Multiple taxes, unemployment, high 10.49 per cent wholesale price index (WPI) rise and severe income losses are thawing the nation amid high Covid-19 deaths.
The six-month high Wholesale Price Index (WPI) figures in April would be straining the economy. Actual price rise at the retail level would be a minimum of 10.49 per cent plus 4.29 per cent CPI inflation, not less than 14.78 per cent. The super inflation in 1974 was at 28.66 per cent, and 16.94 per cent in 1973. Those days purchasing power of the people had collapsed and protests marked the national scenario. It may not look serious, but if income losses of 84 per cent of the people are added it appears grim. As per a study of the Azim Premji University, the pandemic has led to worsening in quality of employment, with a number of salaried employees joining the ranks of precariously self-employed.
“The annual rate of inflation in April 2021, is high primarily because of rise in prices of crude petroleum, petrol, diesel and manufactured products as compared to the corresponding month of the previous year,” the Commerce and Industry Ministry (CIM) said.
As most rise in prices, fares, freight are due to the CIM stated factors, the economy is slowing down, indicating a lower GDP as well. It is being further complicated by rising joblessness at 8 per cent in April amid the second Covid-19 wave from 7.4 per cent in March 2021. A CMIE study – Consumer Pyramids Household Survey (CPHS) – observes weekly unemployment rate touched 14.5 per cent on May 15. The CMIE says that 84 per cent household has suffered a decrease in monthly income and that more than one-fourth of the country’s working-age population is unemployed.
World Bank warns 70 per cent of employment and about a third of GDP comes from the ‘informal’ workers. They are likely to lose their jobs or suffer severe income losses during Covid-19 lockdowns and they tend to be largely excluded from social safety nets. Informality has made eight lakh migrant workers move out of Delhi, according to the state government. No nation, World Bank says, could have actual recovery unless these ‘informal’ people, particularly women, are taken care of.
RBI Governor Shaktikanta Das says that manufacturing and services PMI along with inflation would continue the price pressure. It may aggravate because global prices continue to rise. Amid such scenario it looks strange that the RBI, itself in crisis, approves a dividend payout bonanza of Rs 99,122 crore for July 2020-March 2021. It is 73 per cent higher than the entire previous year’s Rs 57,126 crore. It is time for austerity not only in the debilitated public sector units but also in its expenses on many real estate and cosmetic projects.
It also needs to review increasing the number of Members of Parliament that would strain the nation’s finances further. Their contribution has not been much in giving direction or putting on leash the expenses. Most MPs just kowtow blindly, unlike the MPs of 1950s and 1960s, the party policies for fear of losing their seats as per provisions of the anti-defection laws. Such laws need review for ensuring that MPs could function in the interest of the people they represent.
The arrest and recent sedition case against a Telangana YSRCP Lok Sabha member KR Ramakrishna Raju, for criticising the Jagan Mohan Reddy government publically over several issues, including handling of the Covid-19 crisis, for the past few months, is a stark example how parties could be dictatorial and block democratic functioning. The inner party democracy is necessary for restoration of the nation’s economic and social health.
The country is avoiding discussing such criticality that leads to impasses. The recent farmers’ agitation against the three draconian laws is the result of the ‘partycracy’. The nation does not want to discuss the irrationality of multiple taxes and the woes of the people. Since economic concepts have been given a go bye, the rulers are only concerned about the State revenues without pondering how it could improve if the people themselves were in distress.
The citizens are paying taxes on taxes – on old cars, multiple taxes on petrol, bank deposits, vaccine, coffin, Rs 25 per km road toll and also a GST on that, junking their own cars and even on oxygen –that thankfully was undone by the Delhi High Court, and irrational atrocities and penalties on masks and Covid-19 related issues. No political party discusses such police excesses. A senior political observer and journalist, Ajai Setia, comments that even in government “ministers don’t know what is going on in their ministries”.
The discriminations are not being discussed. The Serum Institute of India is stated to have made profits of Rs 59,000 crore ($8.2 billion) in 2020 and Rs 85,000 crore ($ 12.7 billion). Similarly, some selected corporate are making tons as edible oil, fruit and gas prices are soaring apart from their international and national business. The concern of rising monopolies that are checked in the US through anti-trust laws remains missing. The PSUs that are sustaining the nation are designed to become junks.
In such situation, expectation that GDP and tax revenue would spurt are not realistic. A hungry and unemployed country cannot sustain cosmetic expenses though there is stress on it as some are bestowed with large profits. The model has to be sustainable and the entire economic concept has to be approached afresh.
The second wave or spurt in cases of Covid-19 since April has not only caused loss of lives but has cast its shadows on growth prospects. A third wave has been warned. Downward revision of tax revenue and GDP projections are realities. The Central government’s gross tax revenue in Budget 2020-21 estimates was reduced by more than 20 per cent in 2021-22 Budget. The government would be facing heavy shortfall, which is imprudently being tried to be made up through taxes on fuels, an impractical move.
The governance method has to change with the participation even of the Opposition. The crisis is national and to surpass Bangladesh, the country has to take prudent drastic steps, prune expenses and not do politicking on issues of benevolence. One step would go through long chain of changes.