[Post Covid Strategy ] Focusing on Primary sector could revive the Indian economy

There is not going to be a “post-COVID 19” scenario for industries, or otherwise, for at least another year now. What we already have is a new normal that we have to adapt to and learn to co-exist with the virus. That said, the chain reactions across industries, and the impact on every aspect of human behaviour, is without precedent. 

This is, though, a great opportunity to shift focus and change the economic frontiers of India. Invariably, given the dominance of the primary sector among the majority populace, it will be here that the most important scenario change can, and ought to take place. Agriculture still adheres to a subsistence model, with little commercial exploration happening on a large scale. Now is a great opportunity for governments, both at the Centre and State levels, to recalibrate funds and shift focus on the primary sector, specifically on agriculture. There is already a reverse migration that has been triggered. Governments can capitalise on and deploy this wave of reverse migrants back into the primary sectors by providing some subsidies and investment mechanisms to motivate them. The large part of the relief packages that have been announced can be made use of to give an impetus to the agrarian sector. 

The lack of opportunities in the villages drives people to migrate to large industry heavy cities. This puts a lot of pressure on infrastructure and social systems in cities. If subsidies are properly calibrated, they can give rise to a lot of supporting industries in semi-urban and rural centres. If people are provided with enough incentives to stay in the primary sector, it can lead to decentralizing resources from urban centres, as also help revive the rural economy. 

Now all these measures have to be seen in the context of changes happening in the global landscape. If you look at urban concentration of growth in Indian cities, the main economic activity revolves around just a few specific sectors, driven by outsourcing, by IT and ITeS verticals, etc. This hegemony is going to dramatically change at least in the midterm, say some three years, meaning there are not going to be many opportunities in the cities and migration itself might reduce for the next few years. It is thus a great chance for the Indian economy to realign its focus and shift from its practice of concentrating only on the urban. This is what the post-COVID 19 narrative of the Indian economy is going to look like – disproportionate increase in costs and subsequent increase in prices in most retail sectors, and the need to deploy reverse migrants into entrepreneurial pursuits in primary sectors.

In the emerging economic landscapes, patient capital ought to be made available to not just agriculture, but also to budding entrepreneurs and small and medium industries. Only by implementing economic policy shifts and bringing down the cost of capital can there be a significant growth and in turn this could perhaps trigger a second wave of liberal growth in the country. 

For the social sector, there has to be a lot of encouragement for social entrepreneurs by giving them non-capital intensive or a non-capitalistic means of funding their operations. Now a lot of social entrepreneurs come under the same method of P/E method for investments being available to them, that needs to change. The Finance Minister Nirmala Sitharaman’s proposal to create a social stock exchange must happen in the next three months. If that happens, you’ll see a huge wave of social entrepreneurs who are focused on welfare economics. 

Crowdfunding as a concept

In India, as well as globally, all the crowdfunding platforms focus only on raising funds through donation. None of them focus on outcomes or provide transparency on where the funds went, how they were utilized, who benefitted and to what extent the cause for which the funds were raised was fulfilled. Too, it is very important for both donor and recipient and for charities who raise these funds to focus on impact. 

Most of these platforms target the same set of donors. So, there is a sort of a cyclical monotony in this. This set of donors can be broadened by beginning to show transparency and focusing on outcomes. At Socio Ladder, for instance, we take the narrative away from fund raising, which is just a component of the crowd funding platform we have. A significant amount of effort and focus is pointed towards the outcomes, impact and beneficiary level transparency. 

In the crowdfunding sector, beyond the fundraising episode, what happens to the money is between the donor and the fundraiser. There is no visibility at all on the platform on where the money went or how it was used. Given these inherent risks on all crowdfunding platforms, the need for outcome measurement and impact visibility is that much more urgent.

There is likely to be consolidation in the sector soon because the Reserve Bank of India has come up with a new policy to control or regulate the payment aggregator business, which is what crowdfunding platforms operate on. Right now, the whole sector is unregulated. The new guidelines call for some minimal capitalisation norms and smaller platforms that do not comply with these norms will likely be out of business.