On Friday, Rahul Gandhi, the face of Congress, said that India’s economy is in recession for the first time ever under the leadership of Prime Minister Narendra Modi. He also mentioned that as much as 3 crore people are still looking for work under Mahatma Gandhi National Rural Employment Generation Act (MNREGA).
This comment came as a mockery after the country reported a 7.5% growth contraction in its Gross Domestic Product or GDP in the quarter ending September 2020 followed by a GDP contraction of 23.9% in the April-June quarter.
He tweeted: “Under PM Modi, India’s economy is officially in a recession for the first time ever”.
Showing a GDP contraction of 7.5% in the latest quarterly reports, the Indian economy has held out hopes for further positive expectations on better consumer demand after a record 23.9% contraction in the first quarter of 2020-21 fiscal. These quarterly results were disappointing on account of the novel coronavirus pandemic induced lockdown that led to pummelling economic activity. The contraction of 7.5% in July-September comes against a growth of 4.4% recorded during the period last year.
The Chinese economy, on the other hand, showed a growth of 4.9% in the same quarter (July-September) this year which is more than the 3.2% growth in the previous quarter of 2020 (April-June 2020).
Even though the GDP results of September quarter pushed India into its first technical recession, people are hoping for a sharp recovery before the end of the fiscal year, based on records going back to 1996.
How is the ruling BJP dealing with the whole scenario? Where does the $ 5 trillion economy dream stand?
The Bharatiya Janata Party would perhaps want us to believe that their big electoral win is recorded on account of strong economic growth. But, five key economic indicators of a well settled and growing economy are in turmoil. They show that not only the economy is in a mess but also that it would need an emergency response to get it out of this mess. The economy is slowly and gradually reaching a point where no amount of remedies or headline management or responses would be able to help and at such a time Prime Minister Narendra Modi’s dream of making India a $ 5 trillion economy looks long lost in the near future. In fact, seeing and analysing the situation it would be more than enough for the economy to step out of the technical recession as soon as possible and sustain and survive the economic damages laid forth by the novel coronavirus pandemic and the subsequent nationwide lockdown imposed to contain the same.
Following are these key indicators:
- Investments in new projects:
The amount of investments in these new economic projects stands at a 15-year low currently. This is nearly tantamount to the time amount of investments made at the time when Manmohan Singh took office, leading the country to one of its highest recorded growth periods. According to reports by the Mint, “Indian companies, in both public and private sectors, announced new projects worth Rs 43,400 crore in the June 2019 quarter, 81% lower than what was announced in March quarter and 87% lower than the same period a year ago.”
- Unemployment rate:
The unemployment rate is at an all-time high. Despite the introduction of several employment guaranteeing schemes nothing seems to work. It had already touched a 45-year high. The unemployment rate of the country stood at an astounding 7.8% for the week ended November 22. While the labour participation rate was recorded at 39.3%. Both of them combined together led to a sharp fall in employment rate at 36.24, which is a crystal clear sign of weakening labour markets over a period of the last four weeks. The Centre for Monitoring Indian Economy said that the numbers reflect at India’s labour markets’ inability to absorb adequate proportions of the working-age population even during the festive season of 2020. Moreover, with such a low amount of investments, it is highly unlikely that young India is going to get any respite soon enough.
- GST collections:
Goods and Service Tax has been a much talked about and debated topic during the pandemic. The GST collections have been way lower than expected in the budget leading to an enormous shortfall. The Shortfall stood at Rs 2.35 lakh crore for fiscal 2021 as reported by the government said while the cess collected for GST compensation was Rs 95,444 crore. The government has already paid Rs 1.65 lakh crore to the states for the current fiscal year, including Rs 13,806 crore for March. Finance Minister Nirmala Sitharaman revealed this after the 41st GST Council meeting. She was also in the headlined for stating that the coronavirus was “an act of God” and an unforeseen factor that affected GST collection and thus, making the central government not liable to bear the shortfalls. The possible solution to the matter is still being deliberated among the centre and states.
- Auto sales :
The sale of automobiles continues to decline continuously and drastically, perhaps making this year the worst performance year for the sector in general. Companies like Harley Davidson have already accepted the struggle of survival and have put a halt to their operations in the Indian market. The industry witnessed the worst-ever downturn of two decades in 2019 with sales of passenger vehicles dropping sharply on account of a steep fall in consumer demand and if things continue like this, we might see job losses in the sector in the near future which is not a piece of good news for millions of youth waiting to enter into the job market.
If you put the numbers together and analyse the present devastating situation, the narrative is as follows: the economy is in a major distress position right now with five years of economic adventurism backfiring on consumption, rural India facing several sets of the problem (such as protests against the three Farm Bills 2020 passed by the parliament recently), and the poor and middle-class India are finding it difficult to sustain their livelihood while balancing it with the limitation the pandemic has put forward on travel and general life.