By Shailesh Haribhakti
The Rs 20 trillion ($266 billion) stimulus package announced by PM Narendra Modi on Tuesday, the details of which finance minister Nirmala Sitharaman has been elaborating over the week, makes India’s the sixth-biggest Covid-19 relief package in the world.
Extracting value from this package would require three things: converging exponential technologies, enhancing home entrepreneurship, and easing credit flow. If we can get these spigots opened, we may be able to deliver positive growth this fiscal.
Agriculture can be the nodal point of efforts to revive growth by converging technologies. Digitising land titles can unclog courts considerably. This task can be assigned to aspecial authority set up by state governments leveraging the egovernance capabilities of successful enterprises in India.
The use of mapping, artificial intelligence (AI), machine learning (ML), big data analytics and blockchain will be potent. The path from farm to fork can be smoothened using eNam, SuperKisan and other platforms. Much more of the value chain can be reserved for the farmer, raising rural incomes considerably.
‘Vertical agriculture’ can become India’s urban food security core. Vegetables, berries and fruit can be grown using soilless techniques, providing nourishment to roots using a tenth of the water we use today and increasing productivity 10-fold.
The National Bank for Agricultural and Rural Development (Nabard) could be assigned the task with a Rs 25,000 crore capital commitment to fund debt and equity for rural farmer producer organisations (FPOs), micro, small and medium enterprises (MSMEs) and enterprises capable of delivering this efficiently.
Credit can be enhanced using first-loss guarantees and leveraging existing microfinance institutions. The MSME package announced on Thursday will increase credit availability by over Rs 5 lakh crore, inclusive of credit enhancement through guarantees.
With other equity and cost forbearance measures delivering another about Rs 1lakh crore, the sector should be able to play its role effectively. Domestic supply chain must move through the redefined MSME sector. For this, cluster development along new corridors must be fully deployed.
A decongestion of Dharavi-like clogged manufacturing locations should be supported. Dispersal of manufacturing in a manner that attracts the lowest fixed costs and provide high-quality living and good basic services is an idea whose time has come. India can spawn multiple smart cities using this policy. The last-mile delivery of credit through NBFCs is a much welcome move.
The credit chain can now be reestablished. The challenge will continue to be startups and continuing working capital availability. Unless the whole ecosystem becomes completely regular in meeting all obligations, a true revival will be iffy.
This GoI-guaranteed lending also must be made safe. A strict adherence to data-led credit assessment and monitoring will be essential for this. The entire portfolio can be backtested if the visible financial and legal footprint of MSMEs is tracked using AI and ML.
Appraisal and monitoring will then become data-led, scoring-based, and all red flags will be assessed to protect from nonperforming asset (NPA) creation. Manufacturing must be moved to where labour has reestablished itself. An augmented manufacturing evolution could emerge in 100,000 locations across India.
Highquality goods, with the lowest cost structure, can be produced if capital costs are subsidised by a direct grant. MSMEs will flourish and the entire manufacturing base of India can adopt 3D printing to achieve world scale at lowest cost.
Other technologies, such as tracing and testing at scale, biofuel for existing vehicles, a massive move towards autonomous electric vehicles (EVs), and rapid deployment of biotech to change our attitude to nourishing food and increased immunity must be unfurled.
The outlay on technology, combined with resource availability through last-mile credit availability at scale, would cost about `4 lakh crore, 20% of the stimulus package. With about 30 crore Indians engaged in homebound activities and handicrafts, and a growing number hopeful to join this work-from-home (WFH) force, this section will require marketing and technology support of a unique nature.
Dried-up venture capital will have to be replaced through the package with cash transfers and cost subsidies that can enable these micro enterprises to get going. GoI’s stimulus package, as already announced, has great promise. The success will be determined by the quality of implementation.
The writer is a chartered accountant