Coronavirus has nothing to do with our failed economy, it was in a crisis since 2014
Long ago in 2014, the BJP won 282 seats leading the NDA to a tally of 336 in the 543 seat Lok Sabha. Narendra Modi was sworn in as the 14th prime minister of India on 26th of May 2014. This is the day when 31% of the votes were given to BJP.
The party won and started making a name for itself. Everyone knows India by the name Modi. Publicity is about the government is good at. What about economic relations? If you look at the Indian economy right now, almost all the sectors are dwindling down to a big zero. According to various researchers, the only way ahead for India after the coronavirus is economic federalism. Specific states have been given more importance than the others, as per leading reports. Gujarat has always been the pillar of goodness, not even realising that it has been favoured a lot.
According to the Economic Times, India may pose the lowest growth in the post-reform period after the coronavirus. It is important to note down that the Indian Economy is so stringent that it could not even sustain itself or two months of lockdown. The lockdown started in the end of March and right now we are not in lockdown. A period of two months defined the loss of the Indian economy.
During these two months, the government had to feed the poor and had to make sure that all the citizens of the country were sleeping with a full stomach. None of this happened, but here we are, in a state of disdain. The nominal GDP growth rate is at 42 year low. It is said that the GDP will be the lowest since 1978. All this is happening because of a lockdown of two months? Let us look at a few facts that will open our minds and make us understand that this was a whole process going on since the past and not just a collation of losses of two months.
1. Parle G, India’s largest biscuit selling brand decided to shut down its unit in Mumbai. There was a gradual decline in production capacity and also in demand. After functioning for 87 years, the factory was shut down. It was the first factory established by the company. According to various reports, they had to shut down because of low productivity over the past few years. This is the state of the biggest companies in our country. If the biggest companies could not sustain back in 2019, it is very important to know that the state of the Indian economy was worse than it is now back in 2019. There was one more big flaw for Parle G which led them to this huge decision.
2. The goods and service tax is a complex system which has been created by the government. A simple man cannot understand the whole concept of GST. Earlier the biscuits were taxed at 12% and 5% for the lower-priced ones but after coming of GST, the biscuits were brought under 18% tax bracket. Parle had increased their prices by 5% which led to sales declining significantly. The rural population did not solely buy Parle G now which led to the whole loss-making vicious circle.
All these policies are passed by the government without understanding their practical implication and what was the need of this?
3. Small traders have said that the GST return filing is a very complex process for them and they cannot understand even one per cent of it. It has also been observed that GST is proving to be a bane for small businesses.
4. All these policies are related to major reforms that have happened. Major reforms need to be planned and thought about or not this given out in a short duration of time. Since GST has been implemented, various strikes, errors and mismatch and returns have come up. The World Bank has called GST a very complex taxation system. GST leads to additional operational cost for small businesses. This is the reason why small businesses were dwindling down earlier. To cover this up, a lot of publicity and funding was given to the MSME sector. 28% GST on some products like plywood, automobile parts and electronic items forces the people to go for black marketing.
5. It has also been observed that the government is not giving the GST return to the states on time. The chief minister of Punjab has called out to the government for their lack of payment of the GST return. This is a major issue which is happening. How will the state governments tackle issues related to the pandemic when they do not have adequate funds?
6. The companies which are earning over a hundred crores get refunds in one month while the companies whose revenue is less than that, need to follow a tedious process. Because of this, the big companies end up trading with the big ones and the small ones are left in their own circuit. This does not lead to any development because the big companies keep on getting rich and the poor are getting more poor.
7. Apart from this, since the start of the BJP rule, the educational budget and the health infrastructure was never developed. If we look at the current situation, we do not have adequate beds in hospitals and also the majority of the students in India can’t be educated because of the poor educational infrastructure. People do not have basic knowledge about sanitation and about how they are supposed to live. The basic hygiene rules are being aired on television now because that is what our country lacks. This is a clear-cut case of lack of knowledge amongst the people because they were their minds were not open in this direction before. All they were thinking about was Hindu and Muslim rivalry. If the health infrastructure was developed, people from all over the globe would have been coming to India for treatment and the GDP would have been at a nominal level. The doctors in the front lines are a lot of stress right now and various doctors are complaining about not being given salaries. Where is all the money going? Where is the PM cares fund now?
8. DEMONESTISATION: Apart from all this, if we consider the biggest blunder of the decade, demonetisation, the move hardly benefited the economy. Various economists have questioned the government’s move about the same. Reports have shown that there was a slowdown in the growth after demonetisation. 86% of the currency of a country was demonetised. All the factors coming together like the GST, the slowdown of the MSME sector, higher transaction costs and demonetisation came together and created a big blunder in our economy long ago.
The unemployment rate was at an all-time high after the demonetisation. Demonetisation catered to the sectors of the economy who were not dealing in cash. They did not face a lot of issues. The formal sector in India does not depend upon cash and hence they could come out of it. But when we talk about the informal sector, the agriculture and the small businesses, they were badly hit. The small businesses survived using informal credit system as they could not take the bank loans. These loans had a high rate of interest and this led to a debt trap. If we talk about the agriculturists, they did not get any money from the traders because of the demonetisation cash crunch. This is the reason why our country witnessed a massive drop in agricultural prices. The farmers did not have any money. Agriculture accounts for 18% of the GDP in rural India. It was the basic necessity of every human being. But the government demolished that with a scheme called demonetisation which they never thought of.
All these factors coming together started the massacre which the government is now blaming on the pandemic.
According to a leading report, a lot of regional disparities have come up in the last few years. Various riots have started taking place and a lot of communal hatred is being spread. Money is spent on the issues which were created by the hateful vengeance in the leader’s mind. Statues are being made, capital projects have been taken up, construction of the new temples have started, meanwhile, the economy is dripping down to negative. This is what has led to the decline in the economy and not just the pandemic. Even now, the government has opened up the lockdown because the economic condition of the country is not right. The cases are at an all-time high and the government has in its self said that they do not have enough beds. Is the government preferring money over the people now?
It is too late to take these decisions of opening up the lockdown in hopes of some benefit for the economy because the past mistakes are a reflection of what is happening right now.
We would conclude by saying that, a lot of money was spent in the Rafale deal, where are those jets now? Can they save us all when we are dying?
