Minus 23.9% GDP: Really An Act Of God Or Not?

                    

And the time has finally come, for all what we have been waiting for "A two-digit economy readers" but wait not in positive but in NEGATIVE. Today we are standing at a point where our growth has shrunk to around minus 23.9% and here in this article I'll explain to you how it happened? and what is actually happening around in the nation. 

                              
                                                                credits:economic times

Firstly take a look at some statistics which have been released by the NSO( National Statistical Office) Speaking of Industries, the sector slumped minus 38.1% in April, May and June Services minus 20.6% down, Manufacturing minus 39.3% down, Agriculture was one sector that was still in the positives at 3.4% Trade, Hotels etc were down by minus 47% and this is the deplorable condition of the economy that we are witnessing today.  We have now become one of the world's worst-performing major economies and have witnessed a massive contraction of around 24% in the economy. But after all, this what the government is saying is that this is "An Act of God". Here we're raising a simple question today- Keeping in mind that corona has destroyed many countries, why has the performance of our economy been so pathetic? It is essential to know whether this is an act of God or not? All through the last year, we have been repeating the importance of economy and where our economy has been heading, Counting from last July-August, we told you about what the conditions concerning to GST and Demonetisation are. We already had all these warning signals and the bar of our GDP kept falling The "Staircase" of our GDP was going down in almost a synchronous manner- as if it could only have been God's doing and no human was capable of that. The GDP was already tumbling down since the last 8 quarters and now, it has been dealt a blow by corona as well and we have finally fallen down to the level of minus 24%.

           
                                                           credits:tradeeconomics

In a quick comparison, talking about the United Kingdom, its GDP growth rate had fallen to minus 20.4%, the GDP of France contracted by about 13.8%, The GDP of Italy contracted by about 12.4%, The GDP of Canada contracted by about 12%, The GDP of Germany contracted by about 10% and The adjusted GDP of USA had shrunk by 9.5%. 

                        
                                                               credits: Bloomberg

So, If the rest of the countries are in this state, how did such a big problem emerge in India? And one clearly perceptible problem is that we treated India as a "state" shutting everything down indiscriminately and indefinitely even when the experts believe that India should be viewed as a "Mini Europe" We, in contrast, viewed India as a state, Either everything is open or everything is shut. Whereas Graded lockdown should have been followed, In the initial lockdown- states should have been allowed to decide what areas should be on a lockdown, in consonance with a federal spirit. That, we failed to do and also neither did we increase medical facilities. So, we were kept hanging in this state and hence, we have become the world's number 1 in the number of daily corona cases. The point to be noted is that we were already tottering at a rate of 4% GDP before corona struck, In January, February and March, we had already hit 4.2% and the growth for the next quarter was being forecast at 2%. 

So now I think you all are very much clear about what is happening now let us take a look at the following points that explain why we are in a position like this today and we will try and tell you why this problem is not going to get solved anytime soon. 

1) LOSS IN TAXES 

During the time of Budget 2020, we were already witnessing the biggest shortfall in taxes in a decade, We were already reeling under a tax shortfall as our economy wasn't really growing as per our target. In July-September 2019, we had already slipped to a 6 year low and we were already shrinking by 2.1 lakh crore. Then, the GST blow on top of that- Three years later, situations about GST were such that we were already grappling with lowest collections in about one and a half years GST was supposed to accumulate a massive collection. In contrast, collections fell and the states were left begging for funds as per the deal

2) UNEMPLOYEMENT 

It was clear in 2019 when NSSO data revealed that unemployment was at a 45 year high. By the time this report was released, the elections were already over and the government had said that it would set everything alright. But the report had already shown us that the employment was falling, which meant that manufacturing was falling which in turn signalled that our economy was floundering. Furthermore, the figure for 2018-19 was double the figure for last year, Within one year, we had doubled our unemployment figure in 2018-19. Now you can imagine what conditions would be like in 2019, 2020 and 2021 after the outbreak of corona. 

