The FM’s call for industrial investment


  • Last month, Finance Minister Nirmala Sitharaman asked captains of industry what was holding them back from investing in manufacturing. She likened industry to Lord Hanuman from the Ramayana by stating that industry did not realise its own strength.
  • For revitalising private investment, the government had in September 2019 cut the tax rate for domestic companies from 30% to 22% if they stopped availing of any other tax SOP (standard operating procedure).

The current scenario:

But Indian private sector investment has been weak for almost a decade now; it isn’t a recent phenomenon. Even before COVID-19 hit, our economy had started to slow down. Most of the drivers of economic growth have deteriorated: export is down because of the global slowdown, the government’s ability to support domestic demand is also be limited as the fiscal deficit comes down. Because of the K-shaped recovery, private consumption is only concentrated in some parts of the income pyramid.

Economic recovery scenarios :

Economists are busy describing the shape of the post-pandemic recovery given its complex nature. There are different shapes of economic recovery:

  1. V-shaped recovery – it is characterized by a quick and sustained recovery in measures of economic performance after a sharp economic decline. Such recoveries are generally spurred by rapid readjustment of consumer demand and business investment spending.
  2. K-shaped recovery– is one in which the performance of different parts of the economy diverges like the arms of the letter “K”. In a K-shaped recovery some parts of the economy may see strong growth while others continue to decline. Overall, the natural consequence of a pandemic is the widening of inequality and a K-shaped recovery.
  3. W-shaped recovery- is when an economy passes through a recession into recovery and then immediately turns down into another recession. It is also called as the double-dip recession.

There are many other shapes of recovery – Z, U, L etc. now there is a consensus among most economists that more than a year after COVID-19 struck, Indian economy has recovered in K shape. This is in contrast to the earlier expectations- led by government and RBI- that India was going through V shaped recovery.

Industrial investment is closely linked to economic recovery since no industrial house or investor would like to invest in a sinking sector.


  • Let’s look at some indicators over the past few months. In the GDP figures for the quarter ended June, gross fixed capital formation (GFCF) at 2011-12 prices rose 9.6% to ₹12.77 lakh crore, from ₹11.66 lakh crore in Q1 of FY20, which was the pre-pandemic period. This is in context of the overall GDP growth of 2.8% to ₹36.85 lakh crore in Q1 FY23 from ₹35.85 lakh crore in Q1 of FY20. GFCF, which is viewed as a proxy for private investment, shrank quarter-on-quarter by 6.8%.
  • While private final consumption expenditure, an essential pillar of our economy, climbed 26% year-on-year for the June quarter, the ₹22.08 lakh crore of private spending in April-June 2022 was a significant ₹54,000 crore, or 2.4%, less than that spent in the preceding quarter.
  • Industrial production has shown growth in each of the first five months of this fiscal year starting April, compared with a year earlier; but worryingly, monthly numbers as seen on the Index of Industrial Production (IIP) and the S&P Purchasing Managers’ Index (PMI) for Manufacturing have progressed in fits and starts.

Demand-side issues:

  • Private companies invest when they are able to estimate profits, and that comes from demand. The Centre for Monitoring Indian Economy’s (CMIE) consumer sentiment index is still below pre-pandemic levels but is far higher than what was seen 12-18 months ago.
  • The State of the Economy in RBI’s monthly bulletin released last week emphasised that contact-intensive sectors would likely lead the rejuvenation as the restraint due to the pandemic has waned. “Festival-related spending was already boosting consumption demand with positive externalities for other components of domestic demand.”
  • We are a tad away from capacity utilisation at which an investment cycle typically kicks off. Capacity utilisation is now much better than what it was during the pandemic when it had slipped to 67-68%.
  • An online survey by UBS Evidence Lab India on consumption outlook noted stable or increasing income levels in this survey (versus 54% in the Aug-21 survey). It suggests high purchase intention for cars and two-wheelers, a diverging trend for property, and moderation for some consumer durables (including computer/laptop, refrigerator, ACs). And that might hold the key to the investment cycle kicking in, in response to the Finance Minister’s exhortations.

Way forward:

In a recent article, Pulapre Balakrishnan argued that capital expenditure by the government is a precursor to private investment but that it would take a sustained trend in public spending, for about half a decade at least, to help kindle enthusiasm in the private sector.

While the government’s intent to spend aggressively on infrastructure in its Budget for this fiscal is encouraging, he says this cycle should have started a few years ago. With the government having now announced intent, he says it must now focus on a couple of priorities:

  1. Government must identify the right projects — investments must be made in productivity-enhancing infrastructure.
  2. Inflation could derail the best designed public spending programmes, and we must take a step up in agricultural produce to help rein in food inflation.


