The nation needs wisdom to help stir it out of a difficult situation. An economy sinking for months, hurt grievously by corona lockdown, needs ability to come out of the morass with humane moves to help the distressed people. Everyone in the society is traumatized. The price rise of food items, garments, rail and bus fares, and fuel are simply driving people out of the market.
Some lopsided policies and advices, even as international petro prices are hovering at almost 20-year-low, are playing havoc. Truck operators are finding it more profitable to park their vehicles. The cost of captive generation by industry, power back-ups by housing societies or institutions has become prohibitive. The daily rise in prices, making diesel more expensive that petrol, though production cost of diesel is far less, is hitting everyone — industry, farms, shops, taxi and truck operators or poorest households.
The doles that some farmers are getting would be used to support rising farm input cost. The rising fuel prices may ultimately lead to lowering of demand, severe crunch in production and overall inflation. The farmers are at their wits end. Potato is fetching seemingly “good” price amid about 40 per cent low production. Though it sounds good news it’s really not. Last year they had lost heavily due to high production and low prices. Overall this year the farmer is likely to earn not more than what he did a year back.
The price syndrome causes loss to all related sectors – the cold storages, because it has less to store, labourers earning less as there are fewer bags to handle, the transporter also gets less since he has less to carry. It is almost happening nationally as the losses are seen uniformly everywhere because of excess rainfall.
The corn is hit by low production, again owing to bad weather, and low demand as the processing factories are closed due to lockdown. The previous processed products are yet to be picked up as people are not queuing up to buy. Despite doles of millions of tonnes of food grain, direct benefit cash to some and Rs 50,000-crore job scheme for migrant labourers in Uttar Pradesh, Madhya Pradesh, Bihar and other States, the rural economy is not pepping up.
The silk hubs of Bhagalpur or carpet weaving centres at Mirzapur are crashing due to loss of export markets and low demand in domestic ones. The Trump threat of H1B visa cancellations has put IT professionals under stress.
People do not have the money because of job losses or severe wage cuts across the spectrum. The CMIE figures say that jobs have been restored almost to pre-lockdown level. But on the ground this is not being witnessed. It is just not the industry, but even NGOs, educational institutions or private universities and schools have slyly either not paid salaries or resorted to 30 per cent or more cuts.
Across the board, large number of employees has been thrown out or been told to wait for better days. About 12 crore workers are in distress in India, according to World Bank (WB) figures. In fact, physical distancing too has its cost and that global lost income from school closures could amount to $13 trillion, says the Bank. The lockdown may have been a necessity, but the country has to prepare and work out a plan to face any future epidemic-like situation without the lockdown. McKinsey says the physical distancing is to cost Rs 96 to 231 trillion for India.
The climate is changing. Many more new diseases or various mutants may emerge. The procedure for tackling such situations has to be worked out without getting bogged down by COVID-19. The production lines have to remain open. Closed lines can create problems, including movement of essentials even to border regions. The country is stated to have faced few similar problems during the lockdown. Though security is perennial, a lockdown-like situation can hamper it.
Prime Minister Narendra Modi is right in his aversion that signals show India is set to bounce back. He pegs it with the coal block auctions likely to generate Rs 33,000 core. The experts, however, want wider discussion as sheer lure for money should not disturb the pristine forested or natural ecological reserves.
The Supreme Court guidelines for Niyamgiri in Odisha provide a good base. The recent lockdown has also revealed how it has helped restoration of nature, reduction of pollution, dust and cleaning of river waters. A bit of delay to discuss course correction would pave way for a better future.
The country in post-lockdown situation is under stress to do things fast. It need not. Rather it has to tailor out policies for long term. The revival needs money but it should not be the sole aim. The advisors, who suggested continuous hike in petrol prices, have not helped the policy makers. It may have raised some quick funds but that cannot be the plank for long-term sustained recovery. Instead, it needs to review the situation and create conducive atmosphere for continuous recovery and strengthening of the economy.
The UPA government committed such follies over a long period and came under severe criticism. Repeating it would lead to complications. If prices of essentials continue to rise and cash transactions are not eased, it can cause severe problems. The housing sector is facing crisis due to job losses, pay cuts and surge in home loan defaults. The delinquencies at India Mortgage Guarantee Corporation (IMGC) have doubled in a year at Rs 8500 crore and it guarantees 20 per cent of the loan amount, which covers EMIs for two years.
The excise duty was hiked in May of Rs 10 per litre on petrol and Rs 13 on diesel (unwise) a litre to mop up Rs 1.6 lakh crore till next March. This is in addition to gains of Rs 39,000 crore in March 2020. The daily hike is to add to a similar amount to the government’s kitty. But, it is hitting the economy badly. Fitch and Moody’s are constantly portraying difficulties. ADB is not happy over Asia.
The corona challenge is to remain for some months and it’s both critical and urgent to look for lower cost and inflation for sustainability. Be it petro price hike or lockdown or corona-centric policies, all cause more losses. There should and can be policies that save many more and pace up the economy.
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