? || GDP Contracts Much Before Lockdown ||
The real threat confronting the long-term sustainability of the India Story precedes the lockdown - and is visible in data for the previous quarters. Manufacturing, billed as a way out of low-and-yet-not-middle income rut, grew at an average of barely 3 per cent in the past eight quarters.
Mining and quarrying, which deliver jobs and monetisation of minerals, has recorded negative figures in five of eight quarters. Construction, which is a major job provider at the intersection of urban and rural economies, grew by just 3.7 per cent in eight quarters preceding the pandemic.
The parade of sub-optimal performance - driven by a series of disruptions from demonetisation to GST to the sclerosis of credit delivery - is reflected in the overall picture. GDP for eight quarters preceding the pandemic has been just 5.2 per cent and a GVA of 5 per cent have hurt savings and investments. The lower average has profound long-term implications.
Assume the economy will take two or three more quarters to normalise. The consequent loss of incomes, revenues, jobs and enterprise value will weigh heavily on revival. Neelkanth Mishra at Credit Suisse estimates 50 per cent of loss in GDP is borne by the government - it gets socialised.
Of the rest 25 per cent will be borne by wage earners, 15 per cent by the informal sector and 10 per cent by corporates. This means millions of households could be pushed below poverty line and will affect demand and consumption. A poorer kitty would leave informal enterprises and corporates with no headroom for new investments.
https://www.newindianexpress.com/opinions/columns/shankkar-aiyar/2020/sep/06/why-the-economy-cant-wait-any-more-2192988.html
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? || GDP Contracts Much Before Lockdown || The real threat confronting the long-term sustainability of the India Story precedes the lockdown - and is visible in data for the previous quarters. Manufacturing, billed as a way out of low-and-yet-not-middle income rut, grew at an average of barely 3 per cent in the past eight quarters. Mining and quarrying, which deliver jobs and monetisation of minerals, has recorded negative figures in five of eight quarters. Construction, which is a major job provider at the intersection of urban and rural economies, grew by just 3.7 per cent in eight quarters preceding the pandemic. The parade of sub-optimal performance - driven by a series of disruptions from demonetisation to GST to the sclerosis of credit delivery - is reflected in the overall picture. GDP for eight quarters preceding the pandemic has been just 5.2 per cent and a GVA of 5 per cent have hurt savings and investments. The lower average has profound long-term implications. Assume the economy will take two or three more quarters to normalise. The consequent loss of incomes, revenues, jobs and enterprise value will weigh heavily on revival. Neelkanth Mishra at Credit Suisse estimates 50 per cent of loss in GDP is borne by the government - it gets socialised. Of the rest 25 per cent will be borne by wage earners, 15 per cent by the informal sector and 10 per cent by corporates. This means millions of households could be pushed below poverty line and will affect demand and consumption. A poorer kitty would leave informal enterprises and corporates with no headroom for new investments. https://www.newindianexpress.com/opinions/columns/shankkar-aiyar/2020/sep/06/why-the-economy-cant-wait-any-more-2192988.html
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