Ubaidullah Nasir Unfortunately in our country the upward swing of Covid 19 cases and downward swing of economy continues unabetted. In Covid 19 cases we are just behind US and in economic downfall too we are probably top among all the nations. Though our economic bad luck started with demonetization and mindless implementation of GST
Unfortunately in our country the upward swing of Covid 19 cases and downward swing of economy continues unabetted. In Covid 19 cases we are just behind US and in economic downfall too we are probably top among all the nations. Though our economic bad luck started with demonetization and mindless implementation of GST it reached in its worst stage due to pandemic and mindless lockdown that was strictest in comparision to the lockdowm in other countries. The pandemic has destroyed the economy of each and every country it attacked but our position became more worst due to bad economic policies implemented following pandemic. The government though announced the economic package of 20 Lakh crore but according to experts it breakup shows that most of the money announced is like old wine in new bottle as most of the schemes and projects announced thus were already part of our budget, only about 1.50 lakh crore rupees were given for new schemes including more allocation for MGNREGA. The thrust of this package is mostly production base but economist are of the opinion that it should have been consumption base because unless consumption is increased the increased production may be another burden on economy because due to severe unemployment purchasing power of the people has nosedived and unless there is no sale or consumption what the produced goods will do except increasing inventory of factories and bank interest of factory owners. Congress leader Rahul Gandhi internationally renowned economist Amrtya Sen Raghuram Rajan, Ajit Roy and many more have advised Modi government to transfer cash to needy people that will increase their purchasing power followed by increased production and employment but in his own wisdom Modi ji announced few kilograms of free grains including Chana mainly to migrant workers. The greatest sufferer of this economic disaster brought by pandemic and demonetization GST and lockdown has been middle class the solid vote bank of Modi ji.
This government is expert in manipulating datas and economic figures. First of all immediately after taking over the reign of governance Modi government changed the system of calculating GDP and adopted a method that showed about two percent increase in GDP in comparision to the calculation according to old system. Among others former economic advisor Arvind Subramaniam and even BJP’s Rajya Sabha member and senior leader Dr Subramaniam Swamy too have said that Modi government is bringing out false picture of our economic situation by manipulating the data. Now see some other facts factory output that was 9% in 2011 is now 6%. Rural consumption has come to minus 1.5% that means purchasing power of rural populace is severely affected not only this even urban consumption has also come down to 0.3% .When the consumption ratio is so poor one can easily understand the meaning and consequences of increased production which this government is foolishly asserting. Unemployment is the greatest challenge before this government but it has yet not shown any interest in coping with this situation the only step it took is that stopped making public unemployment data so that our youth could not react but facts are difficult to hide particularly in this era of information technology. According to NSSO a government of India organization since last fifty years unemployment rate was never so high as it is today. Non performing assets (NPA) of banks is increasing due to pandemic Covid 19 that resulted in unemployment and downfall in people’s purchasing power. According to Mr. Shakti Kant Das the governor of Reserve Bank of India the NPA that was 8.5% in March 2020 is likely to increase to 12.5% by March 2021. For this sad situation Covid 19 is definitely a factor but actually it started with demonetization and GST. If before declaring complete lockdown within a short notice of just four hours Mr. Modi would have applied his own mind and would have taken suggestions from his own advisors and the lockdown would have been implemented systematically and in phased calculated manner the situation specially plight of migrant labours could have been avoided and economy would not have been shattered like this.
Former governor of reserve Bank of India Mr Raghuram Rajan has said that India entered the Covid 19 health crisis with the legacy of declining growth increasing unemployment poor fiscal situation and NPAs in his first term. In his second term instead of dealing with this economic situation Modi government in its second term focused on BJP’s majoritarian objectives. Providing resource for repairing an impaired economy is going to be very important and what Modi government has done so far in terms of fiscal support is not adequate in terms of what has been done by other economies. With pandemic related revenue short falls and decline in GDP the fiscal deficit could rise to13-15% which was about 9% before pandemic Covid 19 he warned.
Another bad news is coming from Gulf region and Middle East. According to Swiss banking group UBS remittances to India are likely to be declined by 25% due to steep fall in oil prices and Covid 19 pandemic and resultant unemployment there due to which lakhs of Indians are loosing jobs there. Many have already lost jobs and many more are going to be jobless and face layoffs. India is the largest recipient of remittance from Gulf region which is about 2.7% of our GDP. This remittance help boost house hold income support private consumption and stability to current account balance says USB.
With trade balance already not in our favour this fall in foreign exchange remittance will further decline our foreign exchange reserve which is another bad news for our economy.