Amiya Kumar Bagchi, former Director, Centre for Studies in Social Sciences, Calcutta
The economy has been improving to an extent. But the first thing that the government should do is stop privatisation of public sector units (PSUs). Even the well-managed PSUs are being privatised. At this time when the private sector cannot manage their already existing establishments, how can privatisation be a policy in the interest of the economy? Private companies are undertaking several cost cutting measures. But there is no possibility of the Indian economy to return to the previous level within a few quarters.
Keynesianism is still relevant today. By imposing external impulsion, the production system can be improved. After the Great Depression of the 1930s, many developed countries rescued themselves from economic depression by implementing Keynesian policies. The government can only act as an agent to improve the productive sector while an economy is in recession. Later, many economies began to remove government interventions to a large extent. Then economic ups and downs started in the developed world. But at present, finance has been playing the bigger role. It has no productive background. So uncertainty will remain in the economic recovery of India.
Amit Bhaduri, former Professor IIM, Calcutta, Delhi University, JNU
What type of economic recovery has been going on is difficult to understand. If there is any recovery, then these are only in the regional levels and not at all throughout the country. Have the economies of Uttar Pradesh or Bihar revived? I do not know. What is happening in the economy is a natural phenomenon and it has been in some selective areas. The Government of India has done almost nothing in favour of economic recovery. In this critical situation, everybody has noticed the poor health services of the country.
In Europe, we see some waves of recovery, but the process may not be sustainable. The Government of India, for example, could at least increase employment in the health sector by supplying health care professionals with quick training. The government could create employment by a significant amount on an emergency basis in the rural areas as well as urban areas. That could help people and the economy to stay at working levels.
Anup Sinha, Non-Executive Chairman, Bandhan Bank and Director, Heritage Group and former professor, IIM Calcutta
There are some signs of recovery in the government statistics. But it is difficult to sustain. For example, the GST collection figure is hopeful for September and October. But I think high collection of GST may not be possible in the future months. This is because people’s expenditure increased in the last few months as there was a pent up demand. Additionally, it was a festival season, so demand for goods would naturally increase. That may not continue after the festival season is over. Moreover, inflation is high. Although the food section is one of the hardest hit and in most of the food items, there is no GST. But in many produced food and other items - high prices means higher GST collection.
The government is saying that already business optimism has increased. But it is difficult to understand the reason behind the increase in optimism. An important factor that can create obstacles to economic recovery has been the low demand for bank credit. One estimate shows that it is lowest in 58 years. With such a low demand for credit, economic revival is difficult. Only demand for personal loans is more or less good but it is also risky in this situation. Agricultural loans are also rising.
Ambor Ghosh, Professor of Economics, Jadavpur University
An economy in recession means the growth rate of its GDP slips below the long-term average rate of growth of GDP. But when the rate of growth of GDP is negative for two quarters it is actually called severe recession - as is the phase that India is presently passing through. The present severe recession has been started by the government through the declaration of the lockdown to tackle the Covid-19 pandemic. That meant about 50% of the economic activity had been stopped. So, the supply side of the production system stopped. As a consequence the men, especially workers involved in those activities lost their livelihood almost immediately.
After the declaration of the phased un-locking process, it is quite natural that some activities would restart. But the purchasing power of the common people is at a very low level. The level of demand is not as high as to incentivise different productive activities to restart fully. The government has not been supplying adequate income to the affected people nor is it interested in creating enough jobs for the people. Full economic recovery is a distant dream.
People are worried about Covid-19 and many are not willing to lead normal lives. This is also pulling down economic activities. Recovery will fully restart when normalcy will be restored. It would occur when the vaccine will be easily available and when the investors start investing.
-Compiled by Kishore Kumar Biswas