Friday, 28 January, 2022
HomeOpinionNewsmaker of the WeekNot Sushant Singh Rajput, not Rhea Chakraborty. It's the economy, stupid

Not Sushant Singh Rajput, not Rhea Chakraborty. It’s the economy, stupid

As Indian economy shrunk by 23.9%, many were left with prayer to cope with this invisible ‘hand of God’ – they morphed the Go Corona Go chant to Grow GDP Grow.

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The news of India’s contracting GDP competed for public attention with fresh border incursions by the Chinese army, the passing away of former President Pranab Mukherjee and the continuing obsession with Bollywood actor Sushant Singh Rajput’s suicide. One TV anchor even chased away a panelist who wanted to speak about the economy.

Instead of asking whether Sushant Singh Rajput’s mental health was known to his family or figuring out whether Rhea Chakraborty smokes weed or not, Indians should have spent the week asking tough questions on the nation’s economic health. Sure, P. Chidambaram and S. Gurumurthy commented on the GDP numbers, but through their politically partisan lens.

Prayer is what many were left with to cope with this invisible ‘hand of God’ – they morphed the Go Corona Go chant to Grow GDP Grow. As the world grappled with the lives versus livelihood question for months and learned to live with the coronavirus, it is now the economic pandemic that plagues us. India didn’t manage to flatten the curve, with five large states — Maharashtra, Andhra Pradesh, Karnataka, Uttar Pradesh and Tamil Nadu — making up the nation’s 62 per cent of active Covid-19 cases. But it definitely flattened the economy.

It’s the economy, stupid.

The Indian economy experienced contraction for the fifth time in its post-independence history, shrinking by 23.9 per cent of the GDP in the April-June quarter. While many just blamed the pandemic, some did point out that Indian economy was in slowdown for eight quarters before the coronavirus lockdown hit us.

For this reason, the Indian economy is ThePrint’s Newsmaker of the Week.


Also read: ‘Indian economy is rebounding’ — BJP defends Modi govt in social media campaign


The unique Indian response

In the early summer, when the pandemic was a little more than a couple of months old, Prime Minister Narendra Modi, in his characteristic 8 pm address to the nation, announced a Rs 20 lakh crore package to deal with the economic fallout of the coronavirus. As Modi was making the announcement, in almost real time, economists and analysts were questioning the accuracy of those numbers.

In the strict public finance sense, the Indian economy never saw those Rs 20 lakh crore. Though, nearly eight months into the pandemic, the country’s economy did reportedly shrink by Rs 20 lakh crore.

India’s lockdown was one of the most stringent in the world, and it’s far from the only country to have taken such an unprecedented economic hit. For the same April-June quarter, the US GDP shrunk by 9.1 per cent and the UK’s by 20 per cent.

What makes India unique, though, is the reaction from the Bharatiya Janata Party (BJP) and the public at large. While the BJP and its functionaries continue to cite misleading and often wrong data to argue that the pandemic has failed to reign in India’s economic engine, the country’s media and the populace are keeping themselves busy by chasing drug dealers following the death of Sushant Singh Rajput. If that wasn’t enough, the focus shifted to how the Indian military had finally taught its Chinese counterpart a lesson at the Line of Actual Control (LAC).

In stark contrast to such public and governmental amnesia, when the news of the UK’s economic contraction broke, its Chancellor (finance minister) Rishi Sunak came out with a statement saying, “Today’s figures confirm that hard times are here.”


Also read: SBI report says rural economy is losing steam, flags rising unemployment and fall in wages


How bad is it really?

On 31 August, when India’s ministry of statistics announced that the GDP growth had fallen by 23.9 per cent in the April-June quarter – or that India’s economic output had been effectively reduced by Rs 20 lakh crore – it put a number on the seemingly abstract blowout of India’s economy since the pandemic struck. For the same period, private consumption fell by 26.7 per cent – and most economists are clueless about when will people start consuming again.

