while COVID-19 cases may have spiked, the number of deaths in India are among the lowest in the world. Indian medical system has shown a lot of resilience.

We work in the aspirational districts, the most backward districts of India, we do a lot in terms of innovative work, the national health agency, the Pradhan Mantri Jan Arogya Yojna, all these new ideas have come out of Niti Aayog, and a lot of innovation has come out of Atal Innovation Mission. We drive 5000 tinkering labs in school, we drive incubation centers, we’ve brought an innovative culture to India

- Amitabh Kant

If you compare with China, which is comparable in population, where does India stand?

China is not a democracy. You can compare India’s COVID-19 response with that of US, Italy, UK or even Brazil. I am not getting into the merits of it. All that I am saying is, that when the crisis broke out, we were not aware of the nature of the pandemic.

As we went along, our policy responses became more and more evolved, and now the economic activity is bouncing back and we are quite confident that despite the crisis, we will see growth from now onwards.

If compared to Western countries, India’s stimulus package is fairly low at 2% of the GDP. Why is it so?

You have to look at both the fiscal response and the monetary reforms of both the government and Reserve Bank of India (RBI). In addition to that, you have to look at the entire Atmanirbhar package. You have to look at radical reforms.

Changes are in the coal sector, Micro, Small & Medium Enterprises (MSME) has been redefined, the essential commodities act is changed, the agriculture produce marketing control order, the contract farming was held up for over five to six decades, all of these roadblocks have been eliminated. Now Indian farmers will be able to get market price. Earlier farmers were forced to sell in the local mandi, now they can sell anywhere in the world.

Please, understand that the crisis is not yet over. We are still in the midst of a major pandemic. And this pandemic may continue for a long time. Therefore, the responses of a country like India have to be very measured.

We have looked at the entire economy, but we have not given any sectoral assistance. We have not given assistance to travel, tourism, restaurant, airlines, these sectors have been badly affected. But the government has consciously felt that whatever assistance needs to be given, has to be given for the whole economy and sectors which are impacted heavily.

Some restructuring will have to be done. So, the RBI appointed the Kamath committee which has recommended assistance to 28 sectors. We will serve after restructuring. We will try and support everyone but within means. We must also understand the impact of deficit financing and what it will do in terms of inflation.

Critics say it’s not reforms in agriculture but it’s in agro-businesses.

I agree. Our objective is to convert agriculture into agro-businesses by also enabling contract farming of a large type so that businesses can get into agriculture and do large scale farming. The biggest impact that the government has done is to drive digitisation across the economy through the Jandhan-Aadhar-Mobile (JAM) trinity.

India is the only country with over a billion biometrics. We’re the only country with a billion mobiles. We’re the only country with a billion bank accounts. So this has led to a huge drive of digital payments. Digital payments have grown enormously during the crisis.

Companies which are driven by technology and digital payments, have all grown. Fintechs have grown, all tech companies have grown. We are paying directly in over 500 schemes of the government to the beneficiary. No country in the world has such a sophisticated payment system.

What is your estimate of the actual loss of a lockdown?

Our view is that the lockdown has helped us to save lives. If we had not done a lockdown, India would not have been prepared. We had no PPE, no ventilators, no masks, not enough hospital beds.

The lockdown strategy is a harsh one, but it gives you time and that time enabled us to build our hospitals, there are 500 companies in India who are exporting PPE from India. Today, our auto manufacturers are making ventilators and exporting ventilators. We are the world’s pharmacy.

Is actual loss of lockdown around 13% of GDP (Rs30 lakh crores)?

No, I don’t think that has been estimated. People are making guesses. I don’t think any analysis of the economic loss has been done because of the crisis. The pandemic is not yet over.

The positive growth of agriculture is not enough. It can’t offset losses in manufacturing and exports.

