The worldwide nature of the economic recession caused by the coronavirus pandemic has led many to compare it with the Great Depression of the 1930s. Governments all over the world are working hard to restrain the economic downturn. In India, the epidemic has been devasted major industries such as aviation, automobiles, tourism, hospitality, and real estate.
Historically, India has organized and traced its GDP and economy in three sectors: agriculture and allied sectors, and service sectors. The agriculture sector includes milk and animal husbandry, crops, horticulture, aquaculture, aviation breeding, fisheries, sericulture, forestry, and related activities. This industry includes several manufacturing sub-sectors. India’s definition of the service sector includes retail, software, IT, communications, construction, hotels, infrastructure operations, banking and insurance, education, healthcare, and various other economic activities. The services sector has the largest stake in India’s GDP. The service sector is badly hit by lockdown and pandemic coronavirus, which ultimately hit the Indian economy.
From 2009-10 to 2013-14 (Manmohan Singh served as prime minister), the Indian economy grew by 6.7% annually. Between 2014-15 and 2018-19, India’s economy supposed to grow at an annual rate of 7.5%, under the time Narendra Modi served as prime minister. Therefore, compared with the Manmohan Singh period, Modi’s economic growth during his years is faster, but only before Jan 2020.
But the question is: Does this pass the basic odor test? One way to solve this problem is to view real-time economic indicators and surveys, which reflect the economic decisions of ordinary Indians.
According to the latest survey2020, most Indians no longer believe that the economic performance of the Modi government is “better” than the UPA government led by Manmohan Singh. According to the survey report, most of the respondents believe that the current government’s economic performance is “equal” to that of the earlier Congress-led government.
According to insights from the 2020 poll in India, among the 1,022 respondents, nearly 45% believe that the current government is at par with the UPA government in terms of economic measures. 43% believe that the Modi government’s economic performance is better than the Manmohan Singh government. Moreover, 72% of respondents considered the NDA government’s handling of the economy as outstanding.
According to data analyzed by the Data Intelligence Unit (DIU), for the longest period of time (during Narendra Modi 0.1 and 0.3 terms as Prime Minister), most of the respondents believed that the Modi government’s economical processing power is better than UPA. In January 2017, a survey conducted after the demonetization, it stood at 60% and it remained above 50% for a long time, but it dropped to 43% by August 2020.
But in January 2020, according to the survey, 30% of the respondents voted that the Modi government’s ability to handle the economy is inferior and worse to UPA, which has now dropped to only 10%.
In order to revitalize the economy hit hard by the coronavirus and lockdown, Indian Prime Minister Narendra Modi announced in mid of May the 21 billion rupees ‘Aatma Nirbhar Bharat Abhiyan‘ inducement package to move the country on a path of self-reliance. The survey results showed that 53% of respondents believed that it was a timely event.
This survey was conducted in 97 parliamentary districts out of 194 districts across 19 states in India. A total of 12,021 respondents were interviewed, of which 34% were from urban areas and the remaining 66% were from rural areas of the country.
The survey was conducted in Delhi, Gujarat, Haryana, Andhra Pradesh, Assam, Bihar, Chhattisgarh, Madhya Pradesh, Maharashtra, Orissa, Punjab, Jharkhand, Karnataka, Kerala, Rajasthan, Tamil Nadu, West Bengal, Telangana and Uttar Pradesh.
Approximately 23% of survey respondents believe that unemployment is the government’s biggest failure, while 11% believe that price increases are the main cause of the failure, and 7% believe that the way the economy is handled by the Modi government is the main reason of depression and it is the government’s biggest failure.
In the mid of July, when lockdown restrictions were eased and companies restarted their businesses, consumer confidence reaching the lowest level for the first time in history should be a matter of concern.
But even in the economic downturn, consumers still haven’t found any alternative to Modi. According to the survey, 24% of the respondents rated the Modi government as “outstanding” in dealing with the economy, and rest 78% rated the Modi government as “good”.
More than half of the interviewees said that the opposition criticized the Modi government just for the sake of criticism. Only 34% of the respondents stated that the Opposition held the government accountable in constructive criticism. More than 52% of respondents rated Congress as “average to poor“.
The government is keen to get the economy back on track through the “Aatma Nirbhar Bharat” and “Vocal for Local” missions.
Minister Nitin Gadkari said: What makes me painful is that 90% of the focus of industry organizations is only on major industries in metropolises and big cities. There is hardly any focus on the rural and remote areas. Changes are necessary. The advance sector-wise strategy is crucial for India to become a superpower.
The minister also stated that it is necessary to shift a chunk of the population from overcrowded towns to smart cities and villages. There is an urgent need to create employment and focus on rural, agricultural, tribal, and village areas, including 117 aspirational areas. The goal is to shift nearly 7% to 8% of the population from overcrowded cities to the upcoming Smart cities and villages.
Apart from this, Former PM and Indian Economist Manmohan Singh, in 1991, when India was facing a severe economic crisis, as the Minister of Finance, he carried out several structural reforms to liberalize the Indian economy. These measures were successful in thwarting the crisis and raised Singh’s status worldwide as a leading reform-minded economist.
Due to completely different failures, all the early developments of both governments are now in danger. India has not fallen into an external crisis. It is struggling to deal with the vicious circle of internal default.
The fact is that Narendra Modi’s lockdown is a failure even through his own publicly announced goals. This is the main reason for the economic downturn. Prime Minister Narendra Modi announced a nationwide lockdown in March, stating that India will defeat COVID-19 in 21 days, only three days longer than winning the Mahabharata war.