The government must continue to spend where necessary at this time to alleviate the pain in the most troubled areas of the economy. It must also simultaneously spend in capital expenditure and lead the private sector. Then the industrial captains would be willing to take a ‘Hanuman leap’.

Why World Bank bats for One Health to combat pandemics


Investing in One Health is the way forward in preventing, instead of fighting, the next global pandemic, claimed a report released by the World Bank (WB).

About One Health:

  • One Health is an integrated, unifying approach that aims to sustainably balance and optimise the health of humans, animals, plants and ecosystems. It is the primary approach for addressing the complex health challenges facing our society, such as ecosystem degradation, food system failures, infectious diseases and antimicrobial resistance (AMR). A One Health approach integrates the health of people, wildlife and the environment and can help end the cycle of devastating outbreaks.
  • The concept of One Health recognises the health of humans, domestic and wild animals, plants and the wider environment (including ecosystems) are closely linked and interdependent. Efforts by just one sector or speciality cannot prevent or eliminate infectious disease and other complex threats to One Health.

Findings of the WB report :

  • Titled “Putting Pandemics Behind Us: Investing in One Health to Reduce Risks of Emerging Infectious Diseases”, this report estimated an annual expenditure to implement a One Health approach to be above $10.3 billion (Rs 84,856 crore). While it is a monumental amount, it dwarfs in comparison to the cost of managing a pandemic, which hovers around the $30.1 billion per year mark, as per estimates made recently by the intergovernmental G20 Joint Finance and Health Taskforce.
  • The pace of emerging infectious disease (EID) outbreaks has increased at an average annual rate of 6.7 per cent from 1980 onwards and the number of outbreaks has grown to several hundred per year since 2000, the report said. “This is largely due to humans extending their global footprint, altering natural habitats, and accelerating the spillover of animal microbes into human populations,” it noted.
  • Some 75% of these outbreaks are zoonotic events — which means they jump from animals to humans. With increased interaction between the two, the volatility of EID outbreaks has increased. It’s resulting in more than 1 billion human infections and 1 million deaths each year, the World Bank report said.
  • The World Bank report described pandemic prevention as a global public good. “It is non-excludable (no country can prevent others from benefitting) and non-rival (one country benefitting does not limit the extent to which other countries can benefit),” it said.

Way forward: adopting One Health:

The report details a three-pronged approach to make headway in implementing a One Health approach to prevent a potential pandemic:

  1. Timing — if there is anything the COVID-19 pandemic has taught us, the moment is ripe to work towards mitigating emerging infectious diseases.
  2. Cost- invest in bringing public veterinary services up to international standards, improve farm biosecurity, and reduce deforestation in higher risk countries.
  3. Other benefits for sustainable development.

Funding for One Health:

The One Health Investment Framework for national, regional and global stakeholders to adopt has five core principles for funding:

  1. Adopting an integrated One Health multisectoral approach that aims to sustainably balance the health of people, animals, and ecosystems
  2. Prioritising prevention, a most overlooked component of health security
  3. Complying with existing minimum standards that are relevant for One Health
  4. Focusing on geographical locations with higher risks of spillover at the human-animal-ecosystem interfaces
  5. Reducing risks of spillovers in forests (or wildlife habitat), farms (livestock), and sprawling urban areas
The World Bank noted the cost of inaction is higher than everything else, calling it an investment in humanity’s future. “Benefits for sustainable development include reduction in carbon dioxide emissions, climate adaptation, improved food safety and nutrition, reduced economic burden from animal diseases, increased access to markets and strengthening the resilience of health systems by boosting awareness and multisectoral action,” the report noted.

One Health Joint Action Plan (OHJAP 2022-27):

Four multilateral agencies have launched a global ‘One Health’ plan to better address threats to all living beings as well as the environment.

The 5 year long plan was proposed by the ‘Quadripartite’ comprising of—

  1. United Nations (UN) Food and Agriculture Organization (FAO)
  2. UN Environment Programme (UNEP)
  3. World Health Organziation (WHO)
  4. World Organisation for Animal Health (OIE)

The Joint Plan of Action will create a framework and integrate systems and capacity to collectively better prevent, predict, detect and respond to health threats.. This will help improve the health of humans, animals, plants, and the environment, while contributing to sustainable development. It is aimed at mitigate the health challenges at global, regional, and country levels.

Six key areas were focused on in the plan are:

  1. One Health capacity for health systems
  2. Emerging and re-emerging zoonotic epidemics
  3. Endemic zoonotic
  4. Neglected tropical and vector-borne diseases
  5. Antimicrobial resistance (AMR) and the environment
  6. Food safety risks


COVID-19 has shown that a pandemic risk anywhere becomes a pandemic risk everywhere. The economic case for One Health is powerful — the cost of prevention is extremely modest compared to the cost of managing and responding to pandemics.


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