It took just six years for Mr. Narendra Modi to bring down world’s fastest growing economy of India that was @ 10.8% during Dr. Manmohan Singh’s stewardship to world’s fastest slowing economy I e -23.9% . According to union finance minister Ms. Nirmala Sitaraman it is an act of god but fact remains that it is man made disaster and if only one man can be blamed for this it is Narendra Modi whose silly decision of demonetization followed by most unrealistic and mismanaged GST has destroyed the Indian economy. Covid 19 definitely can be termed as an act of god but it was so badly foolishly and mindlessly managed that it opened the flood gate not only of economic disaster but unimaginable suffering to most vulnerable class of our society I e labourers. Just imagine the consequences that a country of India’s population and area is locked at the notice of just four hours. Under Modi’s instruction India resorted to the world’s most rigorous lock down early on the Covid 19 pandemic when infection spread has just started and hardly 6-700 people were infected and when now more than four million people are infected with about sixty thousand deaths we are gradually unlocking. How could such foolish decision may be termed as an act of god. But this is another story our topic now is our economy which has touched lowest mark.
The Indian economy saw its worst contraction with GDP shrinking to 23.9% in the April to June quarter in comparision to the same period last year. This data has not been presented by Congress or any other opposition party but by National statistical office. Though this contraction reflects the severe impact of lock down due to Covid19 but it has actually started with demonetization. Economists are of the opinion that it will contribute to a contraction in annual GDP this year which may be worst in the history of independent India. The Indian economy is in deep vicious circle where demand is contracting so heavily while the capacity to neutralize this contraction has also contracted because of tax revenue contraction said Mr. DK Srivastava member of the 15th finance commission. He is also of the opinion that there is hardly any chance of GDP returning to positive territory for six quarters until the second quarter of next year. He forecasted annual GDP to contract five to seven percent in 2020-21. It underlies how grim the scenario is. One more important fact must be kept in mind that these estimates rely mostly on the listed corporate sector data and do not accurately capture the state of informal economy they may well be underestimating the real extent of shock. Subsequent revision of the data may well provide a more accurate assessment of the economic pain. Already people have started feeling heat of economic disaster with job loss of more than 15 crore people rising inflation rate and slowing down of all sectors of economy, only agriculture sector gives some ray of hope.
Agriculture sector was excluded from lock down restrictions arrival of migrated labours to villages and extra allocation MGNREGA gave this sector a boost. Readers may kindly remember how PM Narendra Modi has mocked the MGNREGA in Lok Sabha and has termed it as a symbol of failures of Congress government. Not only this budgetary allocations to MGNREGA were also reduced but it proved to be a boon during lock down period for rural work force that increased the productivity of farms also. A good monsoon together with good sowing of the kharif crop raises the hope that farming and allied activities may well continue to grow at relatively better pace. However,the stray animals and end of the animal market due to ban on their transportation had badly affected the farm sector and affecting farmers income to grow on more better pace. Animals were always considered ATM of farmers but now these animals specially cows bulls and calves have become useless for them and farmers have stopped breeding them.
Barring agriculture all other sectors specially construction, manufacturing have nosedived. Construction sector noted the fall of 50.3% and manufacturing 0f 39.3%.Service sector which was booming before Covid 19 has collapsed. Aviation and hospsitality industry are badly hit trade hotels transport and communication sector declined by 47 percent. Private consumption fell by more than fourth underlining the collapse in house hold demand it may continue due to uncertainty at job prospects income moving in crowded places and other health and economic considerations. Investment activity also declined by 47 percent while government consumption expenditure the only driver of growth grew by 16 percent this is healthy trend.
However hopes and expectations of a quick recovery of economy to the level of even pre covid 19 in near future seems bleak.The so called “3 master strokes demonetization GST and lock down “ by PM Narendra Modi has turned into a fiasco and its economic consequences are visible in the GDP numbers. States have been marginalized. PM’s assertion of “cooperative federalism” has proved to be another “jumla” Modiand the union government has no road map to come out of this economic disaster.