With GDP going down to a little more than minus 23 percent, the economy in the country is almost at the bottom level, and needs fiscal stimulus. A few months back, the Prime Minister had announced a Rs 20 lakh crore Economic Stimulus Package which soon turned out to be a myth, and the details of which came out with budget. PM’s announcement came on May 12, and a day after, on May 13, the Finance Minister offered the details layer by layer.
People left with acute deprivation belonged to the same lower depths as always. They were the food givers from the agrarian sector, the farmers, then the industrial workers, and also those who had left in search of respite, and instead got disillusioned and came back. They were the migrants, managing to survive with the minimum.
Then there was the Budget for 2020-21 which already had a fiscal deficit of almost 3.5 per cent, same as that of GDP deficit then. The Budget had expenditure plan of Rs 30,42,230 crore for which the government was to borrow Rs 7,96,337 crore. Slowly, the damage was getting crystallised. The rut had started setting in much before the pandemic and the lockdown as Moody’s had started ringing the alarm bell.
GDP kept falling for last eight quarters. Only once between December, 2018, to March 2019, there was a spark of 0.08 percentage point that dimmed even before getting noticed. However, it had gone up to 8.2 per cent in March, 2018 for a very short while, and came down to 3.4 per cent in March, 2020, even before lockdown was imposed.
When the pandemic had gripped the livelihood and manufacturing sector by April-June quarter, the killing spree of COVID-19 soared high and its spread knew no limits by July and further, as the lives are still being lost in huge numbers. In the total quiet of death and illness, further descent took place. The much celebrated victory after long struggles and sacrifices the world over at the end of the nineteenth century, the working hours rescheduled from unlimited to eight hours a day, now stands again reversed.
Slog for ten to twelve hours and take back salary with a thirty to forty percent cut, or lose your job, has become the norm. There is no choice with unemployment rate going up to 13.8 in the capital city of Delhi and at the national level, in August, 2020, it was 8.4 per cent. Manufacturing growth rate fell to a fifteen-month low in August and by September, it has come down to 47.1 percent, influencing the job possibilities negatively.
The pace of slowing down is much faster than even a decade ago when economy in the country was going through stagnation. This time the forces that earlier helped economy grow, are slowly getting blown out. For example, the consumption generated demand has been almost invisible, thus in turn, influencing the GDP growth with negativity. Private final consumption expenditure had in GDP a share of 57 per cent in 2019-2020, which fell down to 2.7 per cent in March, 2020 quarter. The crash was steepest in the decade that is getting almost over. Also the fast decline in consumption demand has its own devastating effect in the future course of growth. The consumption demand, especially now when the benumbed populace is facing almost a doom, with disastrous job loss and downslide of income, is seeing a growing tendency to cut household expenses and opt for saving, which in turn has an adverse effect on economic growth.
It is growingly realised that the crisis has gripped all sectors of economy and to salvage the situation, it is the government at the Centre that should have played a crucial role. It was imperative that all the major sectors should have received the share of fiscal response with a format for progress provided by the government. But there is a total absence of any such initiative. With the consumption among consumers fading, and the localised lockdown getting the shutters down in the production units, it is inevitable that the economy would need rescuing, and that could be done only with a fiscal stimulus. Then there are the visible symptoms of the whole sale price indices contracting, influencing the production incentive to contract further.
In this pervading gloom, the only shine that survives through all is the brightness of the packaging. The failures and the dark patches are all veiled, making the situation nicely presentable, but in the content, starvation and finality of death have their own presence.
Darkness is thickening, despite the blinding dazzle of gains for the few. Even as the GDP has rolled down to minus 23 per cent, the gains of Ambanis and Adanis have gone up to more than 34 per cent. And the irony is that attempts to distract have proved to be only too glaring.