The aggregate contraction of Rs 20 lakh crore looks all the more worrying when one looks at its breakdown. “We estimate the government bears 50% of the loss, wage earners 25%, informal firms 15% and corporations the remaining 10%,” says a note by Credit Suisse, a financial research firm.

This means that India’s lower income wage earners are going to especially feel the pinch – who have already seen their wages vanish due to lockdowns or job loss. If this trajectory continues, India risks undoing much of the gains it had made in lifting people out of poverty over the past three decades.

In India, if the pandemic’s worst victim is the daily wage earner, the only entity with the tools to help them, the central government, has rarely been this helpless. The current GST compensation fiasco has shed light on the Modi government’s inability to increase spending at a time when it seems like the only option to revive growth. And a Rs 20 lakh crore blowout during the last quarter means the government has its hands tied more than ever before.

It is ironic that since coming to power in 2014, the Modi government’s only strategy to revive growth has been to increase its spending – and now, when the economy is yearning for a fiscal expansion, it really has no space to do so. Both private investment and consumption continue to decline rapidly, and it is hard to imagine any growth revival without their reversal.


Also read: 4 questions Indian economy faces after the record Q1 GDP slump


But who cares?

From one of the fastest growing economies in the world, India has now dropped to the 35th spot among the 42 major economies tracked by The Economist. One would expect that such steep fall would capture all of India’s public and media attention.

But over the past week, this was far from the case. While the BJP functionaries and RBI board member, S. Gurumurthy misrepresented the US’ GDP numbers to hail India’s economic resilience during the pandemic, TV news was squarely focused on solving the Sushant Singh Rajput’s ‘murder’ mystery.

If it weren’t for his presidency, Pranab Mukherjee would still have been remembered for his disastrous 2012 retrospective tax decision – the precursor of India’s economic slowdown.

While the scale of India’s economic troubles in the pandemic era seem unprecedented, the country has struggled to effectively return to its growth trajectory since 2012. More recently, most political scientists struggle to explain why despite a flailing economy, Modi continues to remain popular. According to India Today’s Mood of the Nation survey, 48 per cent of participants rated his performance as ‘good’ and 30 per cent as ‘outstanding’.  

The most convincing explanation for this phenomenon has been provided by Neelanjan Sircar’s idea of “politics of vishwas” (trust) – according to which, a large number of Indians support Modi because they believe in his leadership, despite any evidence to the contrary. As India’s economy shrinks and the number of Covid-19 infections surge, one could argue, vishwas is all that is really left.

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47 COMMENTS

  1. When economy is in bad shape, no hope of recovery from pandemic, we are playing dirty politics , we are interested in witch hunt only. Shame on all of us! Time has come for media to rethink what they are doing

    • Mr Nachiketa Mukhopadhyay: The economy was deliberately destroyed by foolish policies such as demonetisation, GST, crony capitalism and idiotic ideas such as Atmanirbhar that were junked as early as the 1990s by the Nrasimha Rao government. Likewise, the effects of the pandemic were worsened by the hasty lockdown taken unilaterally by the Great Gujarathi genius, without consulting the states and without even bothering to think about the plight of poor migrants who everyone knew would be starving without jobs. And belligerent talk by Amit Shah about recovering territory held by Chinese in the Aksai Chin area led to Chinese attacks on India resulting in loss of Indian territory and lives.

      And when you point out all these self-goals, people like you want to change the conversation. And balme everybody else except the chowkidar. Shame on you !

      As the French diplomat Joseph de Masitres said:

      “Every nation gets the government it deserves”.

  2. Was just reading the comments and wondering how active is the BJP IT cell and it’s 2 RS ka members. Sushant Singh’s case is important but it can’t be discussed 24 hrs a day 7 days a week. The whole tamasha is going on for 3 reasons.
    1 Bihar Election
    2 To bring down Maha Gov
    3 Divert the attention of people from Govt failures.

