India has followed half a dozen countries in placing restrictions on foreign investment because of the pandemic-stricken condition of its domestic firms. The automatic route is now closed to investors from India’s land neighbours. This new regulation has only one target: China. New Delhi is only the latest country to fear that a recovering China will take advantage of the rock-bottom valuations of firms of national importance. India has long had barriers to Chinese holdings in critical infrastructure and technologically sensitive firms. Expanding investment screening to all sectors is an almost natural progression. The HDFC Bank share purchases by China’s central bank was only a trigger. However, New Delhi should not be under any illusion. Foreign capital remains crucial to120 the country’s economic success and will be doubly important as India tries to revive its economy. Making it more difficult140 for China will carry a price tag. China has been the fastest-growing source of foreign investment in the last five160 years. Chinese investors have shown a remarkable degree of risk appetite and now have a substantial presence in over half of India’s unicorns. A purely arbitrary method of deciding what types of investment is allowed would be a setback to India’s decades-long attempt to be more attractive to investors from all countries. As the screening process matures, the Department for Promotion of Industry and Internal Trade should work out a process and precise regulations to decide what an acceptable investment is. 240 The issue of off-shore fund investments and who is the ultimate beneficial owner from an investment is trickier, though it should be recognized that these are used because India remains a difficult business environment. The spread of investment280 barriers is a reminder that economic openness is diminishing globally. China is not blameless. Look at its resistance to Indian service exports. The pandemic has seen great power rivalry only worsen and economic factors such as infrastructure, technology and finance320 move to the heart of geopolitics. India must walk a fine line. At its present state of development, it needs to expand its overseas economic engagements, even while remaining sensitive to its external security needs.
When nations across the world are pulling360 out all the stops to flatten the coronavirus curve, it is incumbent upon leaders to refrain from any statement or action which could exacerbate the situation. But, regrettably, not all world leaders have been responsible or circumspect in their utterances and behaviour. United States President Donald Trump’s tweets asking his supporters to liberate the Democratic States of Virginia, 420 Michigan and Minnesota have been taken as licence to indulge in dangerous behaviour, disregarding norms of social distancing and easing lockdowns of businesses. This puts the lives of people at much greater risk. Brazil’s President has summarily sacked his Heath Minister, who was an advocate of social distancing and isolation. Despite a high number of cases, Brazil’s President has dismissed the virulent480 pandemic as nothing more than a normal flu. Closer to home, in Pakistan, conditional congregations in mosques have been allowed, violating protocols laid down by the World Health Organization. Muslim countries across the world have not eased restrictions, and rightly so, and have got the full support of their clergies on this. This cannot be merely treated as the policy preference of specific countries, and their internal affair, for its consequences will be global. The spread of the560 coronavirus disease has shown the intricate ways in which the world is interconnected and interdependent. In a world where borders are still porous, even when one nation slips, it carries the threat of the rapid spread of the virus. The international community600 needs to collectively insist on the need for scientific advice to be followed. Political considerations, which are clearly motivating the leaders who are advocating dangerous behaviour, have to be put aside for now. This could mean the difference between life640 and death.
In the afternoon of 14th April, just hours after Prime Minister Narendra Modi announced the extension of the lockdown for another 19 days, hundreds of migrant workers made their way to Mumbai’s Bandra (West) railway station. They had been waiting for the lockdown to end, and had assumed that they could return home. Some reports say700 that this assumption was based on an erroneous news report about special trains. With restrictions in place, including on inter-state bus and720 rail travel, this was not to happen. The same day, in Surat, hundreds of textile workers staged a sit-in, demanding that they be allowed to return home. This yearning is not new. Soon after Mr. Modi declared the lockdown on March 24, hundreds of thousands of migrant workers began making their way home. Most of them walked long distances due to unavailability of transport.
These large congregations of workers at close proximity of each other are disturbing. They represent a800 sense of desperation, which is emerging from economic suffering and emotional anxiety. They also undermine the principle of social distancing, for one infected person in any of these gatherings has the potential of infecting hundreds, who may then come in840 contact with hundreds of others. It requires one incident to begin another chain of transmission, which can set back India’s efforts in the battle against the pandemic. That is why a two-pronged approach is necessary to allay the anxieties of migrant workers. The first is recognizing that they are economically insecure, without incomes, and often, without food. As the Government of Kerala pointed out, without income support, compliance with the restrictions will be low. The Government needs to immediately expand its cash transfer measure and include workers in the unorganized sector, at least till the lockdown is lifted. The partial lifting of restrictions in areas less vulnerable to the infection will help a segment of workers. But they need more960 direct financial and food support. There is a second element. Many workers are anxious to return home because they are980 frightened of the disease, of staying alone in the city, of the fate of their families back home. Travel will mean a high degree of risk because social distancing norms cannot be enforced in trains and buses. Travel is also difficult because their home states are not receptive to these workers, given the fear that they may spread the infection in villages. These are all real constraints, but the issue requires more sensitive communication and the announcement of measures which allay their anxieties and encourages migrant workers to stay where they are.
Farmers are currently harvesting a bumper rabi crop.1080 The India Meteorological Department has forecast a 100 per cent normal southwest monsoon with the possibility of a weak La Nina condtions developing in the second half of the four-month season from June to September. La Nina is the opposite1120 of El Nino that is generally not favourable for rainfall in the subcontinent. That bodes well for the coming kharif planting season too. Agriculture is important from two standpoints. The first is inflation control, which is predicated on adequate supply of food, feed and fibre. Secondly, farmers and rural labourers have high marginal propensity to consume. The Indian economy today needs both low and stable inflation as well as boost to spending, which is best guaranteed by increased farm production1200 and incomes. That being so, concerted efforts are required to ensure proper marketing of the rabi wheat, mustard, pulses and other harvested crops. The issuing of coupons or by governments to farmers for bringing their respective produce to mandis at given dates and times is fine, given the imperative for maintaining social distancing. But why are governments limiting the procurement1260 only to mandis? Why do they not open purchase centres at rice mills, or for that matter, even village schools,1280 panchayat offices, primary cooperative societies, district courts and other unused public places during lockdown? After all, wheat and chana only have to be unloaded, cleaned, weighed, filled in gunnies and stocked. There is no necessity of cold storage or reefer vehicles for subsequent movement to Food Corporation of India’s godowns. If the idea is to procure and pay farmers fast, while preventing overcrowding, the best way is not to stagger, but spread out purchases beyond mandis. Equally urgent is the planning for kharif, where sowing of cotton and paddy nurseries will start from early to mid-May in North-West India. Plantings of these and other crops across the country will take off from June, with the arrival of the monsoon.1400 There is no time to loose with regard to arranging supply of seed, fertilizer and crop protection chemicals. The same farmers who would sell grain in hordes now will very soon queue up for buying inputs for the next crop.1440 The challenge of managing crowds at fertilizer sale points is serious enough in normal times. In the time of novel coronavirus, it would be a herculean endeavour. That extra logical effort is, however, worth mounting for a sector offering some hope in this most uncertain economic environment. This is also the time to free agricultural markets. We should allow the farmer to sell to anyone and anywhere, while simultaneously lifting all restrictions on stocking, domestic movement and export of produce. 1520
