By Krishna Jha
We are moving towards zero percent growth as the credit rating agency Moody’s investors service has predicted for the financial year of 2021-2022. It said that the negative context prevailing in the country has its own effect on the GDP growth.
It did not limit itself to the crisis of horrific effects of the Corona pandemic. Without mincing words, the agency pointed towards the economic policies that remained almost passive towards resolving any issue that deterred the growth. The indifference has been almost brutal towards even the human element that gives the imperative input. In reality it resembles the old slavery days. In the grim picture has been the backward social and material basic structure gripped by Corona pandemic, and its intense pressure. As early as in November, 2019, Moody’s had shifted its assessment of country’s economy from stable to negative rate of growth. It also pointed towards investment being at negative level. It also warned against any further credit.
But throwing away all caution, the government has decided to borrow 54 percent more than earlier estimate, which comes to around 12 lakh crore from the market, a massive jump of Rs 4.2 lakh crore, over the Budget estimate of Rs 7.8 lakh crore. According to RBI Website, between May 11 and September 30, over 20 weeks, the government has decided to borrow Rs 30,000 crore every week by auctioning its bonds of between two-year and 40-year duration. In fact, as the Corona started, from April 9 and May 8, the government had already borrowed Rs 106 lakh crore from the market.
It has also decided to overcome the fiscal deficit through bonds which may hit it further by paving the way for inflation. The 3.5 percent is already at the level of 5.5 percent. Consumption rate has almost reached the bottom, as with the boisterous growth in unemployment, there is hardly any purchasing capacity left. The wealth creators themselves are underfed, even starving. The plight of MSMEs is also equally grave with barren promises wrapped in gift packaging.
It is like a horror story. There is the finance capital standing at the other side of the grand canyon, while the industrial capital is perishing on the other side, eager to compromise which is historically impossible. The trap of finance capital is an open secret. Jio is collecting billions of dollars. Mukesh Ambani struck the third deal within three weeks. The tech focused fund will pay Rs 11367 crore for 2.3 percent stake in Jio, the first venture by Vista Equity in Asia and beyond US borders.
Then there is the oil sector. Gripped by continuously falling prices, it finally crashed, going into minus in some cases. It was the first since the Great Depression of 1929-33.
International economy in countries like Russia, Saudi Arabia and several others are engaged in reigning in the falling prices of oil, by cutting down production. OPEC and Russia formed an alliance which was an extension of OPEC to enter an agreement with Russia on cutting down the barrel per day production of oil. All the OPEC countries are in the international market. Whenever the prices of oil come down, India’s economy faces crisis. There is every attempt to keep the prices high. Then there is the cess, and the duties to serve the interest of Corporate houses. Here comes the inevitable question, in whose interest prices are hiked?
Petroleum products are kept outside GST, since it controls prices. Oil prices keep going up without any restrain. The salaries are either cut or kept at minimum level that again has its own negative effect. People are suffering, their miseries go unheard. Labour laws are diluted. Despite the huge burden of injustice imposed on the entire industrial sector, there is a small section in the society, that of corporates, and they are thriving.
And this is how finance capital steps in. (IPA Service)