The measures announced by the Finance Ministry and the RBI, don’t bode well for the Indian industry. This is a heartfelt notion and devoid of any kind of reactionism that many people might term it as this assessment is a very myopic overview of the cyclical manner the economy of a nation such as India works in a globalised economy. We are here making a case for an urgency in the economic policy of this country to usher in broader socio-economic justice and working for the cause, which may be the motherland for the right wingers or the nation of the centrists or the cause of leftists.
No wonder in 1992 post the disintegration of the USSR it was tough for the Indians to manage an economy which was not aligned with the norms of the World Bank and the IMF, therefore we moved towards an open market economy, boosting materialism and a cycle of private enterprise that ushered in generation of more jobs and providing more in terms of a standard of living.
The mixed economic system as envisaged by Nehru throught the Mahalanobis model ushered in great pro-active developmental strides in the initial years yet with time the momentum was lost. With Mrs. Gandhi taking over the reigns of power from her father there was Bank Nationalisation and there was red-tapism that we are still trying to fight out.
The whole idea of the entire overview today is the scenario where the Rs. 500 crore aid from Mr. Mukesh Ambani wouldn’t be of any substantial help specially when the largest job creating segment of the economy which is the medium, small and micro enterprises will be reeling under cash crunch post the lockdown. Even the mid cap and the large cap companies who are even currently resizing their workforce, will see further layoffs and will not be in a position to provide for the people who have sworn their paychecks in lieu of a small car or their dream home, or even their education. The EMI holiday for three months will push the markets to a frenzy of generating wealth since the simplest idea will be to not only make for the losses incurred during the lockdown following the coronavirus scare, but shall also trigger added burden on the capital available and the pending bills of all the people involved in services across sectors.
The IT sector will be hit since their clients sitting overseas probably in the US will see a decline in their demand since the US is emerging as the newest epicentre of the coronavirus outbreak and then the various supply chains spanning across industries will be hit as Chinese manufacturing will not only slow down owing to a weak demand at the hands of the European Union and the US combined, but their internal consumption will also take a hit, and they will try to dump their goods in Indian economy to create a wealth drain or a market for their population to sustain.
This coupled with the burden of credit on the common Indian will lead the population into a cycle of inability to pay, be it businesses, or the tenants who need to pay to their landlords.
The three month window for loan EMI relief, okay with banks willing to provide for working capital, and the loan book getting bulky with unpaid loans (taken as per the incomes and expenses of the period before the lockdown) the servicing of the unpaid and the fresh credit available to the businesses will create additional stress since the payments will remain choked in the pipeline from the period before the lockdown.
Now, when consumerism will take a beating, the companies will raise prices of their products and with labour and supply chains all disrupted, along with the credit cycle, the government in its attmept to offer relief to the poor will add cesses and taxes, which will in turn increase the wholesale to retail inflation. With lower incomes at disposal and jobs being lost, people will start a civil war of sorts for survival.
This vicious cycle will not be tamed by the government be it Modi sarkar or Mamta Sarkar or even Yogi sarkar. All the bureaucrats will give in to corruption and the harders will start profiteering like termites attacking a woodstock.
The stock markets these days are speculating and the profiteers there are making money in the slump, while the honest investors and mutual funds along with portfolio investors have started withdrawing money. The FDI channels will also dry out soon, and the investments that we are talking of will not materialise before at the least 5 years.
The $5 trillion economy is a distant dream. It was suggested that until we have confirmed cases of coronavirus contamination we must keep the economic wheel functioning and stop the mass hyteria, yet Italians and Americans proved otherwise.
The Modi government no doubt has taken a bold measure in terms of catering to the preservtion of lives, and this cannot stop here, not just here.
This article is simply meant for the people sitting at the top to see that how an economy suffers and how the term Socialist in the Preamble of our Constitution can be put to use.
To prevent any abuse in the backdrop of an economy under construction, the Indian industry by and large will have to be nationalised to avert a greater danger to the lives of the poor man.
The socialism that I am advocating here is Gandhian Socialism/ Menshevik Socialism or Indira Gandhi’s nationalisation that was termed as a mere gimmick just because our bureuacracy was too lazy and she was too pre-occupied with an unstable polity.
While in the current regime the bureaucracy seems to be more active and they are blessed with a more stable polity.
This government has been favouring the Ambanis, and the Adanis publicly (let’s confront it) and a Bajaj scion made sure to voice his concern over the bypassing of the industry lobby for giving shape to the economic reforms of the Modi government.
The capitalists today in India are accustomed to the (reactionism) Congress’ way of working which encouraged domestic industry first.
To offer a better quality of life to our citizenry, which shall hereafter not be in a position to travel in the airlines with empty coffers and wouldn’t need the Tejas or Vande Bharat (which are incurring lossed anyway) will be better off if we nationalise the resources available including manpower. All the sectors, which will not be able to recover from the shock inflicted upon the economy today, are very easily identifiable by the NITI Aayog, or the economists or even the Finance Minister who still like to be called as the Raksha Mantri.
Quoting the law minister in a press briefing where he said only 4 or 6 Indian conglomerates will participate in the new economic policy, okay let’s get it straight the policy is a saffronised version of the Congress’ nationalisation tactic. The resources that can be nationalised today, have a safe version to it since the Companie’s Act has evolved from 1956 to 2020, we can make government practically own every business being conducted here with minimal interference in the boards of the companies, and the competitive biddings may continue as they used to!
The cyclical effect of this lockdown is very very aching for anyone who cares about their country, and if there is not policy paralysis, it is time we stop disinvesting and the way we handled ‘Yes Bank’ we need to handle every sector of the industry today, more democratically and with a view to deliver on Socio-Economic Justice.