Ways to revive economy, employment post COVID-19

Amid growing concerns over economic loss following the outbreak of coronavirus disease and a consequential lockdown, Senior Journalist Chandrakala Choudhury spoke to economist Aakash Jindal and VR Sharma, Managing Director, Jindal Steel and Power Limited on the plausible economic scenario in a post-lockdown India.

New Delhi:The 21-day nationwide lockdown enforced due to the outbreak of the COVID-19 pandemic has already resulted in huge job losses, pay cuts and hindrances on hiring which will be visible over the next few quarters as well, thereby adding to India’s already distressed employment scenario.

As per a recent report by Centre for Monitoring of Indian Economy (CMIE), after the lockdown in the last week of March, India’s unemployment rate shot up from 7-8 per cent to 23-24 per cent. The unemployment rate has multiplied three-fold which has severely disrupted India’s already slowing economy.

Speaking to ETV Bharat, Aakash Jindal, an economist, said, “As of now we have many coronavirus cases. On the other hand, we have to revive our economy. There is already a report which tells us that unemployment is around 23 per cent and further, an ILO report which says that about 40 crore people in the informal sector could be pushed deeper into poverty. There is also a World Bank report which says that our GDP growth would come down to as low as 1.5-2.8 per cent. After analysing it, we find that as of now there is huge unemployment and post-lockdown, there is going to be a high level of unemployment as against the fact that the demand is going to rise very slowly”.

“My organisation has sent a request and some suggestions to the government on how we can increase employment opportunities. Firstly, the government should consider reducing tax. Secondly, to reduce GST, waive off property tax or house tax from March 20 to April 30, to reduce electricity and water bills by 50 per cent, although electricity distribution companies would be compensated by the government. Certain people would question as to where would the government get all this money from”, he added.

“I request the government that if the deficit increases because of this, let it increase because this is an extraordinary situation and we should not care about our deficit. If the government feels the need to print more currency, it should do that. Even if we have to ignore the Fiscal Responsibility and Budget Management (FRBM) guidelines for a certain period, so be it. As it is an extraordinary period, extraordinary solutions are required. Another request is that the lockdown should be lifted wherever possible while maintaining social distancing. We also need to take care of the need of our BPL brothers and sisters”, he said.

“I spoke about tax, electricity and water concessions that would help businessmen, entrepreneurs, small scale industrialists and many other people who are into businesses. There are around 50-100 workers under one businessman. So, if we can save the business, we will be able to save and ensure the employment of many people in the country”, Jindal added.

On the other hand, VR Sharma, managing director, Jindal Steel and Power Limited, said, “We have changed our business modules and ramped up the production. Earlier, we were exporting 30 per cent of production, now we are exporting 70 per cent of our production for target customers which includes China, Philippines, Indonesia. We have not reduced our production and it is all done online”.

When asked about the impact on the economy in the post-lockdown period, Sharma optimistically replied, “We appreciate the Prime Minister’s call on declaring lockdown as that is the only way out as of now. Whenever the lockdown would be lifted, there will be no recession in the country. Almost every company has paid a salary for the month of March. As a goodwill gesture, presently we can ask the industries or business establishments to pay salary in advance for the month of April for the sake of livelihood”.

“As of now, the country has not incurred losses to the extent that it cannot be recovered. If the lockdown extends beyond the month of April then it is a matter of concern otherwise, the three-week loss that the country has suffered till now can be revived easily. The demand for consumer goods will increase post-lockdown if the markets reopen and given some relaxation, the stock market will go up and this three-week loss can be compensated,” he added.

It is worth noting that among the worst-hit sectors are predicted to be the automobile and auto-components, MSMEs, consumer durables and capital good sectors. These sectors will face the greater burden of the slowdown. The revenue loss in the tourism, travel and hospitality sector is pegged at $21 billion over the next year.