New wave of Covid will bring more trouble to battered economy
The problem may soon become unmanageable, because on the one hand unemployment scenario is very bad, and on the other the gap in distribution of wealth is getting wider
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 stimulus package provided by the government turned out to be insufficient 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 unemployment level 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 common people.
For example, unemployment was recorded in February this year at 6.9 per cent from 6.5 per cent in January. The highest unemployment rate was recorded in December 2020, which was at 9.1 per cent. It was 7 per cent in July 2020. The fluctuation to such a high level shows that large number of people 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 the number of billionaires is increasing sharply. Even during the lockdown, the number of billionaires in the country rose by 40 persons. Today the number of billionaires in the country is 177.
This shows that wealth is disproportionately distributed among the rich and the poor in the present economic system of India.
The economy of the country slid to technical recession and the 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. 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 is rising chiefly due to the nature of stimulus package that 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.
During the pandemic, the government has launched several structural and other reforms in various sectors including agriculture, labour, power, industry, and the MSMEs without taking the people in confidence. These measures and other schemes need to be discussed threadbare.
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. We see public unrest everywhere, which government must take note of if India wants V-shaped recovery in the next fiscal.
Views expressed are personal