    But Andh Murkh Angotha Chhaap Bhakts will realise their mistake only once they have Bhiik ka katora in their hands. Till then enjoy Jumalas.

  3. Tell burkha dutt that the Indian economy owes itself to the misrule of saint sonia & team, under upa…do you guys have any subscribers of the print? .see how ur brothern ndtv & ibnlive are raking in money by prmoting the likes of rhea..with this kind of pedegree how do u all even have the conciusness to question modi & team

    • Hahaha 7 years in govt. Still blaming previous govt. Weird person
      After blaming, now u are in power at helm of a rapidly sinking ship. Now, what will u do? Get on with feeding peacocks? Talk about poor dead SSR like that obsolete republic TV anchor? Or have guts and get the ship right and moving.

    • Shreeram Pichai: It is mind boggling to see people like you, presumably educated and bearing a name that indicates that you are not from Adityanathisthan or any one of those lawless chapathi-belt states, nonetheless behaving like an itchy-testicled VHP gaurakshak cretin. And of course, since you have outsourced your thinking to the BJP IT Cell and to the likes Arnab Goswami, Tejaswi Surya and Sadhvi Pragya Thakur, facts mean nothing to you.

      So here come some facts.

      The economy of India was growing at a healthy clip under the Manmohan Singh years. Indeed, despite the global financial crisis of 2008, the Indian economy, under the able hands of Dr MMS was able to weather the storm. However, the GDP of India has been in steady decline – I repeat decline – under the stewardship of the Gujarathi genius from Delhi University as World Bank data shows, see ref: bit.ly/2F2k3g0

      Indeed, a side by side analysis of the MMS period with the Modi period shows that on 11 out of 15 indicators, the worst of the MMS period was better than the best of the Modi years !! See ref: bit.ly/35eXfnT

      You rail against Ms Sonia Gandhi and the UPA and blame them for the current débâcle. Now that is the working of a lobotomised brain, patently incapable of understanding cause and effect. Tell me Mr Pichahi:

      1: Who demonetised currency notes, created a liquidity shock by removing 86% of the currency notes in circulation and crippled the informal economy and the farming sector ? Ms Sonia Gandhi? Dr Manmohan Singh? Or was it the Gujarathi prophet you blindly worship?

      2: Who carried out a bungled GST implementation in the wake of demonetisation and ruined the economy of ALL states in India? Incidentally, the Centre does not refund taxes collected under the aegis of the GST back to the states. Whose brainchild was that idea?

      3: Who crippled the lucrative leather sector of the Indian economy by banning cow slaughter and thereby handed over a labour-intensive, export income earning sector over to Pakistan?

      4: Who awarded the contract for the maintenance of Rafale to Anil Ambani, a man who had nearly bankrupted several banks through his NPAs? Mind you, Anil Ambani has zero, I reiterate zero experience in aerospace manufacturing and yet he bags another plum defence contract.

      Mr Pichai, it is time to pin the blame for India’s impending economic downfall on the autocratic decisions of the person who runs the country and not invent scapegoats. And read the economic writing on the wall rather than believing the hot air emanating from Arnab Goswami’s rear end.

      Meanwhile, people like you are losing money whilst smart Gujarathis are moving their assets overseas.

      As the Danish philosopher Søren Kierkegaard (1813-1855) said:

      “There are two ways to be fooled. One is to believe what isn’t true; the other is to refuse to believe what is true.”

  4. So the journalism nowadays is all about agenda and propaganda. Now to solve one issue, let us drop all other issues. The article talks as if entire Finance ministry including all the economists, advisors, reserve bank, bureaucrats are solving murder case. The issue of law and order doesn’t matter according to the author. Millions of people are hoping for justice of a deceased so that a good message is sent in public, to instill faith in judiciary, law and order of state. This does not mean that people aren’t aware of economy which went down only due to stringent lock downs for 3 months. The ranting on about economy by left leaning radicals has only created situation of fear among public as people will be sleeping on street the very next day they wake up. Why isn’t any left radicals talking about similar sharp decline of economy in almost all of European countries?

