By Gyan Pathak
The fresh wave of COVID-19 spreading in India with new ‘variants of concern’ is creating new hurdles to the economy of the country which has just been recovering from the impact of the pandemic in 2020. Almost all the states are reporting sharp rise in infection but the six states – Maharashtra, Kerala, Punjab, Karnataka, Gujarat and Madhya Pradesh – are most affected. These states are also most important for the economy of the country. The containment measures, curfews, and lockdowns will thus adversely affect the economy of the country.
The total stimulus package of the country amounted to Rs 29.97 lakh crore or 15 per cent of India’s GDP. However, it was not found sufficient to bring the Indian Economy back on track, though shoots of recovery have been seen during the last few months, which seem to be stumbling again this month. All the government policies and measures could not reduce the employment rate to a desired level while it pushed up the number of billionaires in the country. There can be two major reasons for this – either government is knowingly working for the rich, or their policies have some inherent problems that is working for the rich more than the poor class.
For example, unemployment was recorded an increase in February 2021 at 6.9 per cent from 6.5 per cent in January 21. In March it went back at the level of January 2021, and November 2020. The sharp rise in unemployment rate was recorded for December 2020, which was at 9.1 per cent which was the highest after the rate of 7 per cent in July 2020. The fluctuation to such a high level shows that large number of persons are employed a month and kicked out of job the next. It is also indicative of the deteriorating quality of job in terms of lesser job security. It also reflects that our business and industries are still not stable.
The problem may soon become unmanageable, because on the one hand unemployment scenario is very bad, and on the other number of billionaires are increasing sharply. Even during the pandemic lockdown measures in place in 2020, the number of billionaires in the country rose by 40 persons. Today number of billionaires in the country are 177. Mukesh Ambani continues to be the wealthiest man in India with a net worth of $83 billion, according to Hurun Global Rich List Ambani witnessed 24 per cent jump and become the eighth richest man in the world. Another example can be given of Gautam Adani, who spectacular rose in the last few years doubling his wealth to $32 billion. These are only examples to show that wealth is disproportionately distributed among the rich and the poor in the present economic system of India.
Economic Survey 2020-21 has emphasized that India’s humane policy response was focused on saving human lives during the initial phases of lock down, and claimed that government measures were recognised that the short-term pain would lead to long-term gain, which did not prove to be true, on account of their disproportionate adverse effect on the poor than the rich.
The economy of the country slid to technical recession despite the government measures with GDP remained negative for two consecutive quarters in 2020. GDP contracted to a record 24.4 per cent in the first quarter of 2020-21 due to stoppage of economic wheel in the country due to lock down. In the first quarter of 2021-22, the GDP growth is estimated to remain at 0.4 per cent. Union government visualizes annual GDP growth to contract by 8 per cent in fiscal 2020-21.
The people who are hoping a sharp rise in economy of India on the basis of rising sensex may be wrong. It may be good for investors but may not be able to push the general economy of the country. It may plunge sharply any time such as we have seen on March 23 for benchmark BSE sensex. It crashed nearly 4000 points in a single day. It is said that sensex has been railing over 25,500 points nearly 98 per cent chiefly due to the nature of stimulus package which was beneficial for investors.
A time has come when India needs to revisit its economic announcements last year because they fail to bring desired results for all the citizens irrespective of their level of richness and poverty. To deal with supply and demand side crises, the country urgently needs appropriate measures, since they have drastically reduced output and employment.
PMGKP, Atmanirbhar Bharat Abhiyan, PMGKP Anna Yojana, and RBI measures must be discussed threadbare. During the pandemic, the government has launched several structural and other reforms without taking the people in confidence covering the sectors like agriculture, labour, power, industry, and the MSMEs. It resulted into failure of many and stiff resistance too.
The three farm laws bringing corporate to the farm sector are stiffly opposed and farmers are agitating for their repeal for the last four months. The four labour codes are also being opposed by working class which they say are intended to favour business and industries. MSME’s definition has been changed to include almost 90 per cent of the firms in India, but they are not able to get sufficient level of support from the banks. Informal sector is also in very bad situation, and are being charged higher rates of interests than big business and industries.
Work from home was allowed for BPOs, but the service conditions are deteriorating. Privatisation of Power sector and tariff policy reform is also resisted by people. Privatisation of PSUs has agitated the whole working class. A compost exploration-cum-mining-cum production regime has been introduced for coal and some other sectors but the government is not able to implement it smoothly. The sectors, such as industry, space, defence etc, need some better reforms than the present ones being implemented. We see public unrest everywhere, which government must take not of if India wants V-shaped recovery in the nest fiscal. (IPA Service)