Revival of Indian Economy, Post Lockdown Era

Introduction

The economy is the total of all activities related to the production and consumption of limited resources by a group of participants.  Indian economy is affected by various factors like capital flow, stock exchange market, global currency trends of economically powerful countries, political changes, energy and oil prices, employment rate, poverty rate, etc. Indian economy is going through a critical phase due to well-known coronavirus or COVID-19 pandemic. Destruction of the Indian economy is not caused by coronavirus but lockdown of economic activity due to this virus. Of course, the lockdown was necessary to control the virus spread. According to IMF [World Economy Outlook (April) 2020], GDP growth rate of the Indian economy for the year 2019 was 4.2% (annual percent charge) and for the year 2020, it is expected to be 1.9%  a drastic fall in the GDP due to complete lockdown. This caused people to face many problems relating to necessity items even. People majorly affected by this lockdown are migrant workers and daily wage earners. There is not just a casualty of people but hopes and expectations also.

The Indian government is looking for a revival of the economy since every individual’s future is linked with the future of the economy. This pandemic has reduced the fund of the government. Many philanthropists have donated to the PM CARE fund as help against this pandemic. The government is also taking reasonable action to boost the economy. Recently on 5th may 2020 Delhi government has raised the liquor price by 70%. And central government hiked the excise duty on petrol by record Rs 10 and diesel by Rs 13. After the hike in excise duties, the price of diesel jumped by Rs 7.1 a liter and that of petrol rose by Rs. 1.7 a liter in Delhi in addition to this retail price of petrol and diesel had already gone up in Delhi after a hike in VAT by the Delhi government in spite of the fall in the price of crude oil.

Suggested Aspects

India is the population of 130 billion people out of which 40 cr. (Approx) are workers and the most affected sector during this pandemic are workers. The major issue is to survive them which is short term issue and long term issue is of growth. The government should be more concerned regarding both but keeping in mind about the spread of this pandemic.

Few Suggestions that the government should take into consideration to revive the economy and survive the workers:

·         Instead of giving free food, the government should try to provide jobs to the workers who have loosed the job amid this epidemic. Of course, free food is a necessity during the lockdown. Govt should come with a better plan like increase the area covered under MGNREGA which generates employment to most affected people.

·         The king of fruit (i.e. Mango) season is approaching. Government should start the supply chain system to supply the mango. E.g. if the supply of Alphanso mango or Hapus produced in Maharashtra, Ratnagiri permitted to different cities that will generate more employment to most affected people (small workers) and industry (Logistics).

·         At present government is sending migrant workers at their home place they are migrated from. Latter Migrant workers should be given agricultural or allied activities and their domicile.

·         To revive the current scenario government should support the major sector whose role is precious amid this pandemic these are Pharmaceutical industry, Tech industry, Information Technology  (IT) services, Logistics, and transportation.

·         According to the author, a simple reform should be made that is NO TAX for 6 months which provide more money to the industry and there would be no extra burden of tax compliance.

The suggestion is given by Nobel laureate economist Abhijit Bannerji in discussion with Rahul Gandhi:

He especially addressed the migrant's people who are not covered under the recent government schemes. He suggested that govt should make package more of GDP (USA announced around 10% package of GDP towards the pandemic and as of now India has announced around 1.2% of GDP only). India should create demand and this only possible with money in the hand of individuals and further this is only possible with employment. He said there should be a decentralization of initiative taken. That is every state government should be given the power to decide and make rules in their state since the local government knows better about their state. Its recent example has been seen in Delhi when the Delhi government raised the liquor price by 70%.

Recently, the UP government has temporarily abolished the Labour laws for 3 years and Madhya Pradesh government for 1000 days except a few acts like minimum wages act 1948 and few more Provisions which protect the basic compensation rights of labor as suggested by Raghuram Rajan (ex RBI governor). Of course, many rights of labor will no longer be active. It will help the industries to fulfill the minimum requirement of labor laws and industries can focus on production without any concerned hindrance which helps to revive the economy.

Conclusion

India has faced a lockdown of all economic activity to control any pandemic ever in its history. It has turned the Indian economy into a critical phase as any pandemic hasn’t done even before. Lockdown has made an economic loss to both central and state governments. Raghuram Rajan and Abhijit Bannerji suggested that there should be decentralization of power regarding the decision amid COVID-19 which will not just assist workers but the economy of the states as well because the state government has the best idea about its state than the central government. Due to big revenue loss, The Indian government will do all necessary steps that will compensate or nullify the loss in this way the government has started collecting funds from the public in the form of huge taxes and whatever means they find suitable. Of course, these steps will not benefit both public and the government. Every individual will be participated in the revival of the Indian economy by the government in the form of high taxes. Here, the public will play a big role to revive the economy directly. Of course, they will be bad grace.

Source: livemint (Snapshot depicts the time to recover of Indian Economy)

We the people of India is aware that Lockdown has caused economic slowdown but India has the potential to revive as IMF has predicted the GDP growth rate by 7.4% for the year 2021.

Sources: livemint, financial express, Hindustan times, IMF world economic outlook (April 2020), IndiaToday