The Confederation of Indian Industries (CII), in a strategy paper submitted to the Union government has called for permission to operate industries in high performing economic districts across the country and allow them to play by different rules. The paper advised the government to permit industrial operations in some 100-150 districts with the highest economic value even if some of those districts are under containment. The industry body has predicted that economic recovery may well take over a year.
The grave illness visible in the Indian economy in the present CoVID related lockdown times can easily be traced to certain drastic actions of the recent past. Before delving into those causes, we have to keep in mind various economic events that have taken place across the globe. Commencing from the meltdown of the Asian Tigers to the Sub-Prime crisis, all had blown over India noiselessly while even countries like the USA were badly affected. The India that could face those major international upheavals and had become resilient to worldwide ups and down, was suddenly crippled for no reason. Or maybe the reasons are petty and political. Delving into the recent past, the singular decision to demonetize two of the highest denomination Indian currency notes sucked the liquidity out of the economy. No doubt, India witnessed a burgeoning class of economists who either vehemently supported or opposed that move. It was easy, post 8th November 2016, to label anybody opposing demonetization as being someone hoarding ‘black’ money. Whether cash, printed by the government, can ever be black or white is a never ending debate. However, it is an admitted fact that India grew and flourished and sustained itself primarily due to huge cash transactions. Like the migrant workers about whom we hear of today as also farmers, agricultural workers, construction workers down to the street vendor and domestic help, all dealt in cash. The concept that was fed to the people at that time was that only the rich were black money hoarders. It may be appropriate to mention that any smart business operator capable of creating large amounts of unaccounted wealth would not keep cash on hand. Investments in real estate, gold as well as using crypto currency and hawala methods to make deposits abroad, have always been easy options. After demonetization, the rich did not have to stand in queues in front of ATMs. Extravagant lifestyles of the upper class continued unabated. While the salaried class and some professionals got excited at the prospect of their bosses going down on their knees, none of that happened. Even the thousands of small industries that did close down could not cripple the owners but the workers went jobless. And once the cash was sucked out, it hit the toiling millions hardest. Historically, Banks in India have always harassed average customers. They only cater well to the rich at the cost of the poor. This cold shouldering kept millions of Indians away from the banks. It is they who lost all their savings in one single dramatic decision in November 2016. Later on, to divert attention from the failure of demonetization as far as economy was concerned but success in the Uttar Pradesh elections, the government played out another midnight drama and introduced the Goods and Services Tax (GST) in 2017. That ploy did divert attention and public memory being short; many people forgot the grievous injury caused by demonetization.
Move forward to 2020. Corona virus descends on the whole planet. It is true that the all nations have had their economies negatively impacted. Yet, India stands out as a sore thumb. While the RBI governor, in all his wisdom, has said that India’s predicted growth of 1.9 percent is a good sign as it still is one of the highest among G20 countries, one doesn’t know whether to cry or laugh at his utterances. All other G20 nations belong to the First World and are totally developed. With hardly any deficit in infrastructure, those countries cannot possibly clock high GDPs. On the other hand, India has extremely low quality and fragile infrastructure. It is a misnomer to consider six lane highways as the backbone of the nation’s infra. Accepting that highways are an integral and important part, infrastructure ranges from energy to irrigation and encompasses the whole spectrum in between enveloping agriculture, industry, communication, tourism and everything else. For a nation as under developed as India, it is childish on the part of the RBI governor to claim that 1.9 percent predicted growth of India’s GDP is higher than G20 countries.
Alas, we are all doomed to abide by people who have no expertise in the field in which they are the Masters.