    • Mr Akash: You bray:

      “.. Why isn’t any left radicals talking about similar sharp decline of economy in almost all of European countries? ..”

      Well, I live in Western Europe and there is such a thing as a safety net here. You generally get medical care regardless of your income levels, furloughed people get about 80% of their salaries, most small businesses are given reprieves from various payments and so on. Nobody dies of starvation and few have been made homeless. Barring the UK, most Western European governments have generally done reasonably well in handling the economic and health fallouts from the COVID crisis.

      There is surely strain but the hardships here in Europe are mere pinpricks compared to what India is undergoing. After the initial difficulties in dealing with a surge of COVID cases, most hospitals have learnt to cooperate and deal with the cases better. France, Germany, Switzerland, Belgium and Luxembourg are pooling their resources and exchanging patients, transferring them from places with little capacity to those with greater capacity. The richer countries of Western Europe and even the middle income ones of Eastern Europe can weather this crisis better than India.

      And as you surely know, India has no social security or welfare schemes for the poor. The poor migrants who trekked from cities to the villages of Bihar & UP were not even provided water by the governments – state and centre. They did not get their wages or any waiver of their rents – they were unceremoniously booted out. They suffered due to the hasty, unilateral decisions taken by the Great Gujarati Prophet who in the books of bhakths like you can do no wrong.

      As an Indian, you should be holding your government and its incompetent, ignorant and corrupt Hindutva leaders to account, not letting them off the hook by pointing to Europe and its much smaller problems. But when even presumably educated Indians like yourself get so easily hoodwinked by a Gujarati pracharak, I fear for the future of the “vishwaguru” !!

      But more worrying is the fact that the nation and people like you all, are more concerned about the death of one Bollywood actor rather than the many deaths and suffering in the roads of India when poor families trekked back home.

      Incredible India !

    • Mr Akash: Your rant:

      “.. The issue of law and order doesn’t matter according to the author. Millions of people are hoping for justice of a deceased so that a good message is sent in public, to instill faith in judiciary, law and order of state ..”

      raises some questions.

      If millions of Indians like you see that justice has to be served in this case such that faith in judiciary, law & order is restored, shouldn’t also justice be served to the many innocent, poor Muslim men who get lynched by your gaurakshak buddies Mr Akash? Why is no stone left unturned in the investigation of the death of this actor but hardly any effort is put by the police into investigations of lynchings of Muslims? Can you also explain why gaurakshaks convicted – I re-iterate convicted – of the murder of Alimuddin Ansari in Ramgarh got garlanded by Union Minister Jayant Sinha ?

      Any thoughts on this Mr Akash ? After all, as an armchair gaurakshak, I assume you know a thing or two about lynching innocent Muslims don’t you Sir?

  5. Previous NON-BJP or NDA govt. left Defense forces to fetch for their own…There was no modernization of weapons, any fighter jets procured or submarines etc developed.
    Border roads were not developed.
    These THE PRINT authors & journalists with Left & Congress support mentality don’t do any constructive criticism…only useless articles…
    Tell me which after Bofors guns which major defense procurement was done by Cong / NPA govt.

    Where will all the money come? One side heavy expenditures being done for defense procurement and in developing infrastructure which was neglected all these years. Poor continued to be Poor, only rich got more rich, Scams one after other continued in successive govt.

  6. Hatred for Modi & BJP has gone too far…
    what can Modi do, if there is sudden outbreak of Corona Virus. To avoid spread lockdown was imposed so that spread reduces and number of fatalities is manageable…but this resulted in Economy & GDP getting impacted.
    Author is simply putting useless articles. If you have any valid & practical suggestions then pass it on to Central Government. I will vote for BJP irrespective if 5 trillion GDP reaches or not.

