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Phase wise withdrawal of lockdown has started. Economic activities which were stopped to prevent the spread Covid-19, have opened once again. Flights and trains have started ferrying passengers. Industry and offices will start working with full capacity soon. So, it is now for the citizens to ensure that the virus is contained. On the other hand, the job of the government will be to bring the economy back on track. Both tasks are equally difficult. Economic wellbeing of the people is meaningless if people continue to die in large numbers due to pandemic. At the same time, it is not advisable to keep every economic activity closed for an indefinite period to ensure people’s safety.
To successfully navigate the coming days and it’s many challenges, it is expected that people will now be more cautious and follow the instructions of public health experts. In a recent communique, World Health Organisation (WHO) has stated that if 60 per cent of the populace use mask and gloves, rate of spreading infection will be 90 per cent lower. But there is no such remedy in the offing for the economy. The Indian economy was on a downward journey even before the virus stopped economic activities in the country. The growth rate of the last quarter of 2019-2020 was just 3.1 per cent. It was 5.7 per cent at the same time a year ago, India’s slowest growth in eight years. But the slowdown was not limited only to the growth of last quarter, India’s GDP in 2019-20 recorded a growth of a mere 4.2 per cent which is an 11-year low. In this financial year, the manufacturing sector grew only at 0.03 per cent. Construction sector registered a growth of only 1.3 per cent. The scenario has badly impacted Gross Capital Formation Deposit rate in the banks, and credit growth rate of the bank has also gone down. These facts and figures indicate that the Indian economy has been affected by stagflation, a situation where market is devoid of demands. Post lockdown, the primary job will be to create enough demand in the market to help the economy regain its health.
The government has already announced a comprehensive economic package for this purpose. Included in the package is an enhanced allocation in Mahatma Gandhi rural employment guarantee scheme which will provide income for both skilled and unskilled labourers in rural India. Thus, it can be assumed that resource mobilisation in the rural sector will occur. Strengthening the rural economy is the focus of independent India and in post lockdown scenario, it will get a new lease of life. At the same time, we will have to ensure agriculture and industrial growth too. Along with rural development, adequate growth in the two sectors will improve the health of the economy. We should be cautious about being too dependent on service sector, as though it contributes largely in our GDP, the problem with service sector is that it makes us dependent on other countries. Therefore if India can lower its dependence on service sector and still manage to register considerable growth, it will take the country nearer to self-reliance and sustenance, a dream we must all work towards.