Coronavirus: Make MSMEs strong

COVID-19 has accelerated the thinking triggered by worldwide economic slowdown that it is better for each country to fall back on domestic economies and import substitution which had become a dirty word in the 1990s and 2000s. They have regained economic respectability, especially among members of Prime Minister Narendra Modi’s government.

The old, discredited mantra of ‘don’t import what can be made in the country’ which was such an attractive socialist slogan, is being adopted by expediency-driven politicians in the ruling party and many of the marginal left-leaning parties. The intellectual retreat from globalisation has been gaining ground ever since the 2008 financial meltdown, whose aftereffects continue to linger a decade later.

There seems to be every likelihood that the quarantine along national borders, necessitated by COVID-19, will become the conceptual framework of politicians and some of the industry and business folk as well for economic thinking in the immediate future.

There is cultural nostalgia for the old ways of life in smaller communities which is being romanticised as having shielded people from the apparently uncontrollable infectious diseases which jump over national and community borders.

It would not be right to dismiss the fear-based reactions because it seems the advances of medicine are incapable of fighting the new diseases, and that the advantage of air travel spawned by technological advancement has become a liability if not a curse.

Modi’s Make in India, American President Donald Trump’s America First and British Prime Minister Boris Johnson’s ardent faith in the virtues of Brexit seem to have gained a backdoor validation as it were from the outbreak of COVID-19. This might turn out to be the dangerous Sirens music which would come in the way of getting the global economy back on to the growth part even as the pandemic runs its course as any viral infection would.

Global coordination is a more effective way of combating coronavirus because research breakthrough in one country should be made available to the rest of the world in controlling it without delay. The instantaneous ripple effects seen in global financial markets born out of turbulence in one corner is also the paradigm of pandemics on the medical front.

It is global research teams that are needed to get quick and better results in finding medication for the virus before a vaccine can be made to prevent it. The world has a stake in China regulating its meat markets, especially involving wild animals, if that is indeed the cause of COVID-19. This requires global protocols and not a retreat into national cocoons.

What is overlooked is the fact that national research agendas were driven by local needs. The Americans invested funds in malarial research as they were involved in the war in Vietnam in the 1960s to the mid-1970s. But they showed no interest in it after the United States withdrew from Vietnam.

China continued to have a stake in malarial research, again because of the war in Vietnam, and they hung on to it. The 2015 Nobel Prize for Medicine and Physiology, won by the traditional Chinese medicine researcher Tu Youyou for the antimalarial drug artemisinin, was a combination of Western scientific research protocols and traditional Chinese medicinal solutions.

The World Health Organisation (WHO) has adopted artemisinin as the antidote to malarial fevers worldwide. Though at present, it is the research teams in the United States and in China which are racing towards finding an anti-corona virus vaccine, it should become apparent to governments across the world that they have a stake in the anti-virus vaccine research.

India would need to pick up the baton along with teams across the world to find a solution to COVID-19. If the new disease frontier facing the world is that of viral diseases, then there should be worldwide research on viruses and the vaccines and medicines needed to combat them in the same way that antibiotics led the war against bacterial diseases.

It cannot be the case that scientific research would be globalised but the economies would retreat behind tariff barriers across national borders. It is indeed the case that in this moment of panic as COVID-19 spreads like wildfire and the economies take a hard blow as a result, the concern of national governments would be to protect the micro, small, medium enterprises (MSMEs) in their respective jurisdictions.

Right of way

The declarations of Union Finance Minister Nirmala Sitharaman and Union Minister for Commerce Piyush Goyal that what can be made by the MSMEs in the countries should be protected and duties raised against imports, when the right way of looking at the issue would be to make the MSMEs into an export-driven segment of the economy.

There is of course the short-term concern which might require protection of some kind or the other, but the long-term solution would be to make the MSMEs strong enough to compete in the global markets.

Self-contained economies, either at the regional and national levels, are not sustainable. A larger flexible system can withstand shocks, shortages, volatilities which would destroy a smaller system. It might be argued, and with much justification, that the advantages and disadvantages between small and big systems is equally balanced, and one does not have an edge over the other.

In a purely logical sense, that might be true. But in truth, the larger system has better chances of survival, sustenance and prosperity. Global economy is the better option because it brings with it the strengths of global networks which will help people in smaller communities.

There is virtue in hanging together and hanging on. National identities do not disappear but thrive in a globalised set-up because we have learned the invaluable ecological lesson that diversity is the keystone of any macrosystem. So, the thinking that India should gain from Chinese economic woes is avoidable negativity.

(The writer is a New Delhi-based political commentator)