    • Mr Ravi: Unconditional love for Modi & BJP has gone too far … Oops, I forget that you are blinkered, blind bhakth

      And the people of India are paying a heavy price for electing an unqualified, autocratic Gujarathi with a Delhi University degree and a pogrom under his belt to run a complex country facing myriad problems.

      What your ilk forgets is that due to a series of economic and strategic self-goals, the CORONA crisis became much worse than it need have been. Indeed, even before the CORONA crisis struck, the Indian economy had nosedived, thanks to the egregious blunders committed by a I-know-everything PM. Indeed, the PM who knows more economics than the likes of Dr Raghuram Rajan, Arvind Subramanina and Urjit Patel went ahead and delivered a liquidity shock to the Indian economy by his hare-brained, ill-informed decision to demonetise. In one sweep, 86% of the cash in circulation in the country was made worthless with no replacement notes available. The informal sector of India’s economy where 85% of workers toil collapsed, unemployment increased, lives and livelihoods were lost and GDP fell. Needless to say Prophet Modi’s advisers were the likes of Baba Ramdev and Anil Bokil – a quack in economics from some frivolous NGO. Worse still, all the “black money” money returned to the banks, now properly laundered and turned into white !

      Modi’s demonetisation, followed by the botched implementation of GST ruined the economy at a time when India could have benefited from low oil prices and a slump in the Chinese economy. Worse still, one now witnesses capital flight with smart Gujarathi businessmen taking their assets out of India to safer locales in Europe or USA. It is against the backdrop of these serious economic missteps that one should view the current CORONA caused slump that has been needlessly hard because they build on prior mistakes and exacerbate them. For the poor, these are deadly.

      Meanwhile Mr Ravi, as the economy shrinks, you are free to vote for the Prophet and his party that will impoverish you. You may get the coveted Ram Mandir in Ayodhya – even though, with a 24% shrinking of the economy, you too are going to pay the price for trusting incompetent men.

  7. Management by Headlines (as Arun Shourie would say) will continue till next elections. Many developments in India have happened despite the Government like IT sector and the Pharma sector. I would still give credit to Indra Gandhi for the push given to the Auto Industry ( though it was given to perpetuate her Son’s Memory). I would give credit to Rajiv Gandhi for boosting the Telecom sector. Credit to PVN for reforming the Economy and Atalji for giving impetus to Infrastructure development. I expected more out of Box ideas from NM and more risk taking. Heres hoping that next two years will be spent on Politics of the Economy then on Politics of Ideology and Headline management.

  8. Don’t mislead people by comparing India’s GDP contraction with USA. They use different methods of calculating their GDP stupid

  9. Good Attempt to divert attention from MAHA Fraud.
    Economy Shrink – Can you do any thing? Donet your one day salary for covid19 ?
    Any option other than BJP?
    Can Rahul be a PM?
    Seems Got Good DOLLARS…:)

  10. There is a difference between slow growth and contraction. Slow growth was definitely govt’s fault, but still it was growing and expected to grow, rate of growth was different among different analysts. But when it comes to contraction, you really can’t blame govt for that. From April 01 to May 31, nothing moved in country. No vehicle sold, no movie released, hotels closed, tourism stopped, no flights, no trains. Coronavirus wasn’t developed by Indian govt. Only two things are responsible for this virus either Chinese or God himself. So kindly take your propaganda someplace else.
    However you mentioned one thing correctly, Indian are mad with SSR case, like he was their Chacha’s son.

  11. Mainstream media constantly looking issues to divert attention from real issues like unemployment, GDP, etc they want us to focus on issues that don’t even have an impact on their livelihood. Only a few media organizations such as print are constantly covering the spectrum of issues, hats off to you, keep doing the good work, we need to show the world that not all people in India are stupid and most importantly to the people in India as well.

  12. The author says there is no fiscal space left with the government. I beg to differ.

    This is how it works. If the GDP is, say 190 trillion of which 38 trillion is mopped up as amounting of taxes what remains with income earners is 152 trillion. Suppose 45 trillion is saved by them, the consumption demand coming from private individuals and companies is 107 trillion. Government spends 53 trillion, that is the 38 trillion raised in taxes and another 15 trillion raised as debt. This includes both the consumption demand and investment demand by the government.

