India's GDP Crash: Act of God? Or Act of Fraud?
It is not long ago that we talked about a double-digit growth and our economy used to be the fastest-growing major economy in the world And today, we stand at a point where our growth has sunk to around minus 24% (minus 23.9% to be exact)
Here on the Deshbhakt, we will talk about why that happened, but today, take a look at some statistics first which have been released by the NSO- National Statistical Office and not just one sector, the entire economy presently lies in shambles. Speaking of Industries, the sector slumped 38.1% in April, May, decrices minus 20.6% down, Manufacturing minus 39.3% down,
Agriculture was one sector that was still in the positives at 3.4%
Trade, Hotels, etc were down by minus 47%
This is the deplorable condition of the economy that we are witnessing today
We have now become one of the world's worst-performing major economies and have witnessed a massive contraction of around 24% in the economy. We were already warned though. We were told that this is "An Act of God"
Here on the Deshbhakt, we're raising a simple question today-Keeping in mind that corona has ravaged many countries, why has the performance of our economy been so pathetic?
It is essential to know whether this is an act of God or an act of Fraud!
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All through the last year, we have been reiterating the importance of the economy
and where our economy has been heading
Counting from last July-August, we told you about what the conditions on GST are,
We told you about the data concealment and how important, critical data was being kept from us
We also told you about how demonetization has now proven to be one of the worst cases of economic policy
(We told you about)how the government policies are deteriorating and how profitable PSUs are being sold off because the government was running short of money and how profits were shrinking and unemployment was rising
We already had all these warning signals
The bar of our GDP kept falling
The "Staircase" of our GDP was going down in almost a synchronous manner- as if it could only have been God's doing and no human was capable of that
The GDP was already tumbling down since the last 8 quarters and now, it has been dealt a blow by corona as well and we have finally fallen to the level of minus 24% In a quick comparison, talking about the United Kingdom, the sorry state of the UK was being spoken about amongst the G20 Nations
Its GDP growth rate had fallen to minus 20.4%
The GDP of France contracted by about 13.8%
The GDP of Italy contracted by about 12.4%
The GDP of Canada contracted by about 12%
The GDP of Germany contracted by about 10%
The adjusted GDP of the USA had shrunk by 9.5%
If the rest of the countries are in this state, how did such a big problem emerge in India?
One perceptible problem is that we treated India as a "state"
shutting everything down indiscriminately and indefinitely
Experts believe that India should be viewed as a "Mini Europe"
We, in contrast, viewed India as a state
Either everything is open or everything is shut
Graded lockdown should have followed the initial lockdown-
states should have been allowed to decide what areas should be on a lockdown, in consonance with a federal spirit
That, we failed to do
Neither did we increase medical facilities. So, we were kept hanging in this state
and hence, we have become the world's number 1 in number of daily corona cases
There has been a rapid rise in corona cases
The point to be noted is that we were already tottering at a rate of 4% GDP before corona struck
In January, February and March, we had already hit 4.2%
and the growth for the next quarter was being forecast at 2%
At this point, corona struck
Very quickly, let us take a look at 10 points that explain why we are in a position like this today
and we will try and tell you why this problem is not going to get solved anytime soon
because we always assume that "all is well"
During the time of Budget 2020, we were already witnessing the biggest shortfall in taxes in a decade
We were already reeling under a tax shortfall as our economy wasn't growing as per our target
In July-September 2019, we had already slipped to a 6 year low
We could see a downfall coming
We were already shrinking by 2.1 lakh crore
Then, the GST blow on top of that-
It was supposed to be our "second independence!"
Three years later, situations on GST were such that we were already grappling with the lowest collections in about one and a half years
GST was supposed to accumulate a massive collection. In contrast, the collection fell and the states were left begging for funds as per the deal
And just like a friend who disappears after taking a loan, the center could be seen stalling and delaying the payment of funds to the states
and if you're a state in which the opposition is in power, then gone are your chances of getting any money!
