India along with the rest of the world is faced with how will the fragile economic system of the world bounce back to pace since the entire global economy has been affected by the coronvirus and the lockdowns spread by it all over.
Talking about India, there is a huge disparity in the market economy we live in. We have seen how mutual funds disruption is taking a hit with Franklin Templeton holdings in India closing its 6 portfolios and the RBI coming over with a package of 50K Cr.
The Insurance industry and the gold markets have also seen a hit with decline in premiums as well as people not willing to buy gold on Akshaya Tritiya. This is just the beginning of the systemic flaws which will expose the Indian frugal growth story in the few weeks to come.
The economy is expected to grow again under some pressure and aggressiveness in the markets where people feel that the things will go back to normal once the lockdown is over. This is specifically not a correct estimate.
The economic woes will require a sacrifice on the part of the people across all levels to ease out on their desires and needs, where we shall stand to first focus on the bare minimum necessities of life only.
The employment sector be it formal or informal will take a hit, and the even the job creation will take a dip since the demand in the market for services and goods will certainly decline. In situations like these we will have to expect the State as well as the corporates to act, produce and distribute generously, which will mean we will shift to a more community oriented socialist model over the profit oriented model of capitalist economies.
This shift will prevent accumulation of wealth and a lot of money shall remain in circulation for the people to keep the prices of essential goods and services within reach of the maximum number of persons.
The Banking sector will have to bear the load in a more holistic manner which means from cost-cutting to dealing with non-performing assets and bad loans the banks will have to do all to cut their profit generating activities and safeguard the money they hold for their customers. The redemption and deposits and fall in the interest rates will have to be given a re-look with the existing loan book defaults to be mutually settled through interest rate reduction and more (loan waivers).
Tenancies and land reforms will have to be taken within a period of 45 days from now since the prices of real estate will have to go down as well as the rentals of residential and commercial properties will have to come down effectively. If the current rates of rents across cities continue to remain as they are, the citizenry will be under greater stress to mke the ends meet in the scenario of dip in consumption and income generation. The tenancies will have to be made more regulated and the government will have to play a greater role to safeguard the interests of the people.
Increasing taxes will not result in any benefits since many people will see a slippage in their income tax slabs, hence taming inflation at all costs will be key.
Mahila udyog and co-operative societies will have to start producing more than the large corporate brands and more than the foreign branded garments we will need to switch over to khadi and made in India clothes and products to save the outflow of currency from India to European and American multi-nationals.
A basic start shall be to regulate tenancies and food grain prices first along with an appeal from households to spend less as it will lead to bouyancy in the hands of the people to take decisive steps to preserve the community beyond the real of self-preservation and personal gain.