Alice in wonderland
Despite the government’s claim about green shoots, the economy is shrinking
Indian economy
Despite the government’s claim about green shoots, the economy is shrinking
Government has been claiming green shoots since February, 2020. It sights early signs of economic recovery such as sales of two wheelers. Two wheeler sales in June 2020 were down by 38% than that in June 2019.
Electricity production is down by 18%, even though more people are staying at home during the COVID–19. New car registrations are down. Tractor sales have gone down by 30%. Sales of commercial vehicles have crashed. Real estate sales have come down by 80%. Even if agriculture recovers, it is only 13.4% of the economy. About 50% of the accounts will opt for moratorium. Online food delivery is down by 50%. FMCG sales are down by 17%. Therefore, green shoots aren’t shooting.
Economist Vivek Kaul writes, “When we take all these factors into account, it is too early to be calling out green shoots in the Indian economy, unless the idea is to promote a narrative that works well amongst WhatsApp groups. For that, the time is absolutely right.
For businesses to pick up after the lockdown, government will have to bring in relief measures. As per the economist Raghuram Rajan austerity will make people save more and spend less. Spending will help revive the economy faster. Government should also help businesses repair by helping bankrupt yet viable companies.
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