The worst fear has come true and despite certain attempts, even though faintly, in discovering ‘green shoots’, it’s official now- deep recession has engulfed the Indian economy. The GDP data for the first quarter of 2020-21 fiscal which came in public domain on Monday tells that the economy which has set for itself the goal of becoming a 5 trillion dollar economy by 2024 is marching- not ahead in that direction, but backwards, which in figures is minus 23.9%! There would have been an uproar, probably a stench of some 'unholy intention' if it had come from any non-governmental agency. But, it has been prepared by the government's own trusted arm- the National Statistical Office (NSO) and hence there should be no room for any denial. The central question that will now haunt the entire think-tank of the economic policy making apparatus of the country is how to contain the slide immediately as a first-aid and then reverse the trend when a little ‘breathing space’ is attained. The task has become significantly difficult than it was presumed earlier and without diving deep into the bare technicalities, from a general  point of view, it must be said that the problem is perhaps deeply embossed and seeking solutions within the parameter of the current Covid-19 pandemic will only result in a stroll in the blind alley.

If 23.9 % contraction in terms of real GDP is highly disturbing given the fact it has been the steepest decline since the NSO started quarterly measurement of GDP in 1996, the real danger, which the economists are now realising is the simultaneous squeeze also of the nominal GDP by 22.6% in the first quarter. This is going to have far-reaching implications in terms of tax collections for the remaining part of the current fiscal year and is also a solid indication that there will be more job losses, wage cuts, downward trends in the overall demand side of the economy, the cumulative effect of which is a wider fiscal deficit. Barring agriculture, contractions have been recorded everywhere and the major ones are- manufacturing which is the centre-point for job creation (-39.3%),  construction, which employs large numbers of people ( -50.3%) and trade, hotels and transport (-47%).

As of now, it is clear that the Centre is in no mood to help out the states by paying the pending GST dues and the ball has been ‘conveniently’ thrown in their courts. The alternate proposals of borrowings have hardly convinced the states and it is a precarious situation altogether.

It is not clear how the economy is going to get out of this severe vicious cycle. However hard it is tried to attribute the whole of the reasons to the pandemic alone, as days go by, it will be hard to suppress the fact that seeds of the economic disaster have been sown much earlier. It’s now more darker than before. 

---

Kenter Joya Riba

(Managing Editor)
      She is a graduate in Science with post graduation in Sociology from University of Pune. She has been in the media industry for nearly a decade. Before turning to print business, she has been associated with radio and television.
Email: kenterjoyaz@easternsentinel.in / editoreasternsentinel@gmail.com
Phone: 0360-2212313

<< Back to News List