I agree with you. But India is the only country in the world which has attracted $38 billion of foreign investment in a range of sectors even during the pandemic. Google — $10 billion, Facebook — $5.7 billion, KKR (US equity firm)- $1.5 billion, Vista Equity Partners — $1.5 billion, Saudi PIF — $1.49 billion, Sequoia — $1.35 billion, Walmart — $1.2 billion, Foxconn — $1 billion, General Atlantic — $870 million, Amazon — $308 million, Intel — $253 million, WeWork Global — $100 million, Qualcomm Ventures — $97 million etc.

We rolled out a production and incentive scheme, in mobile and telephoning. Apple is coming into India in a very big way. We are attracting over $100 billion worth of manufacturing in the mobile and telecom sector and in medical sector. India is offering production linked incentives.

We are offering them land, we are offering them plug and play facilities in India. Vietnam and few other countries may have attracted some investment, but they do not have as many skilled workers, no large domestic demand, or the size and scale of India. So, many manufacturers are looking at their companies moving out of China to relocate in India.

How can the digital technology itself boost the economy with weak manufacturing and exports?

If you look at the top ten companies in the world which have grown, eight of them are technology and digital companies.

Manufacturing will become more and more technology and digital driven. Look at a car manufacturer like Tesla. Is it a manufacturing company? I would say it’s a technology company because it has used all the tools of the fourth industrial revolution to digitise its manufacturing process.

Therefore, 3D printing, robot, internet of Things, Artificial Intelligence will permeate every sector of Indian economy — be it pharmaceutical, agriculture, battery manufacturing, automobile. Every sector will get impacted by the fourth industrial revolution. If manufacturing has to grow in India, companies will have to go more and more digital.

The figures of July import from China is $5.6 billion. In spite of talk about Atmanirbhar, the import is more than June 2020.

Don’t expect this disruption to take place immediately. It is not possible. This is a strategy for a long term. We were importing a lot. Also, you cannot stop all imports. You can curtail imports of items which are being consumed in India but if you stop other items, which come as imports, then your exports will get impacted. But our capacity and capability have to be built up over the long run.

You can curtail imports if you start becoming competitive in manufacturing yourself, Amenabar Bharat is making yourself competitive. And making to scale and size, and that is what we are doing across. We should be competitive as far as China is concerned.

The World Bank didn’t give a ranking citing data irregularity.

No, India has done very well. 79 position. It improved in the World Bank’s ‘ease of doing business’. Also we don’t work for the sake of World Bank; we work for ourselves. We just ranked Indian states in which Andhra has come number 1, UP has come number 2 and Gujarat has topped in easiness for start-ups.

World Bank has some data issues with four countries. It has nothing to do with India. India will continue to become, as the Prime Minister has said, one of the easiest places to do business in the world.

There is lots of talk of Atmanirbhar India, but don’t you think, lately, there is some kind of a perception deficit of India abroad?

No, when Prime Minister talks about Atmanirbhar Bharat, he’s not talking about isolationism or anti-globalisation. He’s talking about making Indian companies champions based on the domestic demand in India and using that domestic demand to penetrate global markets.

He wants every Indian company to become globally competitive, to be an integral part of the global supply chain. My focus right now is on health and education. We worked on the new education policy, we worked on health outcomes.

Who will be the bridge between the Centre and states in absence of planning commission of India?

You are talking of a socialistic era which is dead and gone. Niti Aayog works with every state of India. It’s a very cooperative partnership. We don’t do any more plan allocation to the states, that is being done away with. And every state has the freedom to do its own allocation now, but as far as states are concerned, we have advisers who look after the states.

We hand-hold them. We act as their facilitator, we act as their catalyst and based on their inputs, we do a number of things.

We looked at a ten-year vision document, that is Niti’s job. We are the only agency that ranks states in terms of their performance, in health, in education, in exports, in ease of doing business, we work in the aspirational districts, the most backward districts of India, we do a lot in terms of innovative work, the national health agency, the Pradhan Mantri Jan Arogya Yojna, all these new ideas have come out of Niti Aayog, and a lot of innovation has come out of Atal Innovation Mission.

We drive 5000 tinkering labs in school, we drive incubation centers, we’ve brought an innovative culture to India.