The economy going out of breath

Finally, the central government itself has accepted that the country's economy is in a whirpool of crisis of unprecedented proportions. The figures released by the central Ministry of Statistics depicts the depth of the economic crisis that India is in. In the first half of the current financial year, Gross Domestic Product (GDP) has registered a fall of 23.9 per cent compared to the same period last year, when there was a growth of over 5 per cent.

Ever since 1996, when the practice of compiling quarterly GDP figures started, this is for the first time that such a huge fall has been registered. Barring the nominal growth in the agricultural sector, all other sectors are giving numbers indicating contraction. The figures mainly underline that the Indian reality about the economy is far removed from the consistent claims and rhetoric about economic growth by the Modi government and its backers; and this was quite expected, especially in the background of Covid pandemic. But the question to debate is whether that alone has been the cause of this free fall. It is undeniable that the pandemic has pulled back developments in every part of the world, with unavoidable repercussions in all spheres of life, as had been predicted by experts in respective domains as early as the first few days from confirmation of corona virus.

The nations of the world were not in doubt about how Covid era would stifle the vital sectors which define the economic and development outcomes of a country including industry, manufacturing, labour, service and IT. But what is to be analysed is whether our government took them seriously enough. It may be recalled that one major response by the Modi government to the crisis was the imposition of lockdown at a few hours' notice – as it happened in the case of the note-ban – through a declaration at night. How could one expect such a government to come up with a calibrated remedy to prop the economy? The decline in the key sectors of economy of industry and construction, has been 39.3 and 50.3 per cent respectively, as per official statistics. With the addition of unregistered small-scale enterprises, this may increase by 20 per cent. To be read with this is the rise in unemployment by 23 per cent. Even when the economy plunged deep into a pit, there was no paucity in the extravagance of the government: government expenditure during this period registered a 16 per cent increase. Obviously this is a tragic offshoot of the government's approach to the crisis with no visible planning whatsoever. Among G-20 countries, it is none else than India who suffered the worst tumble during this period. Even other south Asian countries have made better performance and avoided such a colossal economic impact.

Prior to Covid itself, there had been an economic crisis. The Modi government had from its very beginning been a failure in sustaining the economic stability that was made possible through 'Manmohonomics' of UPA government, stained as it was by corporate appeasement and corruption. Not only that, steps hyped as major economic reforms like de-monetisation and GST, served only to shift the economy, already in ICU, to the ventilator. As a key economic indicator, the highest job loss rate in the last four decades, was recorded in the last three years. There are also reports that the jobless army has proliferated so much as to push the country into starvation.

The country, which had lifted 27 crore people from poverty during the UPA government's term, now ranks 102nd in global hunger index below Nepal and Pakistan. As a consequence of the unscientific lockdown declaration, says a recent survey result, 55 per cent of households reduced their daily food intake to two meals a day. To be gleaned from this is that gradually people have started not getting sufficient food to eat. For overcoming this grave crisis, what the government has to do urgently is to listen to the proposals put forward by economic pundits and even the opposition. By now, suggestions have been made by diverse quarters including steps to settle the GST arrears of the states, make public distribution system free at least for six months, institute mechanisms to let a fixed amount of money every month reach the hands of the people, increase the number of days of employment guarantee and declare moratorium for loans to small-scale industries and entrepreneurs. True, all these will increase additional expenditure in the short term, which needs to be resolved by measures like borrowing from the Reserve Bank. But the bottomline is that the situation calls on the Centre to react constructively to such pragmatic and scientific proposals, for the future of the country hinges on that response.