After growing at very high rates for several years, India’s economy had begun to slow down to 4% growth before the pandemic. The three-month lockdown started in March 2020 sent the economy into a contraction of -24% in the June 2020 quarter, followed by a -7.3% shrinkage from July to September which was its worst ever and pushed the economy into a rare recession.Half of India’s population is 25-years-old or younger, and 65% are under the age of 35. This can be seen as a major opportunity for India as this is the subset of the population driving the country’s technological and digital transformation and witnessed with the emergence of 12,000 digital tech start-ups in India. New opportunities span such areas as data-driven lending and insurance payments. Entrepreneurship and the micro-, small- and medium-sized enterprise (MSME) sector contribute nearly one-third to India’s GDP. To support the post-pandemic recovery localisation would be a key role as it would create reliable supply chains and reduce carbon footprint due to reduction in transportation. Let us now see how India and largely the global economy is expected to react to uncertain futures of the post-pandemic world.
Emergence of the big tech economy: A world where there is rapid technology penetration across the workforce. With so much advancement in technology, the quality of products goes up, service delivery improves and the cost of everyday services such as energy and transportation go down. However, there will be an emergence of two camps: namely a US-centric one and China-centric one. These two countries are expected to emerge as tech behemoths and countries will be forced to choose two camps and between two different sets of technologies and languages. This will also lead to job insecurity among people due to a higher demand for skilled labour and would take trade unions by surprise. This would leave them incapable of responding and an effective mitigation strategy is required which entails communication to employees, upskilling of the existing workforce and developing capabilities at the domestic level.
Increase in surveillance: In this scenario, we can expect a society of hyper surveillance. The progress in technology is moderate but firms will create value by sensors to monitor people, objects and the surrounding environment. Rating systems become a norm and this leads to a competitive work culture. Some employees feel that this creates a meritocratic society while others take the increased surveillance as a threat. The increased vigilance also leads to less waste as fewer resources are left idle.
Economic slowdown: Pandemics and economic shocks are expected to be a relatively frequent occurrence in the near future. This can have a negative impact on the fund allocation for research and development capabilities and may lead to a low skilled, low productivity and low pay paradigm economies. The confidence in the capitalist economies reduces and people may look for alternative economic models. This will inevitably see a positive reception of the welfare state to serve people’s core economic needs in food, housing, energy and banking.
The awareness economy: This economy will see a transition towards empathetic leadership. Technological progress does not take place at a breakneck pace but public awareness increases. There is increased regulation by the tech sector to build trust among its stakeholders and create new products where everyone’s needs are met. Worker unions are kept happy as automation takes place at a moderate pace and is carefully managed. There is a higher disposable income due to higher employment and this money flows back into the welfare sectors like health, education and elderly care. This trend would be highly welcomed but profit-driven agencies may be discounted as they have to sacrifice their aspirations to meet the needs of others.
India will have to prioritise its economic recovery but will have to be very careful as it may fail to take into consideration its marginalised population. Critical uncertainties are aplenty but a few things are quite clear such as economic contraction taking place in the short run, emergence of alternative technologies and localised production likely to boost the domestic sector. Finding the right balance and forecasting futures by making calculated assumptions will be essential for decision makers.
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