Bengaluru, (Aryavarth). What Indians would have loved to see from the NDA government, is a plan to review the Economy and get to $5 trillion marks and not 6kg of extra grains (5 kg rice/wheat and 1 kg pulses), that too procured from FCI, the quality of FCI grains needs no introduction.
With no signs of recovery or a strong impetus coming from the NDA government, the Slide of Economy is looking worse off, day by day. In June’s last week, the International Monetary Fund projected that the Indian Economy, the first time since 1961, will dip by 4.5% in 2020 – 2021 FY. This is much lower than the 1.9% positive growth the IMF had forecast in its India Outlook in April. What the Government should have done is to better the earlier projection rate and not slip deeper.
In the first week of June, Moody’s Investors Service (“Moody’s”) downgraded the Government of India’s foreign-currency and local-currency long-term issuer ratings to “Baa3” from “Baa2”. It stated that the outlook remained “negative”. Our sovereign rating is one step from Junk grade now. This is the second consecutive downgrade by Moody’s, In November 2019, it had changed the outlook on India’s Baa2 rating to “negative” from “stable,” a “negative” implies India could be rated down further.
The worst news is that this downgrade is not due to corona, Moody’s was categorical that while this downgrade is taking place “in the context of the Coronavirus pandemic, it was not driven by the impact of the pandemic”.
While the current spate of BJP leadership leaves no opportunity to mock the Ex-PM, Manmohan Singh and label him as incompetent, weak and messenger of 9 Janpath, the truth is that he handled the global financial crisis of 2008, much better than the current NDA Government. The GDP slipped from 6.7 per cent to 5.5 per cent in the said period. Under pressure from the socialist partners in the coalition government, the Manmohan Singh’s Government went out of the way to protect jobs. The current Government has seen machismo by States like UP, that made one-way changes in labour laws. Eventually, the honourable SC had to restore balance by reversing them.
IMF has routinely called on governments to implement substantial targeted fiscal, monetary and financial market measures to support affected households and businesses. It is estimated that global trade is projected to collapse by around 12 per cent, the traders, exporters and business houses need support, they can employ more people and empower them to buy more than 5Kg of grains. Most of the schemes introduced by the Government create little or no demand in the Indian Economy, the factory owners and industrials have been coerced to pay wages during lockdown by the arbitrary order by the Ministry of Home Affairs under the leadership of Mr Amit Shah.
In the appeal when the SC bench comprising Justices Ashok Bhushan, S K Kaul and M R Shah probed Attorney General, KK Venugopal representing the Centre, “You have put forth payment of 100 percent (wages). The question is, do you have the power to get them (companies) to pay 100 per cent and on their failure to prosecute them?” In a U-turn after that, the Centre told the Supreme Court that payment of wages during the lockdown is a matter between the employer and employees. And the notification on wages was issued to prevent human suffering.
The focus of the Government has to be the revival of the Economy and strengthening the business community, even though the Government continues to gather money by raising taxes on petrol and Diesel, this is a wrong move, which will have a disastrous effect on the economy in the long term.
If the Government supports traders and engages with them in one to one discussion, at an average wage of Rs. 15,000 a month, a labourer can buy 500 Kgs of grain, isn’t it time that we make the labourer’s Atma Nirbhar by giving them a job, rather than giving them food grains.
Do Indians need employment or 5Kg of Grains?
Giving food grains has been an established practice for many years now, a way to prevent malnutrition among the poorest of the families. Years of reform and successive governments have managed to lift vast tracts of the Indian population from extreme poverty, reducing the relevance of food grain guarantee schemes.
The present-day government is abdicating its responsibility by giving extra dole of food grains and not talking about how to review the economy. Does this step by the government prove that the 20 lakh crore package announced with fanfare, a few days ago has failed? Or the government has realised that it did not cut the ice, a $270 billion stimulus at 10 percent of the economy would have done wonders.
The problem lies in making a media event of all announcements and rushing to announce them without due calculations, or closer scrutiny. The stimulus was far lesser than the advertised 20 lakh crore. While economists and experts are still debating on Twitter, it seems that the direct fiscal stimulus from the Centre will only be not even 1% of India’s GDP, instead of 10% as projected by many supporters of the government. After deciphering the 20 lakh crore announcement by the Finance Minister, Barclays’ Chief India Economist Rahul Bajoria said: “We estimate that the actual fiscal impact on the budget will be only Rs 1.5 lakh crore (0.75 percent of GDP), based on our calculations and assumptions made during the series of announcements.”
The truth is that of the 10% of GDP stimulus that was announced as an economic relief package, only 6.5% is attributable to the government, the balance going to the credit of the RBI under its monetary policy measures. Of this 6.5%, a large part is towards contingent liabilities (guarantees), and only 0.8% is the actual fiscal cost (actual cash outgo from the government’s budget), according to a Nomura report (Asia Insights).
The economic package was announced with the intent to “make India self-reliant” signalling that the NDA government has shifted its coronavirus strategy from “survival” to “revival” mode. So why are we keeping Indians in survival mode and not revival mode, giving extra 5kg of grain is a symbol of keeping them in survival mode.
Will 5kg of extra Rice Win Bihar elections?
To make a portion of decent food, apart from rice/wheat and pulses, you also need vegetables, oil, masala and cooking gas. With no jobs for migrant labour, one option would be to consume raw grains, as the financial situation may not be good enough to procure vegetables or buy an LPG cylinder.
The announcement by the government and linking it to the festival of Diwali and Chhath Puja, clearly demonstrate that the NDA government is making these announcements without understanding the gravity of the situation. With anger brimming in the state of Bihar, against the Nitish government and its partner BJP, over the handling of migrants from Bihar the government is making these announcements, in a desperate bid to reverse the widespread anger. The apathy towards migrants by the Nitish government may cost BJP and Nitish Kumar the state legislature, 15 years of rule and no plan to employ people, definitely will incur the wrath of voters. The slow pace of action in comparison to the swift action by the Yogi led government has left many seething with anger.
The previous three elections were won on an anti-Lalu platform, and people are now starting to question what the Nitish Kumar government has done to bring jobs to the state. They are also asking the 1 lakh crore plus package announced by PM Modi for Bihar, and what results has it created on the ground.