Not Just Coronavirus, India’s 2nd Big Battle is Economic Pandemic
Video Editors: Sandeep Suman, Varun Sharma
Yeh Jo India Hai Na, it is fighting a second big battle – and that is an economic pandemic.
Visuals from Pune show the railway station packed with people, with bigger worries than social distancing. And pictures from a bus stand in Kolkata show thousands of workers desperate to get back to their villages. They are waiters at restaurants that are shut, housekeeping staff at offices that are shut, loaders of goods at factories that are shut. They’ve been told, ‘Daftar, hotel, factory... sab band, salary nahi hai, ghar jaao. Do-teen mahine ke baad dekhenge. (Offices, hotels, factories... all are closed, there’s no salary, go home. We will reconsider it after two-three months.)’
Now multiply this scenario for industrial cities and big metros across India. Across Mumbai, Delhi, Gurgaon, Chennai, Coimbatore, Kochi, Surat, Ahmedabad, Ludhiana, Noida, Kanpur, Hyderabad, Bangalore, Mangalore, lakhs of them, suddenly with no jobs, heading back to their villages – the direct and immediate result of the coronavirus lockdown. An additional worry: If any of them are positive cases of coronavirus, then this exodus from the cities, is one sure way of the pandemic spreading to rural India.
Big Industries Hit By Coronavirus
Production Shut = More Layoffs
- Meanwhile, here are some figures we’ve taken from The Economic Times. Some of the big industries that have been hit by the coronavirus. Be ready... these are scary statistics –
- The hotel and tourism industry employs 4 crore people. In the next 12 months, it expects 12 lakh job-losses, and revenue losses of Rs 11,000 crore.
- The aviation industry is a Rs 2.2 lakh crore industry, employing 3.5 lakh people. It expects losses worth Rs 4,200 crore between April and June.
- India’s retail industry is worth Rs 59 lakh crore. It employs 4.6 crore people. If the corona crisis lasts three months, it expects 1.1 crore job-losses.
- The restaurant industry employs 73 lakh people, of which 15-20 percent could lose their jobs. That’s around 14 lakh people!
- The real estate industry, already in a slump, is looking at 35 percent job losses. Again, lakhs of jobs will be lost.
- The ride-hailing industry, meaning Ola and Uber, has around 5 million driver-partners. The lockdown has led to a 40-50 percent drop in business.
- Top car manufacturers – Maruti, Hyundai, Honda have shut down car production until further notice. That means even more lay-offs.
Amid Coronavirus, India Can’t Ignore the Economic Pandemic
So, even as the coronavirus pandemic is very rightly our number one priority, we can’t afford to ignore the economic pandemic. Businesses and industries of all sizes are seeing a slump due to the lockdown, and millions are losing their jobs as a result of that. They all need immediate financial support just to survive, and fiscal stimulus to get restarted as and when the pandemic starts to retreat.
So, how can the country deal with this crisis?
For instance, the Modi government says it has opened over 38 crore bank accounts amongst the country’s poorest, as part of its Jan Dhan Yojana. Could an Emergency Direct Cash Transfer of even Rs 5,000 be made into each of these accounts? It will greatly reduce their immediate distress.
Another fire-fighting suggestion: Why not announce interest-free or low-interest bank loans for the next three to four months for medium, small and micro enterprises, who don’t have the deep pockets to tide over a short-term crash in business or demand?
Why not get the RBI and India’s mega banks to make major cuts in their lending interest rates? That would be an immediate boost for the economy.
How about a six-month suspension of EMI payments for those with home loans or business loans?
How about reducing the price of petrol and diesel at a time when oil prices are at their lowest in years? That would give the public some spare spending money, which would create internal demand for the Indian industry.
Why Is India Doing So Little?
While the Indian government is silent, other countries are fighting the coronavirus and the economic pandemics simultaneously. The United States, even as its COVID-19 numbers are soaring, has also announced a UD 1 trillion fiscal stimulus package for its economy. France has announced a 45 billion euro package, and even Italy, worst hit by the pandemic, says it will spend 25 billion euros to restart its economy.
So, why is the Indian government doing so little? Well, partly because the government itself is already short of money! From GST and from Income Tax, the Indian government’s revenues are way short of their own calculations.
- Instead of an expectation of Rs 7.4 lakh crore in GST, the government collected just Rs 5.8 lakh crore in 2019 – short by Rs 1.6 lakh crore.
- In Income Tax, instead of an expected Rs 5.2 lakh crore, they collected Rs 4.7 lakh crore – a shortfall of another Rs 50,000 crore. So the government doesn’t have cash to offer as relief.
On top of that, India’s GDP growth is already at a low of 4.5 percent. Leading financial analyst Ruchir Sharma now says that in the year ahead for India to grow at 3 percent will be a miracle. He adds that the global economy is set to contract by 5 percent. Even China’s economy will contract for the first time in 40 years. American stock markets have crashed 32 percent in three weeks. The Indian stock market has crashed by 35 percent in two months. None of this has ever happened in either country’s financial history.
Given how acute the problem is, how ‘never-before’ it is, how we don’t even know if the worst is over, or yet to come, all one can say at the moment is –
Yeh Jo India Hai Na… If it wants to survive, we must urgently acknowledge that there is a huge economic pandemic as well, and then get serious about dealing with it.