COVID-19 Recession Is India’s Worst Ever Recession: CRISIL
COVID-19 came as a jolt for all of us. But for the already slow Indian Economy, this jolt proved to be much stronger than expected. According to a report by the Credit Rating Information Services of India Limited (CRISIL), it will be tough for India to return to its pre-pandemic economic growth levels at least for the next three years. In fact, to be able to catch up on the pre-pandemic growth level, India needs its average GDP growth to surge to 11 percent over the next three fiscals, but this is something that has never happened before. Having said this, the report believes that this will be India’s worst-ever recession since Independence.
The CRISIL report titled ‘Minus Five‘ forecasts that the first quarter of the fiscal year 2021 will suffer a massive contraction of 25 percent, with the GDP for the entire year falling off by five percent. The report states, monsoon has always been a major factor for the Indian economy on the agricultural front. But this time, we have two additional factors – the pandemic-induced lockdowns have affected most non-agriculture sectors. And the global disruption has upended whatever opportunities India had on the exports front, leaving India in a really difficult situation.
The Human Effect Of COVID-19 Induced Recession
Since the time coronavirus hit us, a recession was anticipated but was predicted to be a V-shaped recession, where the economy rebounds quickly after the lockdown is lifted. But with every passing day, the coronavirus crisis is proving to be more uncertain and no one knows when will normalcy be restored, posing yet another economic uncertainty, and forecasting anything involves a heated debate. But for now, this has more to do with how the masses will sail through the situation.
Reetika Khera, Indian economist, and social scientist, and currently an Associate Professor at the Indian Institute of Management Ahmedabad told SheThePeople, “What worries me more than the slowdown – prolonged or otherwise – is that the slowdown will hit different segments of society differently. People like me, for instance, who are in salaried jobs are unlikely to experience much of a reduction in earnings. But as everyone knows, for the poor, their earnings evaporated overnight when the first lockdown was announced.”
Niharika Sharma is the founder of a startup based in Bengaluru, dealing with food products. Her startup had only started attracting customers when COVID-19 hit. “We had started both online and offline modes to carry our business forward. We were receiving an amazing response from the customers and decided to extend our business. Thereby, we stored an adequate amount of products. But given that people will be really cautious after COVID-19, it seems to be difficult to match the pace at which we began.”
How Adequate Is The Relief Package Announced By The FM?
The Finance Minister Nirmala Sitharaman recently announced the relief package of Rs 20 Lakh Crores, in an attempt to revive the economy. However, for how adequate this will be on the ground level, Khera says that the package has been a really big disappointment.
“Instead of protecting the most vulnerable sections of society – labourers – we saw little coming their way. Let me explain why I say that: the big announcements included (1) doubling rations for three months for those 800 million who have access to the Public Distribution System (PDS). (2) Extra Rs 1,000 – over the Rs 200 per month that the central government gives as a pension. You read that right – the central government’s contribution to certain pensions is only Rs 200 per month. (3) An additional allocation of Rs 40,000cr for NREGA. (4) Rs 500 for three months to female Jan DhanYojana account holders,” Khera says.
But according to her, this isn’t good enough. “As far as the PDS is concerned, the government is legally obliged, by the National Food Security Act 2013 to cover 2/3rd of the population. That would be around 900 million people, not 800 million. Today, even the one-third who in ordinary times manage to fend for themselves (think of autorickshaw drivers, gig economy workers, etc.), are experiencing distress and should be supported. Finally, the central government has a problem of excess stocks at the moment (it is sitting over 3.5 times the grain stock it needs to maintain as buffer) and storage is an issue. Plus the rains are upon us, with the danger of the grain rotting when that happens. Yet, the government did not use this to universalize (even just for a year) the PDS,” Khera adds.
Further elucidating on how the allotted funds are nowhere near enough, Khera adds, “As far as the cash transfers to pensioners and female Jan DhanYojana account holders are concerned, they are way too little. If all your earnings have dried up, how far can Rs 500 take you? Finally, as far as NREGA is concerned, to provide 100 days of work to 14 cr job cardholders, you need roughly Rs 2.8 lakh crores. With the additional funding announced as part of the package, we are barely touching Rs 1 lakh crores.”
Reema Agarwal worked in a leather factory in Kanpur before the lockdown was announced. Recently, when the leather factories started working, she was informed that due to a restricted number of employees, she has been fired. ” My husband lost his job too as we work in the same factory. We have written letters to the public authorities but no one has responded yet. Even before corona, I used to earn only 4,000 INR per month, but at least that was sufficient for us to manage to live. With no savings at hand and the job has gone, I don’t know what to do,” she says.
Job World Post Corona
Around 27 million youth in the age group of 20-30 years in India, lost their jobs in April, according to a recent report by CMIE (Centre For Monitoring Indian Economy). Provided that the overall restrictions will take time to perish, there’s a lot of uncertainty on how the future job market will turn out to be. “I hope that workers will be able to organize themselves and assert their right to their fair share of the GDP. According to the Annual Survey of Industries data, since 1991, while the share of profits in net value added has risen to about half of total value-added, the share of labour has stagnated around 15%,” says Khera.
She further adds, “People tend to think labour issues are not something we have to bother with, it is a ‘headache’ for industry. In fact, we all can – and must –do our bit. For instance, domestic workers in our homes (cooks, cleaners, gardeners, drivers, nannies, etc.) tend not to have written contracts, assured minimum wages or social security, such as health benefits. This must change: it is not a matter of charity, but a matter of right.”
Picture Credit- Chain Store Age