New Delhi: The successive slowdown in growth rate for the second quarter in the year states that the country is facing an economic recession. The growth rate slowed down to 23.9 per cent in April-June 2020 (first quarter) in the wake of the Covid epidemic. In comparison, the situation seems to have improved somewhat due to the relaxation of lockdown restrictions and festive purchases. Accordingly, the Reserve Bank of India (RBI) estimated that the slowdown in growth rate will be limited to 9.8 per cent.
Effective action plan is the real stimulus
That India performed better than Chile, UK, Colombia, Spain and Mexico in the second quarter of the current financial year is just one side of the coin. At a time when 26 countries worldwide, including China, South Korea, Israel, Sweden, Germany and Japan, are recovering faster than India, there is every need to review our strategies immediately.
The gist of the various packages released by the Centre to achieve self-reliance (Atmanirbharat) is that if the supply constraints are removed, the situation will improve with private investment. No matter what the leadership says, it is clear that government spending has slowed in the second quarter.
Central and state governments should heed the advice of financial experts so that the system will substantially improve. An effective action plan along with higher demand only will be the real stimulus for the economic slowdown in the wake of the Covid crisis.
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Employment creation should be the agenda
The Comptroller and Auditor General's report in July last year warned that the country was experiencing signs of recession. The employment sector has been hit hard by the sudden outbreak of the COVID-19 pandemic on humanity. The lives of countless migrant workers have plummeted. Crores of people have slipped below the poverty line. To bounce back to normalcy, the purchasing power of the customer needs to go
If the central and state governments actively spend on infrastructure projects as an employment creation agenda, it will be an effective solution to many common problems.
Various projects taken up
Former Union Minister Nitin Gadkari voiced concern that 210 national highway projects in the country are in a state of disarray. Earlier this year, the Modi government announced a Rs 100 lakh crore plan for infrastructure projects in 18 states, including power, energy, urban development, roads and railways.
There is an urgent need to speed up their implementation. Rural industries, especially Micro, Small and Medium Enterprises (MSMEs), should lend generously to Self Help Groups (SHGs) at low-interest rates and give special priority to job creation.
The Centre has recently called on the states to reduce stamp duty to boost the real estate sector, which has accumulated 7.38 lakh units unsold across the country. If versatile reforms are taken into account and linked to the increase in employment opportunities, the spending capacity of the people will increase resulting in increased demand.
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