Point number 2- Unemployment
It was clear in 2019 when NSSO(which has now been done away with) data revealed that unemployment was at a 45 year high
The government had questioned the veracity of the report
By the time this report was released, the elections were already over and the government had said that it would set everything alright
But the report had already shown us that employment was falling, which meant that manufacturing was falling
which in turn signaled that our economy was floundering
Furthermore, the figure for 2018-19 was double the figure of last year
Within one year, we had doubled our unemployment figure in 2018-19
Now you can imagine what conditions would be like in 2019, 2020, and 2021 after the outbreak of corona
Next, let us move to a rural economy. Tall claims of our rural economy turning savior were made
Farm income growth had slumped to a 14 year low in December 2018
Having already declined in 2018, we were trying to recover from it
and this is why a slight increase is seen in the farm income subsequently
All this- while we were told that our farmers' income would double by 2022
How that will be done is yet to be seen
A deflation was already visible in our rural economy 2016 onward
On top of that, we had already lost 11 million jobs in our rural economy
These problems were already rearing their heads and so that is why
economists, in a very interesting article, we're talking about how a "cold wave" was hitting the Indian economy in 2019
Viewed broadly in 5 points,
our GDP growth had crashed by more than 2% within one year
Our Index of Industrial Production (IIP) was growing at minus 4.3%
Unemployment, as I already told you, was at its 45 year high
Since then, the spike of unemployment has been growing consistently
And now the government doesn't even give us the data so that we can know
Consumer confidence is extremely important
People buy things out of their pockets as well as buy things on EMI if they are convinced that they would get money in the future
But if they lack the confidence about the durability of their jobs, they would resist from spending
Consumer confidence had already fallen to an 8 year low even before the corona pandemic
and the business sentiments- of taking loans, setting up factories, advertising- had dipped to the 2008 levels
and a financial crisis had struck in 2008
The economy was already in shambles
Now, why am I saying that this problem is not going anywhere soon?
It is not that once corona ends, we would be back to our double-digit growth rate from the minus 24% today
That will not happen because there are no investments in our country
No matter how much you harp about Make in India, Take in India, Build in India, and Atmnirbhar Bharat,
investments are not happening in our country
Since the earlier investments have stopped now
the debts of the people are rising
And when this moratorium on EMI ends, and when banks begin to ask for their money back,
the economic crisis will aggravate in the next three months
Our NPAs are estimated to rise to 20 trillion from 10 trillion
The banking system is in for a lot of pressure in the next three months
And then there is the problem of our shrewd politics
Politics should be shrewd and that is how it is done in India as well- there is no issue in that
The problem crops us when shrewd politics gives people the confidence of being shrewd economists as well
and then politics begins to be employed everywhere- which creates a problem
When the economy lies in ruins and China is attacking you, you indulge in politics of "Local par Vocal" and "Boycott China"
An introspection on why China grew to be so powerful while we stagnated is not being done
We do not question why our domestic manufacturing is unable to compete with that of China
We do not question whether "ease of doing business in India" is actually effective
Do we honestly take feedback from businessmen on whether they have an uninterrupted supply of electricity
or whether they are asked for bribes
and what areas they face problems in?
No
We are satisfied with our better rankings in world ease of doing business by the World Bank
But now, the World Bank has put a pause on world ease of doing business rankings because it turned out to be a hyperbole
Now, what are we going to do and what are we going to tell the world?
because the world is aware that it is difficult to conduct business in India
and there is another major reason for that -
Tax Terrorism, which affects both the big and the small businessmen
Big businessmen have said that they are unable to carry out their businesses
as they are randomly raided by authorities like CBCD and EID and their tax books are looked into
It could happen to anyone- even you or me. Big businessmen have said that Tax terrorism has to end
The government has also more or less conceded
but whether the terrorism has stopped or not will be told to you personally by the businessmen
The 9th point is extremely interesting
You could wonder how "social unrest" is related to all this. It is-
When a company invests billions of dollars in India, it would want to know what kind of a country it is investing in
and how the atmosphere there is- not the air quality- but the religious atmosphere
and whether social unrest, tensions, and freedom of speech exist or not
We might conceal all of these things here
But the problem is that be it the issue of Kashmir or the issue of freedom of speech or the issue of Prashant Bhushan or the issue of JNU
or the issue of police action,
the entire world is reading about it
You will understand how much is being written about religious violence in India if you look through some foreign papers
But we assume that all is well
and that the world considers us to be a superpower
This is why no one is ready to invest here
The last point I'd like to mention as to why we are facing so many problems is because we do not admit our mistakes
We will never admit that ease of doing business was a hyperbole
We will never admit that the world is not investing in us because our Make in India policy has failed
Instead, we repackage it as "Atmnirbhar Bharat- making for the world"
Until we admit that we are officially in a phase of recession,
and that our economy is floundering
and that we need not focus on other problems of denial and sending people to Pakistan
and that we need to focus our energies on this problem alone- not getting distracted by things like Bhoomi poojas
and concentrate only on economic rebuilding-
Until then, our nation will not improve
And so I request you that now onward if you watch the TV and consume news
then do watch things about our country, about recession,
and curtail watch time on issues like that of Rhea
because this problem is set to hit us hard
If this economic recession continues, we will soon join the migrants on the road
And so we swiftly made this episode to tell you
the problem is massive and grave and that you will need to plan your finances carefully
or else difficult times lie ahead
There's at least no debate on the deplorable economic situation
and this is why you will have to manage your economic situation
Credits: this article is written according to above given video
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