    In normal times, of the 45 trillion saving, the entire amount is used up by investment demand by private sector. But this is not a normal time and investment demand by private sector is likely to be minimal, say 10 trillion. Hence the aggregate demand in the economy is 170 trillion, 20 trillion less than the GDP. The producers of goods and services will be left burdened with unsold inventory of 20 trillion and hence will be compelled to cut production by a like amount, thus reducing GDP to 170 trillion.

    This demand deficit can only be filled by government through fiscal policy action. It has two options, raise taxes or increase borrowing or a combination of both to mop up additional 20 trillion from the market and spend it to plug the gap in demand. That seems to be the only way to stop the economy from further slide.

    Those who oppose this idea contend that increasing current borrowing will increase debt leading to sundry consequences. The argument of increase in debt, according to my understanding is a false argument, born out of the debt phobia rather than a rational understanding of the debt dynamics. Of course, debt will jump up significantly, say by 25% of GDP over a period of 3 to 4 years, if that is the period taken to return to normalcy. The current debt of the the centre and states taken together is around 70 percent of GDP. It will jump to 95 percent of GDP. However after normalcy returns, debt will move towards it long term equilibrium level which is roughly average annual borrowing divided by rate of growth. If the centre and states limit their borrowings to say 7% after normalcy returns and economy achieves 10% nominal growth, which is real growth rate of 5% plus inflation of 5%, the debt will settle at 70%, which is the current debt level.

    On the other hand if government fails to prevent this potential slide, the consequences shall be pretty bad and can cause permanent damage to the economy, without preventing increase in debt.

    Therefore, borrowing liberally, during this COVID induced downturn makes a lot of sense. There not only fiscal space available, it is imperative to mobilise unabsorbed savings and spend them lest things take turn for the worst!

  13. We should not give a damn about Sushant, he was just one guy. But the news media, to get TRP is trying to push people into an unhealthy addiction of entertainment-crime news. The most responsible for this are Times Now, and Republic TV, and now Aaj Tak, India Today, Zee News etc. all have joined them. Now they are porbably going to cover this case for months – and forget vastly more important things.

  14. The reply by Pramod Patil is good and explains to us many laymen technically about exact meaning of economic terms such as the GDP and what constitutes it and how it can be improved by the government. The topic covered by the reporter was good but it had no solution provided. It should have broken down on expenditure and how government can reduce wasteful expenditure allocation for a planned new parliament building, that could be easily postponed and so on

  15. Lost a family member to covid and also lost jobs in 2 family members due to it and struggling to adjust to the new reality while someone just blamed it on the God when they were not even entitled to quote that cause itself.

  16. I strongly disagree that media shouldn’t talk about the Sushant’s murder case. The police didn’t registered an FIR, no time of death on postmortem report, money angle, drug angle and you think it’s not worth talking about? this case is flawed on every level from quarantining an on duty IPS officer to doing fake PR to stopping the case going to CBI. Now, for drugs angle just see what happened in Mexico or just watch breaking bad to see how bad can the situation go. For the economy, discussions must be held but to say leave everything else is just senseless. Someone gets murdered and the govt. and police tries to cover it and you think it’s not a big deal. OK.

    • The country’s GDP and the economic crisis amid the covid 19 pandemic are of course very important topics to discuss and people do take interest in it.But this doesn’t mean that we should ignore or stop talking about other things.Sushant was murdered or not,the drug cartel that rule the film industry among others are equally important.What is surprising and shameful is that THE PRINT doesn’t find discussing criminal law and justice important in the country.By doing this aren’t you joining hands with those who wish to hide the truth?

  17. Though not really educated we can be sure that he realises the difference between running a state and a nation. The yarns being spun will in the face one disaster after the other fail to work. With doom staring wish he realised it was best for him to resign forthwith just as his bete noire did after losing the election.

