With their country-wide presence including far flung areas, the public sector has the capacity to not only Kick-Start the economy but also boost entrepreneurial confidence by establishing a chain of multi-product Joint Ventures with Small and Medium entrepreneurs (SME) to global standards and stimulate demand.

Unshackling public sector from bureaucratic and political control by moving these assets under a new Member, Public Sector, in NITI Aayog, setting up an Exclusive Stock Exchange for PSU Joint Ventures for access capital and Exit route for PSUs are some of the major recommendations of a study of the post pandemic economy carried out by the IPA Research Bureau, a division of India Press Agency (IPA).

The study conducted by Anand Vardhan, an economic writer with over four decades experience, seeks the creation of Technology Task Force under NITI Aayog to determine the nation’s technology requirements both civil and defence to make India a “Technological SUPERPOWER!”

Collated in a book Titled “Alternative Strategy For Unfettered Growth”, the study calls for these joint ventures to take up manufacture of anti Covid19 products for mass production not only for the home market but also build up exports essentially to the US, world’s single largest market. This will generate investor confidence and risk taking ability more so at a time when there is No Demand, No business and No Money in circulation.

The study calls upon the NITI Aayog to direct PSU joint ventures to target US Buyers of consumer goods including entertainment electronics, white goods, toys to move to India following worsening of the Sino-US relations. Besides, there is needs for targeted product promotion with exclusive product based fixed scheduled exhibitions throughout the year on the lines of the Guangzhou, Shanghai, Beijing and Hong Kong, fixed scheduled product based exhibitions around the year.

ALTERNATIVE STRATEGY FOR UNFETTERED GROWTH
Executive Summary
The Covid-19

Covid19 has taken a heavy toll on the Indian economy.

The economic impact of the coronavirus pandemic in India has been extremely disruptive with the country’s growth in the last quarter of the financial year 2019-20 having gone down to 3.1%, according to the Government reports. Needless to say, India had also been witnessing a pre-pandemic slowdown. According to the World Bank, the current pandemic has ‘magnified pre-existing risks to India's economic outlook’.

The World Bank and the rating agencies apprehended that India’s growth in the financial year 2020-21 would be the least since the economic liberalization in the 1990s. However, after the announcement of the economic package in mid-May, India's GDP estimates were downgraded even more, signalling a deep recession. Even a State Bank of India research estimated a contraction of over 40% in the GDP in the first quarter of 2020-2021.

Within a month, the unemployment rate rose from 6.7% as on 15th March 15, 2020 to 26% as on March 19, 2020. During the period of lockdown, an estimated 14 crore (140 million) people lost their precious jobs while salaries were drastically cut for the unfortunate rest. More than 45% of households across the nation reported an income drop as compared to the previous year.

The Government announced a variety of measures to tackle the situation, i.e. various initiatives to ensure food security and extra funds for healthcare. It also offered several sector related incentives and tax deadline extensions. On 26th March’20, some economic relief measures for the poor were announced, amounting over Rs 170,000 crores. The next day the Reserve Bank of India (RBI) also announced a number of measures which would additionally inject Rs 374,000 crores to the country's financial system. The World Bank and the Asian Development Bank also approved support to India to tackle the coronavirus pandemic and allocated USD 1 billion.

On 17th April’20, the RBI announced more measures to counter the economic impact of the pandemic by offering a special support of Rs 50,000 crores to the National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and the National Housing Bank (NHB).

The Government also announced a new foreign investment policy whereby no foreign company from the neighbouring countries would be allowed to acquire equity in any Indian organization.

To build the country as a self-reliant nation, on 12th May’20,Prime Minister Mr Narendra Modi announced an overall economic package worth Rs 20 lakh crores, equivalent to 10% of India's GDP. During the next five days the Finance Minister, Ms. Nirmala Sitharaman announced the details of the economic package. Two days later the cabinet cleared a number of proposals in the economic package which included free distribution of food grains.

