The economic costs of India’s Covid crisis is ballooning, the actual impact could have a fallout into the next fiscal also, If not piloted though the haze that envelopes it now.

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India is reeling from a double edged economic and health crisis induced by the pandemic. Economic growth has slumped over a longer and sharper curve than other countries. Indian GDP has shrunk by 23.9% in the first post-pandemic quarter. With the latest downfall in GDP, India is trailing behind all G7 countries — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. This is double the average of 12 % of these countries.

 

Since the economy started opening up from august, the demand increase hasn’t been very encouraging except for a bit of spurt from bottled up demand of the past six months. Most small scale and medium units have not been able to revive production levels in the absence of the immigrant contract and beset by supply constraints. There is a serious fear that inflation may have creped up almost to 7%, according to some leading economists.
The pandemic came just as the markets were recovering from the aftereffects of a major tax revenue crisis following the underperformance of GST rollout.
So, now in end September 2020, While most countries have peaked their infection curves; in India, on the other hand we are inching close to 95 K cases per day. Another lurking fear expressed by health experts, is that rural India might be exploding and may be under reporting or lack of correct information flow. Rural health infrastructure services are far less equipped for a surge in cases and the non present state machinery, may not know of localized outbreaks till it is too late.

The government predictament should be appreciated, faced with all avenues of income squeezed and its coffers empty it cannot embark into any welfare of those most affected, small business and contract workers. Programs like Britain’s furlough scheme or the U.S.’s $600 per week unemployment aid are a distant dream in India.
Surprisingly there is very little concern manifestation in India, either among policymakers or the public in general. Perhaps that’s because of the psychological relief from the case fatality rate, as projected publically by official agencies and the press, being well below 2% and thus among the lowest in the world.

The fact is that the first tranche of the stimulus package, did seem to get caught up in formalities of eligibility etc.. Made worse by reports of fraud and corruption diverting the funds to ineligible farmers etc. especially in tamil nadu. However, a “second stimulus” — especially one directed at business — would be fiscally dangerous and looks highly improbable in the current fiscal situation. This is fuelling the atmosphere of uncertainty especially with clear data on respite from the spread yet to come in from agencies.

The upheaval in the educational field is yet another dimension of the impact of health crisis and is having a strong undercurrent of anxiety across families and society. As prolonged anxiety grips parents children and faculty a sense of extreme fatigue is setting in about the future. Now as states announce opening of schools, teachers and parents remain skeptical judging from the very poor response in sending children to school with the impractical imposed restrictions of social distancing. A failure to put back education on a even kneel very soon could have deep repercussions for the future. The pandemic has introduced society to some of the drawbacks and shortcomings of our educational systems in this modern age and also the opportunities that we can leverage to make education more accessible and rewarding both for the student as well as the teacher in very meaningful and beneficial ways. The case for a better understanding of these factors by policy makers is very strong, especially for the vulnerable sections of our society.

Millions of Indian school children could not go to school, most of them already subject to suboptimal education by global standards. And, unfortunately only 25% of our student population can access online classes. Given that this generation is the one that will have to take India’s last shot at prosperity, that’s especially bad news.

If India is to buck the trend and catch the opportunity to surge ahead as a power house of economic growth, it needs to get its act together on public health, education and skill training and manufacturing sectors. Is anybody listening¬¬

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