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Tuesday, Sep 08, 2020 14:15 [IST]

Last Update: Tuesday, Sep 08, 2020 08:41 [IST]

On survival mode

Between a rock and a hard place. This is what the scenario looks like for India at present. The country is reeling from a quadruple whammy that is practically unique even during this pandemic. First, growth has taken a hit that appears to be larger than any of its peers, with GDP shrinking 23.9% in the first post-pandemic quarter, never seen in the last 40 years.

Experts say that the Covid pandemic fallout on Indian economy may not be over yet. While the economy has re-opened somewhat since then, it remains beset by supply constraints. That means — second — that inflation may have reached almost 7%, according to experts. That’s well out of the Reserve Bank of India’s comfort zone. And, third, all this has hit an economy that was already suffering from slipping potential growth and a major tax revenue crisis following the underperformance of a national goods-and-services tax.

The only sector that has grown is Agriculture, Forestry and Fishing at 3.4 per cent. The Finance Minister who blamed an ‘Act of God’ for the decline should actually be grateful to the farmers and the gods who blessed the farmers. Every other sector of the economy has declined sharply, some precipitously. Manufacturing is down 39.3 per cent; Construction by 50.3 per cent; and Trade, Hotels, Transport and Communications by 47.0 per cent.

Former Reserve Bank of India Governor RaghuramRajan said India’s GDP data should “alarm” all of us. The reported 23.9% contraction in the economy is likely to be even worse when informal sector data is accounted for, Rajan wrote in a post on his LinkedIn page on Sunday night. The damage to the Indian economy is far worse than in the U.S. and Italy — two of the worst affected by the pandemic, he said, adding that the discretionary spending in India will remain weak until the virus is contained.
India might still have managed this economic storm if its Covid-19 case total was not exploding as well. The country is now registering over 83,000 new cases a day. Most nations across the world have successfully moved off the peak of their infection curves; in India, on the other hand, new daily records are still being set.

Many economists believe that we can find our way out of it, even at this stage, if the government took the fiscal measures necessary to arrest the slide, boost demand/consumption, and, consequently, revive production and jobs. The key is expenditure — government and private consumption expenditure. It does not matter how much is spent under which head as long the money is found and spent.

Sikkim at a Glance

  • Area: 7096 Sq Kms
  • Capital: Gangtok
  • Altitude: 5,840 ft
  • Population: 6.10 Lakhs
  • Topography: Hilly terrain elevation from 600 to over 28,509 ft above sea level
  • Climate:
  • Summer: Min- 13°C - Max 21°C
  • Winter: Min- 0.48°C - Max 13°C
  • Rainfall: 325 cms per annum
  • Language Spoken: Nepali, Bhutia, Lepcha, Tibetan, English, Hindi