It is true that the suggestion of clapping, and clanging utensils, from the beloved prime minister of India, was taken too seriously. And therefore, this suggestion was cherished by a huge crowd throughout the country. However, it is also true that not everyone seemed to be satisfied with this move. Because mere lip service, and frivolous suggestions, cannot offer psychological ease to all in the long run. People are looking for tangible outcomes and assurances now. Indeed, the corona fear has enveloped the everyday life of all the states of India, except the North East. And the mortality rate of Jharkhand, Bengal and Bihar is negligible as compared to other states of our country. As a corollary, this means that at least there are some states in the eastern part of our country that cannot be fooled by using Corona as a veil against the failures to revamp the Indian Economy.
Nevertheless, it appears that our extraordinarily talented head of the State has turned Günter Grass’ epic poem In Ohnmacht Gefallen(Fainted) upside down. Because while on one hand if in this poem Grass suggests the citizens become socially aware by using sound as a means of becoming alert about the all-pervading crisis – on the other hand, we are busy here making sounds to ignore the idiocies of the parliamentarians. For instance, on 20th of March 2020, Mr.Narendra Modi notified ₹ 20,000 crores towards Recreational, Official & Commercial Development Plan of Rashtrapati Bhavan Area. In a situation where the cost of diagnosis & treatment of an unknown disease remains far too higher than the neighbouring countries don’t you think that it is unfortunate that we are busy spending the hard-earned taxpayers’ money on the recreational and commercial development of Rashtrapati Bhavan. Well, that’s up to you to decide.
India was already going through a recession, but if this situation prevails for long it will have to witness a depression. In order to deal with this condition, new financial tools need to be deployed – the sooner the better.
Sectoral Priorities amidst Corona Phobia
First, Taxes on the tourism industry should be reduced and simultaneously taxes upon the health industry should be raised in order to maintain buoyancy in the market. Further, taxes on the food services (Swiggy, Zomato et cetera) and restaurants should be brought down as we all know that India is basically a service-oriented economy and food, at this moment, is the basic concern of the households. India, without doubt, also needs to jerry-rig digital systems so that the government can distribute cash to households directly. This is exactly what Hong Kong is hoping to do because hyperinflation could be dealt with later on. But above all, we need to understand that precautionary measures, and not untouchability, can strengthen our social immunity against this virus. This should be our first step towards our battle against this virus, and it will also help rejuvenate the stock market to some extend. The vital question that arises here is, “Are we prepared for such decisions?”
The social model of lockdown endured by China is pretty different from the one followed by Western economies. However, the obnoxious situation – due to lack of infrastructure in India – calls for a mixed approach towards making our economy running. The irony is that none of the significant steps has been taken, or implemented, properly so far.
Second, Household and Companies ought to be the target of an economic plan which should be fast, efficient and flexible. The priority of such a plan should be to protect the vulnerable first. And this can be done by subsidizing sick pay and ensuring health care to those without health insurance. Also, spending is needed to discourage layoffs at firms running far below capacity; in short, the government needs to subsidize workers’ wages – an area where Germany has led the way.
These economies (Germany, China, America and others) are taking such steps without giving a second thought just because they have been consolidating their fiscs from time to time. Ironically, the Modi government is beating around the bush because neither do we have a strong consolidated fund, nor a healthy contingency fund, to mitigate the vicissitudes of this crisis. Demonetisation, along with a quixotic implementation of GST, broke the spinal cord of our financial structure.
Role of Financial Institutions amidst Corona Phobia
Unlike the central banks of western economies, the Reserve Bank of India has not gone for cutting down of interest rates because we cannot afford this step at this moment. Instead of rate cuts, RBI has gone for an additional bond purchase for as much as ₹ 10,000 crores to enhance liquidity in the market. As the fiscal deficits balloon further, the Indian government will have to issue piles of bonds. And RBI should step in to buy those bonds to keep yields low and markets orderly.
Again, the issue of inflation could be tackled later on. And similarly, nothing could be done at this point to raise the value of Rupee in the international markets as well. All the possible options were ignored and neglected when India had the opportunity to grasp and utilize them fruitfully. After YesBank, the time has arrived for the IndusInd bank now to start counting its days. This bank has been working with the Vodafone-Idea for the last couple of years. Sadly, with the fall of Vodafone-Idea, due to the monopoly of Jio in the telecom sector, IndusInd bank is also suffocating in an unprecedented oligopolistic business environment. Possibly, the talented tricksters and the cunning administrators of the establishment will exploit each & every dimension of the Corona paranoia to hide the feeling of resentment witnessed by the Indian economy at this moment. Indeed, this moment is the testimony of the fact that their priorities have always been absurd and misleading. Being patriotic minded youth, it is our responsibility to remind again and again about the harm the members of this party have done to the prosperous economic landscape prevailing prior to 2014.
As far as the stock market is concerned Blue chips are bleeding badly as Sensex posted worst ever one-day fall in history recently. This tells the entire story in short. However, this can be revived only through boosting confidence amongst the participants of this market – mainly, those who are working from home right now. Hence, a focus on the issues they are going through presently should also be a priority for the government. No step, however, has been taken so far to ameliorate the problems associated with poorly wired broadband penetration in semiurban areas.
Most importantly, the demand of the situation says that we need to rethink and recreate our economy based upon the principles of neither capitalism nor socialism. Cooperation and compassion should be the guiding principle for organizing the entire world order as soon as possible. Can the ruling regime realise this?
Sagar Dey is The New Leam Journalist – based in New Delhi.