What does the current economic trend mean for common people?

(sksharmahthakur@gmail.com)

The trend of the country's economy in the last couple of years is leading to very contrasting positions. While the overall performance shows a heartening turnaround, going into meticulous analysis of the conditions of the people at large, the picture derived is most disheartening. My fear of some evil impacts of the country's economic turnaround was quite loud and clear. Looking at the phenomenal exodus of reverse migration, I was too sure what would be its impact a mega section of the people. Almost all the industries in the country suffered very pathetically with only difference in degrees of suffering. In comparison to those which were finding competition in the markets not sustainable for them, the others, most of which were in the FMCG segment, found their businesses not that disheartening. People's risk appetite went down drastically. With the incomes of most of the people going down, savings were badly hit and the people who could save a bit mostly preferred thrift without taking any risk. Resultantly, a very clear picture of tapering private investment in business surfaced. Both loss of earning and growing unemployment started hitting the domestic consumption very badly with fast decelerating purchasing power. Even in the struggle strategizing for survival, the domestic traders and those industries not having the fame of export earning were seen mostly affected. Prices of almost all the items including fuel costs, having an impact on the production of almost all the items, were showing rapid increase rendering the manufacturers scream at the increase in the cost of production. Fear of losing numbers of customers because of the rise in prices was real for those manufacturers. In efforts for keeping the volume of sales unaffected as much as possible, the manufacturers had to be susceptible to price levels, which led to compromise on quality because the maintenance of quality was giving rise to an increase in the cost of production which resulted in an increase in the sale price and increase in sale price was opening two ways i.e. decrease in sales volume at that increased price and shifting of the consumers to lower-priced ones thus compromising on the quality of the product. Therefore, all in the marketing process were affected quite a lot. In this context, a very small but very significant happening that I experienced in the meantime maybe quite relevant for mentioning here.

On almost every Sunday, I go out for purchasing vegetables in the market which is hardly one-and-a-half kilometres away from my residence. As it has become a practice, I take a small glass of black tea at a tiny tea stall in that market. Having found the quality of the tea deteriorating a bit, one day I asked the tea stall owner the reason for that. He, very convincingly replied that in that market, the consumers of black tea were not ready to pay more than Rs 5 per such small glass of black tea and with the escalation of the prices of raw materials and fuels etc., on one hand, he was compelled to keep the price level per such small glass of black tea unaffected and on the other hand, he was not left with any other option but to compromise a bit on the quality of tea leaves. He also explained to me the price rises of the raw materials and that if he went on selling tea at the earlier price of Rs 5 per such small glass of tea, with earlier quality of tea leaves the price of which increased by almost 20% with an increase in fuel cost which was also not less than that percentage i.e. 20%, only a wafer-thin margin of profit he would get. Whatever small incident that it was, from a practical viewpoint, is very significant and important.

The much-hyped India's current account surplus in the balance of payments for the first time in 17 years, in FY'21, marked by contraction in pandemic induced import demand and slip in deficit in the Q4'21, is not giving any exhilarating picture if the people's economic conditions are analysed. Together with growing unemployment, the country's rapidly deteriorating domestic consumption trend is making the reliability of GDP growth questionable so far its benevolent effects on the people at large are concerned. In the COVID-19 pandemic period, while most pathetically poverty is growing fast, the conversion of a large number of middle-class people into poor people has become a salient feature of the economy now. In this respect, government actions are far from being satisfactory. Unless domestic consumption levels increase, dying MSMEs turn around, and the unemployment problem witnesses meaningful steps, some rosy pictures like GDP increase, and export volume increase etc., cannot have a reason for celebration. Not to speak of the other places in the country, most remarkably, even in a metro like Mumbai, the volumes of sales of different FMCG products, are reducing very much.

During the COVID-19 pandemic period in India, when the country recorded its lowest economic growth, most alarmingly and to a very serious detriment to the country's economy, after 45 years, the world's fastest poverty-reducing economy witnessed in it the growth of maximum poor in a year! I am more perturbed finding that the rural areas where most of the people reside and hence are the base of the majority of the consumers have been hit much more, thus severely rendering more and more people slipping from the middle class into the poor class. Not only that the MGNRGA has fallen far short to prove as a suitable avenue with the protection of wages for those who took resort to that consequent on their reverse migration, but those who missed the bus, their growing plight has failed to look back also. Growing financial inadequacy in the MGNRGA Schemes in different states and the union territories are all set for unfolding further economic pinch to those engaged under those schemes.

An economy cannot prosper with the prosperity of the wealthy persons only if the real prosperity eludes the majority of the persons. The government at the Centre and most of the state governments, what I have perceived, have failed to read into the growing economic plight of those in rural India. A comment on the economy, based mainly on the urban people will be very deceptive and that is, therefore, likely to do severe harm to the economy. Some of the priorities of the governments, both at the centre and at the states baffle me. I call upon all concerned to consider utilization of the financial resources from the perspective of the existing necessity. True, we require a few more bridges across the Brahmaputra which will require mega capital expenditure. But while the state is still reeling under growing poverty of the people out of both loss of earning and growing unemployment, the State government should have started with strategies for revamping the sick PSUs and thereafter to make them profitable. Under such a circumstance of showing negligence to improve upon industrialization in the state, in managing heavy capital expenses, today the government may be able to succeed somehow without passing on the buck to the shoulders of the common people, but that such financial burdens will fall on the shoulders of the common people even in near future, is absolutely inevitable. I am really very perturbed having seen how in this period of COVID-19 onslaught, the rapid growth of middle-class people's slipping into the poor class is taking place and to me, that should have occupied the top position in the government's agenda of priorities. The role of the government should have been much more pragmatic for improving purchasing power of the middle class and the poor class of people ensuring a meaningful increase in their investment appetite.

Most of the government policies are for achieving political ends than for achieving long-term economic ends. The creation of jobs will require a huge sum of money for the government. Except for increasing the economic burden on the already economically badly hit persons for the realization of such growing financial requirements of the government, is the government having any other strategy? That in Assam, the authorities have set their minds for increasing electricity tariff, as we have come to know very recently, will be another blow to the common people. Most unfortunate is that the governments, both at the Centre and in the state, have drastically failed to realize the priorities and under such a situation, neglecting economic turn-around of the suffering people under the prevailing circumstances, will do great harm to the economy in particular and a huge class of people in general in future.

The Central government offered very lucratively corporate tax reductions hardly a few years ago to the corporate entities. For those tax-paying middle-class people, carrying on hopes of meaningful relief in taxes has become only a mirage. Now, another Union budget is due within less than a month, and if that burden carrying class does not get any meaningful tax relief, that the country will witness a steep fall in purchasing power of that class of people with the consequent steep deceleration of domestic consumption thus aggravating poverty, is sure to happen.

I have heard a chorus of people against handing over PSUs to the private sector. But it is my monotonous repetition that while the government cannot shrug off its responsibilities unless all the stakeholders with the most pivotal responsibilities of the employees and the employers do their best, I foresee more suffering in the society in the days to come.