Kick-Start the Economy :

Role of private sector:

For long, the players of the Indian private sector are having a track record of exploiting market conditions, gaining abnormal profits from artificial scarcity conditions and leaving the country devoid of development and growth. The private sector hardly responded to the national crisis, except for aiding the contingency funds.

The situation is different in the other countries. For example, in the US, an organization named as Medtronic, immediately threw open its most sacred technology for the manufacture of ventilators. Responding to the President Trump’s call, they did not even charge a penny. The technology has already been made public and till now over 100,000 entities got the benefit of the technology.

Role of Banking sector:

The uncanny rising of non-performing assets (NPA) has made the banking industry rather fragile and the industry suffers from the lack self-confidence. Besides, the repeated loan waivers and the questioning / policing of the banking industry by Enforcement Directorate has also made the banking personnel diffident.

Banks at best are the custodians of funds and their interest lies in ‘their pound of flesh”. This keeps the entrepreneurs away from the banking industry. Hence, it may not be prudent to depend upon the banking industry to give the Indian economy a kick start.

‘Out of the Box’ Solution:

The need of the hour is to invoke Indian public sector to take charge of the nation as a whole in providing just what the country needs today. A generous arm to be extended to Government of India for the revival of the micro, small and medium entrepreneurs. It would indeed be prudent for the government to take the Indian public sector into confidence to take the country by storm.

The Government appears to have completely forgotten the 348-enitity-strong Central public sector companies which also hold the major institutional assets spread across the country. Each of these organizations is a government by itself and is fully capable of steering the economy back to recovery and development. These public sector entities are the pillars of strength and give the requisite confidence which is much required today to kick start the economy.

Similarly, there over 1700 companies owned by the state governments. Some of these companies headed the electronic revolution in India in the 1980s with stalwarts like Uptron of UP government, Keltron of Kerala government, Punwire / Punjab Electronics of Punjab government, WEBEL of West Bengal government taking a lead.

Besides, the state government public enterprises such as the UP Bridge Corporation, Gujarat Petroleum and the like have also made a mark on the global markets, making India proud.

‘NITI AAYOG’-The New Custodian of Public Sector

Niti Aayog should be made the custodian of the central public sector enterprises, liberating them from the administrative control of their respective ministries and departments.

A new post of Member Public Enterprises (PE) is to be created in Niti Aayog to steer the growth and development of the Indian economy. The Member, Public Enterprises, Niti Aayog should be a former chairman and managing director of a Public Sector company.

The Member PE Niti Aayog should summon a meeting of all the chief executives to discuss the strategy for revival of the Indian economy. As the economy today suffers from a total lack of demand and confidence, Niti Aayog would need to identify the areas of immediate demand not only for domestic needs but also double it for export marketing.

To start with, a list of 20 items, having an immediate demand by the Government for its war against Covid-19 should be identified for manufacturing without any delay. This potential product list should also include those itemsfor which there is a huge demand in the US and Europe and which are presently being met by China. The intent is to establish mass production capacities not only to meet domestic demand but also 50% of the global demand.

Taking a minimum of five manufacturing facilities on an average for every central public sector, the combined strength of the 348 public enterprises goes up to 1,740. Facility of each of the 348 entities has been considered as independent public sector unit. State government owned 989 operating public enterprises can be added to this. With each of them having an average 5 units / facilities, the total strength goes up to 4,495 enterprises. Hence, the cumulative strength of the central and state government public enterprises clocks a staggering 6,685 units.

After making the demand assessments for establishing production facilities for both the domestic and export markets of US and Europe, each of these 6,685 enterprises would be able to invite small and medium entrepreneurs (SME) to set up at least 20 manufacturing facilities per enterprise. It will not only cover all the products required but also such of those products would be able to uplift the sentiments on a countrywide basis.