  18. No doubt, the tactics employed by the ruling dispensation are to deflect the peoples’ attention from the larger extremely gloomy picture, but in SSR murder case, I hope the cavalier attitude of the political parties and the pressure exerted on the police are also brought out and the true intent of the political establishment, to stick to power at any cost is exposed. The underground drugs cartel is an enemy of the nation and has to be smashed at any cost. That said, minute by minute report of the case is also to divert the attention of the people, by drugging them this way.

    • The unemployed can’t be diverted cause they are experiencing the problem and they are the biggest voters and the employed does not care, it’s the agenda of some media org. to say people are stupid and will be diverted.

  19. You lose credibility when you use “nearly eight month” in Pandemic. Just to prove your point played with figures??

  20. Chinese Virus or COVID19 crisis has led every nation’s economy gets heavily affected. India is not an alien rather with such a huge population and lack of infrastructure the problem would have been many folds but only limited due to better governance.

  21. Complete agree with the Author. The bate of this dead actor and then the Chinese was thrown at the Bharatiya masses through the equally gullible media and both took it willingly. I am a BJP and Modi supporter And sincerely believe that it is only they have the capability of taking us out this mess. I also believe that there should be a strong opposition, which unfortunately is full of comedians and part time politicians like Rahul Gandhi and others, and therefore the onus is on the media to play that role of questioning and if required cornering the govt on important issues. But alas most in our media I believe are lazy, incompetent and happy to publish any girbish without application of mind ( I exclude the print from this)

  22. Measures taken by BJP led government are not sufficient – Rs 20 lakh crore package looks good on the paper no where reflecting in action, this the time now government should take bold economic measure of pumping money directly in to economy with impunity to come out quickly, govt. must act now, trust will disappear as soon pinching starts giving pain to common man – hard times ahead

  23. I agree. But why should we be surprised by the extent of contraction in the economy? This was to be expected. Lockdown may not be so stringent as it was in the June quarter, but still economy remains in the doldrums. Widening fiscal deficit, GDP contraction, severe drop in tax collections, job losses – the crisis is still mounting and the end of the pandemic is not in sight. The vital issue is how to kickstart the economy and what is the road to recovery. So far we have created liquidity in the system by making steep reduction in interest rates and incentivized the banking sector to lend more, especially to MSME sector. But is this strategy viable? I doubt very much. Monetary policy has its own limitations. As per CEIC data, India’s private consumption accounted for 57.1% of India’s nominal GDP in Jun 2020, compared with the ratio of 59.5% in the previous quarter. As it is well known, GDP is a sum of four components-government expenditure, consumption, investment and net exports. Ironically, a steep fall in imports contributed more to the net exports and to the GDP, government expenditure also rose by 16.4% to Rs. 4.87 trillion. But private consumption contracted by 26.7% and investment by whopping 47.1%. The challenge is, therefore, how to stimulate productivity private consumption and investment. The turnaround can only be triggered by a suitable fiscal stimulus. This can increase the debt burden and invite the wrath of inflation. But this is the only way out. The government is telling banks not to be risk-averse. But it is the government that is required to shed its risk-averse mindset and jump the gun.

    • Some palaces were built in Rajasthan during long spells of drought, to provide employment to the poor. We should do the same.

  24. Well I will vote for BJP again only if it fulffills the promise of 5 trillion dollar economy or even close to that or else I will vote for NOTA

  25. In India it’ s not the economy stupid. It is about caste dominance, reservations, Hindu muslim etc. GDP etc are so boring. We shall rather watch WWE show on prime time tv.

  26. While Rome burnt, Nero played fiddle-sticks. Modern-day Neros have played fiddle-sticks before in 2002; now in 2020 whole of India seems to have joined Nero in playing fiddle-sticks. Meanwhile Rome continues to burn bright. I am dreading the beast that will emerge from the ashes.

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