If we had a media with a spine and conscience, if we had a well-functioning parliament or an effective opposition, then the Modi government will have to explain why its COVID-19 Mahabharata is a lost battle in about a hundred days.
In fact, the idea of imposing the lockdown was just to buy time so that our hospital would not be overwhelmed with more patients than the number of beds. Apart from some exceptions here and there, the Modi government also failed in this regard. Despite this, this still shifted the goal post as usual. It’s a bit like that eternal mystery of the ‘real purpose’ of demonetization.
It is important and useful to Loopback and asks why our lock failed to flatten the curve? Even if we know the answer, they bear the repetition, because the war against the coronavirus is far from over. It is probably just beginning. It’s not just mortality or recovery rate. Unless we can control COVID-19, our factories, offices, and markets will not function properly. Unless they do, economic recovery will remain an illusion.
Well-known economist, Arun Kumar, has also argued that India’s actual growth is close to 0% and has been so for a few quarters. The reason he gives is that the government did not recognize the crisis in the unorganized sector after lockdown even earlier it neither recognized after the demonetization, GST nor did it accept extensive job losses that have followed ever since. Delayed recognition of the slowdown and bad decisions has already worsened the economic situation.
The highly-rated infrastructure operator, financial owner, and Group suddenly closed down in September 2018, which was the last straw. The country was already staggering under a disastrous 2016 ban on 87% of the currency in circulation. Prime Minister Modi’s demonetization plan failed to achieve the goal of freezing ill-gotten wealth: it depressed consumption and pauperize producers, farmers, and small businesses into poverty. Thus, Demonetization is the best example of a financial decision that backfired.
Then in 2017, the goods and services tax was raised, which hit the medium businessmen. Before the goods and services tax, the businessman gave the accountant 500 rupees a month, after the goods and services tax, he has to give 1,500 rupees a month. Therefore, when Modi introduced the concept of the goods and services tax, all advocates, Charted Accountants, and other accountants have increased their fees and charge small and medium-sized businessmen twice as much.
If GDP (Gross Domestic Product) continues to shrink for three consecutive quarters, the slowdown may even fall into recession. Several economists have been criticized the unwise and thoughtless decision taken by Modi’s government.
Former Prime Minister Manmohan Singh, speaking of the economic slowdown, said that it was caused by the humanitarian crisis and a deep and long-term economic slowdown is inevitable. In the 2019-20 fiscal year, India’s gross domestic product (GDP) fell to 4.2%, the lowest in 11 years.
Indian government followed the pattern of other countries, “maybe lockdown is the inevitable choice at that stage.” But the government’s shock and awe approach to the lockdown caused great pain to people. The suddenness of the announcement and the strictness of the lockdown were thoughtless and insensitive,” the report quoted Singh as saying.
Former Prime Minister Manmohan Singh said in a speech that protecting people’s livelihoods, providing sufficient funds for businesses, and ensuring the autonomy of the financial sector are three measures the government should take “immediately” to eliminate the economic destruction caused by the Covid-19 pandemic. He urged the Modi government to consider notable amounts of direct cash transfers to the public.
The former prime minister and senior congress leaders warned that the damage caused by the lockdown to prevent infection will lead to a long-term slowdown and that it was necessary to strategize the response, including measures such as providing credit guarantees to companies and making financial institutions safer. This point is very important and powerful to recover economic growth.
India is expected to announce its April to June GDP data before the end of this month. Economists predict that the economy will contract by at least 4%-5% this year (2020-21), especially because the country has experienced a difficult lockdown for two full months (April and May) of this quarter.
True Facts, figures, reports, and survey data often conceal from our sight the jobless youth who wait at crossroads for a chance to earn a daily living. The marginal farmer and his agricultural products also need buyers. Truck drivers are laid off, domestic workers are struggling as their employer’s real income falls, and many migrant workers return home need support today. The wheels of the economy run on their shoulders, so large projects have to wait, but those hungry for work at home cannot. It seems like common speech can bring back rice and barbecue that have shrunk on their plate.
No one can ever doubt that Manmohan Singh is a brilliant economist so far in India. Because Economic growth as per capita income in India has grown threefold since UPA came to power. The average gross domestic product growth during the period of the Manmohan’s UPA government had been 7.5 percent despite two global slowdowns.
PM Modi strives to achieve and do better every day, but he fails to do so. When Narendra Modi was the chief minister of Gujarat, he proved to be a staunch supporter of the economic moment. There is no doubt that Gujarat became one of the most prosperous states in the country under his leadership. He signed agreements with many foreign companies and governments.
Narendra Modi has successfully replicated it to a greater level. His foreign travel brought a lot of investment with Japan invested in the country’s first bullet train. But due to his many thoughtless decisions like demonetization, GST, and now lockdown, the Indian economy is facing a downturn. India’s economy will shrink by 4% in the fiscal year 2020 as against a growth of 4.2% projected in its April outlook.
Thus, Manmohan Singh wins by a big margin as a great economic reformer. During his tenure, India’s GDP growth rate was always increasing rapidly. Whereas Modi as an economic reformer is average at his best. His reforms such as demonetization, goods, and services tax were implemented as per him in order to change the face of India. However, the result is only mediocre at best, and the GDP growth rate had fallen to a new low of 5.7% in the past decade.
Will PM Narendra Modi handle and solve this problem soon?
Will India’s economic recovery be rapid?