                                
                                                                  credits: Indiatoday

3)RURAL ECONOMY

Next, let us move to the rural economy. Tall claims of our rural economy turning saviour were made but in reality, Farm income growth had slumped to a 14 year low in December 2018. Having already declined in 2018, we were trying to recover from it and this is why a slight increase is seen in the farm income subsequently. While we were told that our farmers' income would double by 2022 and how that will be done is yet to be seen. A deflation was already visible in our rural economy 2016 onward, on top of that, we had already lost 11 million jobs in our rural economy. 

4)CONSUMER CONFIDENCE

Consumer confidence is extremely important people buy things out of their pockets as well as buy things on EMI if they are convinced that they would get money in the future, But if they lack the confidence about the durability of their jobs, they would resist from spending. Consumer confidence had already fallen to 8 years low even before the corona pandemic and the business sentiments- of taking loans, setting up factories, advertising- had dipped to the 2008 levels. 

5)NO INVESTMENT IN THE NATION

Now, why I said before that this problem is not going anywhere soon? It is not that once corona ends, we would be back to our double-digit growth rate from the minus 24% today. That will not happen because there are no investments in our country. No matter how much you are happy about Apple coming to India which is some other topic we'll cover soon and also about Make in India, Take in India, Build in India and Atmnirbhar Bharat, the reality is that investments are not happening in our country. Since the earlier investments have stopped now the debts of the people are rising and when this moratorium on EMI ends, and when banks begin to ask for their money back, the economic crisis will aggravate in the next three months. Our NPAs are estimated to rise to 20 trillion from 10 trillion. 

6)ARTFUL POLITICS

The banking system is in for a lot of pressure in the next three months and then there is the problem of artful politics, Politics should be artful and that is how it is done in India as well- there is no issue in that. The problem crops us when artful politics gives people the confidence of being artful economists as well and then politics begins to be employed everywhere- which creates a problem. When the economy lies in ruins and China is attacking you, you indulge in politics of "Local par Vocal" and "Boycott China" But we don't talk about how why China grew to be so powerful while we stagnated. We do not question why our domestic manufacturing is unable to compete with that of Chinas.

7)EASE OF DOING BUSINESS

We do not question the government whether "ease of doing business in India" is actually effective? Do we honestly take feedback from businessmen on whether they have an uninterrupted supply of resources? or whether they are asked for bribes? and what areas they face problem in? Why the government is not helping the entrepreneurs and why companies like Paytm has to take money from China? Now, what are we going to do and what are we going to tell the world? because the world is aware that it is difficult to conduct business in India. 

8)SOCIAL UNREST

The 8th point is extremely interesting You could wonder how "social unrest" is related to all this. It is- When a company invests billions of dollars in India, it would want to know what kind of a country it is investing in and how the atmosphere there is- not the air quality- but the religious atmosphere and whether social unrest, tensions and freedom of speech exist or not. We might conceal all of these things here but the problem is that be it the issue of Kashmir, or the issue of freedom of speech or the issue of JNU or the issue of police action, the entire world is reading about it. You will understand how much is being written about religious violence in India if you look through some foreign papers. But we assume that everything's fine and that the world considers us to be a superpower, this is why no one is ready to invest here. 

9)THE GOVERNMENT WILL NEVER CONSIDER THEIR MISTAKES

The last point I'd like to mention as to why we are facing so many problems is because the government will never admit their mistakes. They will never admit that ease of doing business was a hyperbole, They will never admit that the world is not investing in us because our Make in India policy has failed. Instead, we repackage it as "Atmnirbhar Bharat- making for the world". Until the government will admit that we are officially in a phase of recession, and that our economy is floundering and that we need not focus on other problems of denial and sending people to Pakistan and that we need to focus our energies on this problem alone and concentrate only on economic rebuilding- Until then, our nation will not improve and so I request you that now onwards, if you watch the TV and consume news then do watch things about our country, about recession, and reduce watch time on issues like that of Rhea because this problem is set to hit us hard. If this economic recession continues, we will soon join the migrants on the road and so we swiftly made this article to tell you the problem is massive and grave and that you will need to plan your finances carefully or else difficult times lie ahead.

ABHISHEK RAWAT
ContentWriter
@DayLightMedia