Vaccinating A Crippled Economy

Abhishek Kabra

Floundering all the way from Delhi to Bihar, Ram Pukar Pandit was stopped at the Uttar Pradesh Check Gate. Before he could explain to the officials, the reason of his barefooted solitary journey, the vibration of his phone in the pocket of his withered shirt was enough to create a jerk in his heart. His year-old son passed away and he was neither able to help nor could he see him for one last time. He could opt for nothing except crying and becoming the highlight of some photo journalists’ news reports for the day.

The Finance Minister while speaking about reverse migration seemed to have actually built up the premises “The Devil lies in the details” leaving behind the emotional cost arising due to mistakes in State’s checks and balances. Ram Pukar’s case here, is not just about a person alone but, is representative of cases of lakhs of Indians working in the informal or unorganised sector of Indian Economy. Covid-19, did not merely affect a system but exposed down an already diseased system characterized with uneven development, which has been forcing people to migrate and this has to be re-examined. With the declarations of lockdowns, their incomes have stopped resulting in the decline in consumption.

Indian Economy in recent years aligning with the global scenario was not doing some great wonders and characterized a decline in GDP and reduction in employment, failures in several sectors like Auto and textiles and so on. And Covid-19 brought this economy to a grinding halt resulting in an unprecedented slowdown as well as financial fragility. When we try to understand the modern economic scenario, most of the activities are dependent on market forces of demand and supply. The farmer may produce the wheat but they have to get the manure from outside. And the outside here represents the market.

Consider Robinson Crusoe, marooned alone on an island, where he would have to produce everything. Life would be completely elementary. He would not be able to produce a cooking vessel if he does not have the skill of a potter and energy to bake mud or clay. So, we are not Robinson Crusoe cast away on an uninhabited island but are a society having a lot of capital of all kinds with which one can potentially produce what all of us need.

Human labour is required to run the machines. Indian Economy is neither completely capital nor labour-intensive, but a mixed dependent economy where the factors merge together to smoothen in turn, the practises of trade. And this production again, to meet the needs, is dependent upon another pillar of marketing i.e. Place, which requires finance, trade and transportation. And Covid-19 all at once, has put down a sudden brake in these activities thereby ruining the present supply chain management creating a domino effect in a stalled economy. For instance, if wood is unavailable, paper cannot be produced and because of that, numerous notebook businesses halts. The processing units do not get work. In turn the notebook manufacturers and agencies or merchants are affected. The transportation industry carrying finished products, the accountants and the shopkeepers, and a whole host of workers throughout the chain loses work in no time. Thus, unlike problems of capital or labour, this global pandemic has brought a situation where both capital and labour exist but production ceases.

Another important ingredient in the recipe of Indian Industry, trade and commerce is their banking system. Even though the banks are encouraged to provide loans, they would naturally be reluctant to do so. Because, the economy faces a shortage of demand of Non-essentials items and with less money in the pockets, the people are looking more for survival rather than life characterised by luxury. And thus, the loans if given, have a huge risk of being turned into non-performing assets because the same might not be recovered without enough sales. Moreover, without a real demand in the market, merely facilitation of credit to the MSMEs cannot do wonders. Because, even if income of an organisation collapse, collapsing the savings too, the consumption cannot be collapsed. And with no new income in hand, the consumption is to be made out of existing savings and past deposits. As a result, bank deposits in India have hugely declined and simultaneously the credit demand falls as both production and investments are affected. Thus, an interest rate reduction or credit supply under the newly announced policy of Aatmanirbhar Bharat might not give the economy, a boost.

Once the economic activities resume completely, we need to shift the paradigm of employment avenues. Many businesses start as sole-proprietorship or partnership but could not meet the demands of the diversified masses of the country and as a result of which the goods of similar type that are produced in large quantities by the capitalist class gets consumed. But this gap in meeting the demands creates room for a mass employment through formation of Co-Operative Societies. In Assam too we have several self-help groups which can be mobilized to a large extent to go for production of items of daily consumption. This would do a twin-faceted benefit. Apart from making the people employed in good number, the produced commodity can be attained by the members at a lower price. It would also disclose market opportunities for many indigenous skill-based activities like weaving, pottery, handloom, handicraft and so on.

Rather than preaching merely, the liberal philanthropy to propagate positivity and hide the failures, the state can capitalize upon the limited opportunities experienced in terms of export sector where many Indian Chemical producers have gone on record at having received enquiries from Western Manufacturers who earlier never used to look India as a source. Lastly, for an economy like ours to survive, equal treatment needs to be given irrespective of economic class of the people, which is a completely different scenario at present where even a global pandemic is being used as a tool to curtail the rights of the working class.

Abhishek Kabra, Department Of Mass Communication And Journalism, Tezpur University, Assam

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Frontier
Jun 4, 2020