This would mean the setting up of as many as 133,700 joint venture companies of international standards, geared up with the economies of scale and mass production. This is intended to kick start the economy with a snow balling effect on all the areas including employment generation to the tune of 4.1 crore plus workers. It will attract both direct and indirect employment on a pan India basis. Also, it will garner rotation of money and a surge in demand.

There should, however, be no bar on the public sector companies to limiting their investments to only 20 joint ventures. They should be allowed to establish as many joint ventures as possible. For, they are the government in themselves and need to sub-serve the government objective of driving growth and development.

Alternative Investment Strategy

The government would need to capitalise these public sector companies to the extent of the initial capital investment requirements. That is to be done in line with the projected domestic and international demand This investment would be ever more fruitful, paying rich dividends to the economy as a whole, rather than flooding the banking sector with funds. Needless to say, the banking industry has little or no competence to steer the national economic growth and development.

The public enterprises will be required to invest between 25% to 40% in such joint venture enterprises with the balance coming from either the SMEs or other state-owned public enterprises. Perhaps the banking sector should be asked to play a liberal role by funding equity. They should also cater to the working capital requirements by the SMEs in their joint venture partnerships with the public sector companies.

Setting up a new COVID-19 Stock Exchange (CdSE)

As Niti Aayog will be tasked with the establishment of global class of manufacturing facilities in these 165,700 joint ventures, India would require a massive investment for an unfettered growth and development.

To reduce the reliance on government funding, there is an urgent need to establish the country’s new stock exchange. This is to be called as Covid-19 Stock Exchange (CdSE) It will exclusively cater to the NEO enterprises to be created by the way of joint ventures between the SMEs and the public enterprises. This is bound to open up a new avenue for the capital market thereby enabling the public enterprises and their respective joint venture companies to be listed therein for raising capital.

Besides, this special stock exchange will also help to establish an exit route for the public enterprises, if they wish to leave the joint venture company. The exchange will also help in facilitating mergers and amalgamations to enlarge their operations globally.

Aggressive Export Marketing to replace China

As COVID-19 has since become a global phenomena adversely impacting country after another, India needs to establish multiple manufacturing bases of anti COVID19 products to meet not only domestic demand but also the massive export demand. The Niti Aayog should identify the list of anti COVID19 products as also establish the demand for each for building adequate production capacities for both the domestic and international demand. The US perhaps the single largest market be targeted first.

Public sector companies like the state trading corporations, minerals and metals trading corporations, metal scrap trading corporations along with the overseas offices of all the public enterprises like BEL, BHEL, HAL, India Investment Centre, should be channelized to establish customer meetings in the US. At the same time, they are also needed to set up product-wise permanent exhibitions in various parts of India around the year.. China does it.

Meanwhile, the Niti Aayog should also create separate teams of product wise traders and send them to Chinese exhibitions with a twin objective. First, they should identify the products of mass consumption by the US consumers. Second, they are to tie up joint venture manufacturing in India for a gradual shift of US customers to this country. Product range should include toys, mobile phones, accessories, radio sets, entertainment and professional equipment, face masks, ventilators, thermometers and the like.

Technology (Civil & Defence) Super Power

Niti Aayog urgently needs to create an ‘India Technology Vision Document’, keeping in mind the requirements of the country. The Member Public Enterprises, in consultation with the Chief Executives, will decide the strategy for the acquisition of the said technology. Be it the joint ventures with foreign OEMs, acquisition of companies overseas or joint venture participations — scopes are enormous.

There shall not be any ‘why’ and ‘how’ questions on the issue of consideration for acquisition as this single factor has always threatened the management cadres in public enterprises. Taking the call should be the prerogative of the Niti Aayog, Member Public Enterprises and his council of chief executives of the public sector. Once the decision on the acquisition of a technology is taken, the task of acquisition should be left to the chief executive himself without any arguments.

As the public sector is the government per se, it should be safeguarded from the direct exposure to the parliament or even the Comptroller General of India. This activity will help in avoiding unnecessary interventions.