|
Open Forum
New Delhi, 26 May
2021
Pandemic 2nd Wave
NOT GDP ALONE, STRATEGY VITAL
By Dhurjati Mukherjee
The second wave of
the pandemic posed a downside risk, severely affecting economic activity in the
first quarter of the current fiscal with future expectations of a muted
economic impact as compared to the first wave, according to experts. The first
wave due to a national lockdown had hurt economic activity in two successive
quarters. However, in the second wave the impact has been much severe with
growth estimates being affected.
The RBI still
maintains that the dent to aggregate demand is expected to be moderate in
comparison to a year ago. In a separate report, the SBI stated they are little
apprehensive of double digit growth in this fiscal though other agencies have
downgraded growth to around 9 per cent.. “Given the rise in cases and
restriction in every State, real GDP growth of 10.4% looks a bit ambitious.
Regarding the question if the pent-up demand would support economic activity
once the restrictions are removed, we believe recovery will depend on the
psyche of people to come out and this will not happen till the larger
population is vaccinated”, Soumya Kanti Ghosh, SBI group’s Chief Economic
Adviser observed. But the larger population being vaccinated may take another six
months, if not more.
Though recently the
growth rate has been downgraded to 9.3 per cent by Moody’s Investor Services
from 13.7 per cent predicted earlier, there are reasons to believe that the
rate in the current fiscal would not be less than 8.5 per cent. However, the
problem in assessing growth is focused on the rate of increase of GDP. This
narrow perspective of analysing growth obviously does not take into account the
rise or fall of the incomes of the poor segments and economically weaker
sections, which constitute around 40-45 per cent of the population. In the
present situation, not just these groups but also the lower income sections
have been greatly affected.
One may also refer to
a recent study of Centre for Monitoring Indian Economy (CMIE), which found that
a total of 73.5 lakh jobs were lost in April with the unemployment rate rising
to over 14 per cent by mid-May from 6.5 per cent in March. It pointed out that
the lockdownand economic slowdown has devastated small enterprises in rural
areas. India had almost 39 crore employed people at the end of
December 2020, counting both the organised and unorganised sectors. The
number rose to 40.07 crore by January-end but fell to 39.82 crore by February,
39.81 crore by March and 39.08 by April end. A section of the 73.5 lakh people
who lost their jobs in April were agricultural workers, who had just finished
harvesting.
Besides, as per a
study of Pew Research Centre, which analysed the situation last year, a massive
32 million people slipped from being in the middle class, in terms of income,
to the lower income group. The number of people, living in the country with an
income of $2 or less per day, increased by 75 million. Another study of Azim
Premji University, observed that 23 crore people have been pushed into poverty
from March to October 2020, increasing the number of poor households by a
staggering 77 per cent, which may now be anything around 80%.
As reports have
indicated that apart from loss of jobs, partial lockdowns have very severely
affected daily wage earners as also small traders and shopkeepers. The lack of
demand, even in urban areas but, due to reduced purchasing capacity of a major
section of the population, is another indicator of the economy not being in
proper shape. Moreover, the sudden spurt in prices of pulses, edible oils and
some other grocery items has put most families in great crisis. Food inflation
climbed over 5 per cent -- may have crossed 5.5 per cent by end April -- and
overall consumer inflation is above 5.5 per cent.
Though industrial
output jumped at the fastest pace in at least nine years, clocking 22 per cent
jump in March, on the back of a 19 per cent decline a year ago, the reality is
that this has had little effect on the masses. The increasing pool of
unemployed people has emerged as an enormous problem with no hope of new livelihood
opportunities coming up. The pandemic as, is generally agreed, is of stunning
proportions leading to a weakened economy crippled by inadequate attention and
faulty policies.
What needs to be
assessed is not the overall growth but the extent of income loss and
deteriorating conditions of the lower segments of society. In this connection,
there emerges the need for a planned strategy to provide work to the poorer and
impoverished sections, both in rural and urban areas. However, the government
has yet to come up with any remedial measures to ameliorate the sufferings of
the struggling masses.
It is the Supreme
Court that has understood the problem and directed the Centre and the
governments of Delhi, Uttar Pradesh and Haryana to provide free rations to
migrant workers in the National Capital Region without insisting on identity
proof and arrange transport for those migrants who want to return home. The
bench of Justices Ashok Bhushan and M.R. Shah said these governments must open
community kitchens and serve two meals a day to the migrant workers and their
families as the petition estimated 8 crore migrant workers are facing
severe hardship due to the second wave of Covid. It is now necessary for the
different State governments to take a hint and adhere to the recommendations of
the order.
However, this may not
be enough as employment opportunities need to be created both in the rural and
urban areas and this can be done by making available more funds for MGNREGA,
which has reduced in the current fiscal. Also some such programme needs to be
thought of in urban and semi-urban areas. Not just the poor workers, who are
stranded or have lost their jobs, there are sectors like construction, where
work has slowed down, while the problem is severe in hospitality and tourism,
aviation, jewellery manufacturing etc.
Finally, if the Covid
situation does not improve by June, or latest by July, sufferings would
accentuate, even if two meals are made available. For one class of citizens,
education has come to a standstill as also treatment of diseases, except
Covid-19. Government planners and economists should not just calculate the GDP
but evolve a strategy so that the lowest 30 per cent of the population do not
die of starvation or under nutrition. When will we hear something from the
authorities sitting in glass houses in New Delhi? ---INFA
(Copyright, India News & Feature Alliance)
|
Archives 
