Consequences of Covid-19 on Indian economy are harsh
New Delhi: As reported in a daily newspaper, at an SBI organised conference of banks held last Sunday, the current Governor of the Reserve Bank of India pontificated that it is “uncertain how long it will take for demand conditions to normalise”. Is this called confidence building or green shoots?
By “uncertain” he meant “a string of uncertainties—from supply chains, state of banks, demand, to the pandemic effects on future growth”. In simple English, he meant to say that the government is clueless.
Since 2015, I have written several times (even while the GDP on a statistically upgraded base year price index grew at 8%) to predict that a tailspin had begun due to the clueless economic policy of the Ministry of Finance. I was proved right thereafter, since year after year the GDP growth rate kept declining. In February this year, before the coronavirus pandemic was detected in India, the GDP growth rate had fallen to just 3.0%—even less than the rate of growth of 3.5%, mockingly referred to as the Hindu rate of growth [when we were proudly peddling a 1930s Soviet socialist economic planning]. Officially, Covid-19 arrived thereafter, and it was announced on 25 March by Prime Minister Narendra Modi.
Many columnists wrote that the government may be able to “cover up” the economic and financial slide-down from April 2015 to March 2020 and blame the coronavirus for our lack of GDP growth. Now with the lockdown being diluted, the Finance Ministry has begun propagating that “green shoots of growth” spin. Even the PM was persuaded to join in on that. But the economic graph does not show anything like that. So the conviction based on statistical evidence is that if at all the shoots exist, they are brown in colour, not green.