Agriculture is the only sector that has shown positive growth, sectors that require huge labour force and logistic have shown a great decline like Construction (-50.3%), Trade and Hotels (-47%), Financial Services (-5.3%) Mining and Quarrying (-23.3%). The GDP decline is mainly due to the government’s lack of understanding in basic economics and pumping money in the wrong places. Google reported India’s mobility changes as of 1st September, 2020 which saw a drop of 35% in Retail and Recreation, 4% increase in supermarket and pharmacy, drop of 41% in parks and public places, drop of 34% in public transport and drop of 35% in workplaces. COVID-19 has done more psychological damage than respiratory damage.
What went wrong?
The economy was tumbling since 2016, COVID-19 just boosted the process.
A logical approach to solve a problem is to accept that there is a problem and then come up with strategies to combat it, but instead of accepting the problem the government is blindly believing that the problem doesn’t exist (BJP tweeted “India pegged to register the highest GDP growth rate in 2020 among major economies of the world (1.9) and credited IMF for the source but in reality IMF reported India to have a GDP rate of -4.9% for the year 2020). Government’s constantly trying to deviate from the real situation on emphasizing on imaginary scenarios.
So, it’s not only that the government is ignoring the basic truth but also selling lies.
How can the government combat this situation?
An organized plan for the unorganized sector, as the failure of the supply chain is a big reason for the GDP crash.
Spending more on healthcare instead of infrastructure.
Including transparency in the system, to know and understand where government funds are been allocated
Focussing on a long-term plan, which includes supporting the migrant workers.
What is the future scope and How long till it normalizes?
Stabilising the economy will take a long time, it can take up to 2-3 years to normalize. The 20 Lakh Crore stimulus package which includes free ration for migrant workers is extended till November and the estimated projections can worsen after it ends. The worst is yet to come…
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