COVID-19 Pandemic: An Opportunity In Adversity

Home »  Finance »  COVID-19 Pandemic: An Opportunity In Adversity
COVID-19 Pandemic: An Opportunity In Adversity
Anurag Mathur - 08 April 2020

In every adversity lies an opportunity is an age-old adage and has never been truer than the current COVID-19 pandemic. As an extension, it could also be said that greater the adversity, greater will be the opportunity, particularly for a diverse country like India.

As we evolve as a modern progressive democracy, there are still deep-rooted opinions and traditions that tie us down, on many occasions causing extreme hindrances where none need to exist. These are only exasperated by the contrasts created by religious beliefs, politics, urban or rural divide, race, caste, and language. In fact, there are not many occasions where the country is unified in a larger sense of purpose, except in times of grave adversity and hence this adversity whilst brutally unfortunate and undeserved is a call to reform and bring about deep-rooted changes.

In fact, our short history as an independent nation is replete with such examples. The food shortage of the 1950s brought about the green revolution in Punjab and the northern plains. The milk shortage ushered in operation flood, catapulting India from being a recipient of donated milk powder from western nations to becoming the largest producer of milk in the world. The depletion of foreign exchange reserves leading to a mortgage of our sovereign gold in the 1990s to building one the largest forex reserves amongst its cohort and saving our national animal, the tiger from inevitable extinction to record populations through the project tiger programme.

The Global Financial Crisis (GFC) tested us significantly, but for the most part, did not hurt us as much as it did to other developed and leveraged economies. Evidently, our reforms coming from that event are not noteworthy.

The current crisis, however, is scary and has galvanised this government into a measure that has never been witnessed before by humanity; a three-week “lockdown” of 1.3 billion people is a perfect example of that. It would be no exaggeration to term this as an existential threat for our citizens. Whilst I do not have the slightest doubt that we will recover, it calls for unleashing deep reforms that would not otherwise be possible to bring about through conventional consensus.

Coincidentally, the government of the day also enjoys an absolute majority in both houses of the parliament, the only limitation being the imagination and planning.

One of the major themes emerging from this pandemic will be greater hygiene and sanitation, backed by better healthcare. There are several minor themes that emerge such as supply chains and self-sufficiency of goods and emergency supplies, but none as compelling as the former.

Reimaging Urbanisation

In my hypothesis, this problem starts with reimagining the concept of urbanisation in the Indian context. Our freedom movement has deep roots in galvanising and igniting the minds of our rural masses to the concept of total freedom and the right to self-govern with a universal adult franchise. That worked very well for us and the same theme prevailed post-independence and saw us through droughts, famines, and wars with the slogan of “jai jawan jai kisan”. As a corollary to this, the city dwellers or the urban inhabitants were always classified as a corrupt profiteer who had undeserved access to the best life has to offer. This was perhaps true when agriculture contributed the most to our economy, followed by manufacturing and almost nothing by the service sector. The city dwellers, therefore, were the rich industrialists who lived in fancy houses amidst an army of servants, drove around in fancy cars, accessed luxury hotels for all their needs and flew the world in fancy aircraft.

Cut to the current millennium and the reality has altered dramatically, albeit the perceptions and the political patronage have not so far. The service sector now contributes over 50 per cent of our GDP and all of it resides in our cities. This is now run by young men and women who have migrated from small towns and villages into the cities and found jobs that open up the world for them. These men and women work in the technology sector, in banks and financial institutions, hotels, airports, retail environment, house-keeping, maintenance, security. In the current day, the individual GDP of our seven cities will be greater than the vast majority of countries in the world.

Therein lie the acute problem and the solution that I propose in the following sections.

Seven city wonder

Our growth from a poor backward country to a trillion-dollar economy has been a product of seven cities for the most part. Kolkata is a poor contributor to this and Hyderabad a fairly recent addition, which leaves the entire growth coming from five cities in India. We have been migrating people to these cities in numbers as large as the entire population of Australia- every year for the past several years. It is not difficult to imagine why these cities are crumbling and why even an insane amount of new infrastructure simply can not keep up with the demands of the city in terms of mobility, water, sanitation, housing, pollution, government services. There is a dire need to add more cities to our country that can compete with Delhi-NCR, Mumbai, Bangalore, Pune, and Hyderabad; in every possible way. Whether we build new cities or simply upgrade some of our state capitals is the subject matter of urbanisation experts and economists, but if there ever was a time to build new cities, this is it. We need to build much larger and modern versions of Rourkela, Bhilai, Gandhinagar, Chandigarh, and Jamshedpur. The operative part is that these cities need to compete with our current cities on every possible parameter and only then will we succeed. As a reference, China has built 20 new cities during its period of explosive growth.

Land Acquisition

The second relates to streamlining our existing cities and addressing the issue of land acquisition and modern housing, which by definition comes with hygiene and sanitation. By rough estimates, almost 60 per cent of Delhi’s population lives in around 130 villages. For those who are unfamiliar, these are historical villages or “abadi” areas that were spared from acquisition by the British colonial masters while building the city of New Delhi during the late 1800s. Our Land Acquisition act of 1894 provided for the exclusion of villages or hamlets by drawing a red line on the blue-print using a glass marking pencil (hence the origins of the term “lal dora”), while acquiring the agricultural land to build the modern city. These villages were also excluded from the administrative agencies of the city, including the registrar, the municipal bodies, the development bodies, and all of those were to be administered and managed by the villagers themselves. No development rules applied in these villages. In the year 2020, all these villages remain as enclaves or islands in a modern city. There is rampant and uncontrolled construction in these villages with rods no wider than 2 meters or 3 meters at best in some cases. They are a massive health and life safety risk, but they are the hub of brisk and low-cost commercial activities along with providing economical housing to the migrant population into the cities. The land acquisition act needs to be amended and these enclaves need to go

Rental Housing

That leads to the point of where do you then house these migrants in a safe, economical way. The answer lies in rental housing, modeled on the Singapore Housing and Development Board (HBD) model. The cities need to build a large number of high density but highly-serviced apartment housings much on the lines of Sarojini Nagar, RK Puram, and make them available at economic rates. The need of the hour is housing for all, but that should not be confused with making everyone own a house. With high mobility and a young population with modest means, trying to force-feed affordable housing located at the periphery of the cities will never see success, and instead, the focus has to be on providing rental or social housing in prime locations using surplus government land. The government itself need not build these units and should use private developers to do so, followed by ownership held by individual investors (for rental income) or through REITs.

The author is the CEO, Savills India

Financial Advice For The Newly-weds
How To Manage Your Personal Finances During COVID-19 Pandemic

Related Articles

Analysing India’s GDP Growth
02 June 2020

Analysing India’s GDP Growth

Yoga For Your Financial Health
02 June 2020

Yoga For Your Financial Health