BETTER TO BE MINDFUL OF A POTENTIAL BLACK MARKET THAT MAY RAISE HEAD IF STEPS ARE HURRIED AND DETERRENT TO CHASE THE IDEA TO BE SELF RELIANT

BETTER TO BE MINDFUL OF A POTENTIAL BLACK MARKET
THAT MAY RAISE HEAD IF STEPS ARE HURRIED AND DETERRENT TO CHASE THE IDEA TO BE SELF RELIANT 


The painful and enduring experiences during the prevailing Covid-19 pandemic stretching over three quarters of a year till date, has led a number of nations globally, including India to think and pursue the idea of being self-sufficient or self-reliant or “atma nirbhar” as called in India. The “Dream” or “Idea” of being self-sufficient or self-reliant in the long term is always considered to be a good dream or a good idea and it can be subscribed by one and large. Mahatma Gandhi was an ardent proponent of Self Reliance and even in post-independence era stretching from the call of Mahatma Gandhi from pre-independence era, India pursued the doctrine of self reliance and development of internal economy although accused of license raj or closed economy until 1991 when it opened its economy to the world market. India did Green Revolution and While Revolution in achieving self sufficiency in foods and dairy production successfully. However, in other sectors, as there were little choices left at hand and to be on comparable grounds of play with other parts of the world and not to be left behind in technology and developmental efforts, India remained opened to international trade of the world since 1991 reforms. Further efforts to move towards self reliance is not a bad idea however, in the present context it has to be moved with calculated steps and some degree of caution and care in decisions towards it. However, if hurried and deterrent steps are taken in extravagant manner to impact international trade in order to chase this idea, it is also needed to be mindful of a potential black market that could be created in the short and medium term even unintentionally; that would badly hurt the economy and the public in terms of cost and shortages.

The Covid-19 situation compounded with a well published border stand off with China, provoked some thoughts at Indian side towards international trade with China with a negative stance that also got published widely in the public domain in various electronic and print media. Even social media roared a lot about it far and wide with negative statements and publications floating and circulating all around against the international trade with China more emphatically towards imports from China. A lot of Software Apps that had got popular widely and had found extensive use in social media or otherwise in electronic media were banned and axed. Messages traveled far and wide and the authorities involved in the international trade, particularly imports, got into some actions that created some deterring effects in the movement of materials. In the process, while trumpeting against the anti-international trade (mainly imports that are inevitable), all could conveniently forget that the supplies of some essential materials or finished products, which are otherwise not available locally (until it is produced locally to reach the stage of self-reliance) already disrupted due to Covid-19 pandemic and the ensuing lock down measures, would further get disrupted badly. Exactly that has happened. As a result, a Potential Black Market, that was not existing for quite some years after 1991 economic reforms announced and implemented in India, has raised head again. Although this Potential Black Market is not conspicuously visible on the surface, it has become deep stretched in the inner compartments of the market. For example, the first hand experiences say that, the prices of spare parts or components of all kinds of Appliances (which are inevitable for use in consumer hands) used in Household or Commercial Establishments have increased almost by 100% to 200%. Not only the prices have increased, while it were freely available in the market, now there is exhibitable shortage of such spare parts or components, whether it is electronic, mechanical or electro-mechanical. The Automobile Manufacturers have already expressed their concern and predicaments regarding the difficulties being faced by them for bringing in and procuring Automotive Spares and Components for their manufacturing. Even the prices of Automotive Spare parts that are not manufactured in India have increased substantially and the price rise could be as high as 100% to 300%. While the public is not inclined to buy more of new cars or automobiles in the present situation, the usage of used automobiles has increased a lot and its maintenance and servicing has raised load on demand of Spare Parts and Components almost like a black market. Similarly, the Mobile Phone Components and Accessories that are primarily not manufactured in India have not only become expensive, it has slipped from a free market to a black market situation. While India is considered the Pharmaceutical Factory of the world for feeding of its supplies of finished pharma formulations now to almost every country of the world , the Indian Pharmaceutical industry will face an existential crisis if it is stopped from importing its active ingredients ( APIs or Active Pharmaceutical Ingredients) in technical form which get imported from China as these pharma raw materials are either not produced  in India at all or produced by a negligible volume. Further producing those technical raw materials in India right now will make it economically not viable as the cost of production of it will be 20-25% higher( than that of China) if produced in India right now. Same is the case of Automobiles or Automobile Component Industry of India and its dependence on import of spares and components, which can not be stopped overnight; otherwise these industries can be fish out of water. The situation of all kinds of Appliances Industry from mobile phones to computers or from hair dryers to Refrigerators explained above is nothing different. Even the Chemical Industry or Specialty Chemical Industry which is one of the Strength Area of India, is right now dependent on its intermediate products ( pre-cursor products ) on imports, whether it is China or Other countries of the world. In fact, by authentic experience, it can be said that for more than 30years, in India's neighbourhood, China was engaged continuously in building and building the extensive facilities to get the uncontested title of the “Factory of the World”. 

To crunch some numbers, reported in the public domain, the imports of automobile components [spares or components or Original Equipment Manufacturer (OEM) components as called ] from China alone in the year 2019 was worth USD 4.2 billion ( or Rs. 30000 Crores appx. ) [ as per the Auto Component Manufacturers' Association of India (ACMA) data ]. Similarly, the Pharmaceutical Industry of India had imported Rs 17,400 crores   ( USD 3 billion approx.)  worth of Active Pharmaceutical Ingredients (APIs) (in technical form) from China in the Financial Year 2019 to manufacture finished formulations in India that were fed to and sold in world market (including Indian domestic market) by Indian pharmaceutical manufacturers. The Chemical Industry dependence on imports though has not been quantified due to complex structure, but it is a huge volume and value that has been inevitable as it is not available locally right now and in the short term it can not be replaced easily for various technical reasons, such as availability and cost factors of basic raw materials in India at easy reach. To get rid of this situation without hurting the economy and raising the cost burden on the public, there  would be need of a hatching time, it goes without saying. May be it may or may not be possible to shed off everything of imports for a very long time. However, we can not afford to create a Black Market for the same materials which were available freely may be before the onset of Covid-19 situation.

Given the situation explained above, although with a handful of examples, none the less representative examples, it is just the tip of the iceberg. Unless we are ready to produce such materials or components or finished products locally and make it available to meet our requirement, taking hurried and deterrent steps to stop it or disrupt it badly which has already been done partially by some actions or by creating psychological barriers due to campaigns, it will lead to growth of a potential black market for such requirements and it will also hurt the mass of public and the economy as a whole by creating artificial shortage of supplies and rising prices of the materials, components or finished products that have become essentially essential in the hands of the consuming masses.


About the Author : Dr. Nimain Charan  Biswal is a B.Sc.(Agri. Science and Technology). M.B.A. and Ph.D.( Management Area ) by qualifications and he has 34+years of work experience in both  industrial and development sectors in diversified fields of social importance. He has been educated at Orissa University of Agriculture and Technology (OUAT)-Bhubaneswar, Institute of Rural Management Anand (IRMA) and Gujarat University ( with Resource Support of IIM-Ahmedabad ). Dr.Biswal is further educated at IIM-Calcutta, XLRI-Jamshedpur, Apple Computer Industries and Spar Inc., USA. He has worked for reputed National and International Organisations in Senior/Top Management Capacities. He is a management expert, a prominent professional of India and known Internationally as well. He lives at Mumbai in India.


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