The idea behind self-reliance is not to turn the country inwards or into an isolationist nation, but to ensure that India can emerge as the global nerve centre of the complex modern multinational supply chain, Foreign Secretary Harsh Vardhan Shringla has said, hailing the government's Aatma Nirbhar Bharat' initiative for post-COVID economic revival.
In his address on the New World Order Post COVID-19' at the FICCI, he said a "major scale black swan event" that is impacting most of our established practices, norms and regulations, and thus shaping to become the big disruptor.
"The primary impact of the disruption is economic. Global economic institutions put the cumulative loss from the pandemic in the range of USD 5.8-8.8 trillion or approximately 6.5-9.7 per cent of the global GDP. The International Monetary Fund (IMF) predicts a 3 per cent contraction of the world economy in 2020," he said.
This is the largest contraction of global output since the Great Depression of the 1930s and the Great Recession of 2008-09, and other lesser recessions did not reduce world output on this scale, Shringla said.
He said this is also the first economic downturn of this magnitude due to a non-economic cause.
"Quarantines, travel bans and lockdowns, important to control the spread of the coronavirus, have expanded the economic impact to multiple sectors of the economy. The initial supply shock has been followed by a demand shock as both production and incomes have been hit," the foreign secretary said.
Whether the contraction will turn into a depression or not is unclear, he said, adding that the scale of disruption makes it a possibility.
Shringla, however, said the primary cause of the disruption is the pandemic.
The speed of resumption of economic activity will therefore be the key determinant in preventing the recession from growing into a depression, he said.
"The slowdown will impact all kinds of economies. Hydrocarbon and commodity dependent economies will be hit as badly as manufacturing, services, agriculture, mining and tourism dependent economies.
Global poverty and unemployment levels will rise. Expatriate workforces will be negatively impacted. Remittances are already falling," he said.
The pandemic is also expected to leave people with a thoroughly different world, with tightened global financial market conditions, behavioural changes and altered consumption patterns, such that the demand and supply chains no longer suffice to cater to the new demand emanating from a changed world, he said.
The economic order that existed in the pre-pandemic times will have changed significantly in the post-pandemic times, Shringla said.
"This pandemic has not just stressed our systems globally, but has also exposed the existing gaps in our systems, forcing all of us to identify the loopholes, regroup, reform and reinvent. This reinvention of the global economic order is something that we all must prepare ourselves for," he said.
Strong multilateral cooperation will continue to be critical in the collective fight against the pandemic as also for a global economic recovery, he asserted.
"Our global supply chains have been severely impacted by the COVID-19 pandemic. The risks of increased dependence of our supply chains on a particular country or region of the world have been exposed by the pandemic, and the need to de-risk and build resilience by increased diversification and innovation has made itself starkly evident," he said.
Prime Minister Narendra Modi, identified five key pillars of the country's future economic roadmap, including economy, infrastructure, demography, democracy and supply chains, Shringla said.
Successful integration and assimilation of all these factors will be crucial to achieve a quantum jump in our overall growth and development, he said.
In India, there was already an ongoing thinking within ministries and agencies on formulating a strategy which would position India as an alternate manufacturing destination of choice for global investors, he said.
The idea behind this initiative was to enable manufacturing and trading companies looking to diversify and de-risk their value chains to choose India as an alternate location for their operations, Shringla said.
The government has announced a set of bold economic reforms under the Aatma Nirbhar Bharat Abhiyaan, Shringla said.
This vision of economic revival aims to provide short term relief to the citizens impacted by the COVID-19 pandemic, while also defining a long-term economic roadmap to achieve the government's vision of a USD 5 trillion economy by 2024, he said.
"The idea behind self-reliance or Aatmanirbharat is not to turn the country inwards, or into an isolationist country, but to the contrary, it is to ensure that India can emerge as the global nerve centre of the complex modern multinational supply chains," he said.
The Aatma Nirbhar Bharat Abhiyaan takes into account the largely untapped domestic potential and the ever-growing domestic demand, which are the two key driving forces for the Indian economy, and builds on them to provide a new strategic roadmap for the growth of India's agriculture, manufacturing and services sectors, Shringla said.
"Foreign policy begins at home. A strong economy allows us to be heard in the world. A self-reliant India will have more to offer to the world," he quoted External Affairs Minister S Jaishankar as saying.
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