Bounce in India's economy but the path ahead

Posted on 3rd Nov 2020 by rohit kumar

On one hand, the speed of the Corona epidemic has decreased, on the other hand, the pace of development of the economy has increased. That is, the country's economic health is getting better.

 

If we take a look at the results of October, it becomes clear that the growth rate is increasing rapidly.

 

According to the Finance Ministry, the Goods and Services Tax or GST collection was Rs 1.05 lakh crore in October, which was 10 percent higher than the same month last year and Rs 10,000 crore more than the previous month.

 

However, the collection of GST from lockdown to unlocked-5 i.e. in the April-October period of the current financial year was Rs 5.59 lakh crore, which was 20 percent less than the same period of the last financial year.

 

But the GST collection is not the only area in which there has been a boom. India's electricity consumption grew by 13.38 percent to 110.94 billion units (BU) in October, mainly due to a spurt in industrial and commercial activities.

 

In most areas, the situation is improving

 

The country's electricity consumption was recorded at 97.84 BU in October 2019. There has been a five percent increase in exports and the manufacturing sector has increased continuously in the last two months.

 

A private survey showed that India's factory activity grew at the fastest pace in a decade in October. The month of October feels like a spring season, given the pandemonium badly hit by the epidemic. Development is visible in most sectors of the economy.

 

Talking to news agency PTI, Finance Secretary Ajay Bhushan Pandey said that the bad days are now left behind.

 

Alok Churiwala, president of Churiwala Securities in Mumbai, told the BBC that there are signs of improvement since the Indian economy was unlocked. According to him "the pace of spread of the epidemic has given us confidence that a better time is coming for us financially".

 

He says, "GST collection of about Rs 1 lakh crore, increasing sales of automobiles, increase in power consumption are some of the signs that show that the economy is returning for the better".

 

On Sunday, FICCI President Sangeeta Reddy said that the country's economic situation is getting better. He said, "India's strategy to deal with the Covid-19 crisis has shown its impact and the country's economy is going back to boom and strength."

 

Experts give several reasons for the betterment of the economic situation. According to economic affairs expert Vivek Call, 'Economic activity has increased due to the opening of the lockdown, due to which every region was to improve compared to April-August. Nothing is amazing about the government in this.

 

He says that there are still many sectors in the economy in which there is no growth, especially since the government has failed to create employment opportunities.

 

On the other hand, it is being claimed in the government sector that the main reason for the latest boom in the economy is the Rs 20 lakh crore self-reliance package announced by the Prime Minister on 12 May, which is being said to be the biggest relief package among the G20 countries.

 

Even then, many party leaders were heard to say that "this relief package is not only to deal with the current epidemic but also to ensure continuous development for India in the post-pandemic world".

 

Exports increased, imports reduced

 

The interesting thing is that from April to September, with the increase in exports and a decrease in imports, for the first time in years, savings of $ 17 billion have been made. According to government figures, exports during this period stood at $ 221.86 billion while imports were $ 204.12 billion. In comparison to the same period last year, the decline in exports was only 16.66 percent while the decline in imports was 35.43 percent. The reason for this huge drop in imports is also being attributed to a huge decrease in the price of oil.

 

On the other hand, despite the decline in revenue under the self-sufficiency package, the government refunded the tax of Rs 1.27 lakh crore. So far, GST worth Rs 70,000 crore has been returned in this financial year, which has brought relief to the common people and businessmen.

 

But India's economy is based on supply and demand, not government support. Demand is still slow. The government wants to see the demand growing rapidly. But despite the festive season, the demand has not picked up due to which the government is disappointed.

 

For the last two months, experts in economic affairs have been demanding that the government give a new relief package to increase demand, under which some cash will be available in the pockets of laborers and those living below the poverty line for the next six months. According to the government, it has given money to more than 80 crore people under the Jan Dhan Yojana. But this amount was only 500 rupees and was given for only three months.

 

Finance Minister Nirmala Sitharaman has hinted several times towards the new relief package, but its real decision is with the PMO, the Prime Minister's Office, like all other big decisions. Alok Churiwala is in favor of this package because it will give more momentum to the development of the economy.

 

Perhaps a major reason for the PMO's reluctance is the threat of the "second wake" or second phase of the epidemic in India like Europe, which will always fear the failure of the relief package.