A full blown dot
Sometimes when a government is making all the efforts to revive a failing economy, and the economy is just not picking up pace, this phase is described as a full-blown dot. The dot represents a full stop to the government’s efforts to pace up the economy in the ways pursued before. The government in itself is unaware that the rising criticism and large-scale bankruptcy filing is the failure of the past few years. A full stop to the policies pursued or planned is mandatory as the economy is just unable to return to the past growth rates. The biggest of the biggest CAPEX will not help the GDP as it is the GDP that has wasted all the previous CAPEX in the same way the government planned in the past to revive the economy.
The vicious cycle of money is unable to find a way to the GDP of the country and any kind of push to revive the sentiments will only help in throwing the money to dustbins where it is not picked up by anyone and lies in the dustbin only to slowly find a way where it just doesn’t enter the GDP. Having said this the institutions/people involved in the planning should think something which chases the country’s rise, not the credit disbursal as credit is accepted when the GDP players have the capacity to return the credit, picking up credit for no reason takes me to China story where even small companies are on a buying spree for better profits with support from central banks.
A country reeling from the impact of COVID-19, a complete lockdown without any thought behind it only added to the woes of the growth rate which is hovering its numbers in the negative territory for many years gone by, a country where the informal economy plays a better role in providing employment than the formal economy, the country which is run by informal sector where this sector alone contributes to the tune of 50 percent to the GDP of the economy, along with employing close to or more than 90 percent of the employees, schemes like atmanirbhar Bharat will only be on papers or even if distributed as per the plan will only give a boost to the planning members idea of it(AtmaNirbhar).
As and when I say that, think of it this way right from small to big companies picking up credit will not be able to pay back any loans or credit as the demand is fading away from the market, India ranks way below in exports except IT, chemicals to an extent. The countries manufacturing is almost negligible and the failure or rising NPA’s are a clear result of a failing economy with no area or region for growth to the existing companies. The government needs to rethink its strategy of disbursing credit to a falling economy, rather the focus should be on increasing the capital expenditure(for consumption), that too by finding new ways to do that. This disbursement should be related to increasing the consumption rather than credit disbursal, all the companies are well versed and have enough finance people to guide them when it comes to picking up credit, even it is is the smallest SME.
My point of focusing on CAPEX going up, even if it results in a wider fiscal deficit to the tune of 20 percent, should not matter to the government as to when the consumption is up, all the companies will be interested in eating the profit pie of the consumer driven economy. Allow me to quote an example, Government should consider all the Chinese tech companies to come to India and provide employment, first it will be a first round the globe along with improving the job market and the salaries in the tech sector. What happens next is this — maybe USA tech buys out the Chinese tech, think of kind of loans disbursed by Indian financial institutions and the returns, no NPA guaranteed. Keep aside, if china hits your soldiers, Indian soldiers should reply the same. Why does a business or employment have to suffer?
To sum up the best of the best plans in the name of nation-building fails if it is repeated and executed by the same people who have been serving the government for decades, just like politicians never remain in power always, same ways people making plans for the government should never be the same, it keeps the process unhealthy and without any new eyes who may change the growth curve for better. One last thing to the advisors of the government, when this lockdown happened, salute you did it so early and quickly but your speed killed more than Covid-19. You could have announced it to people, transferred money to those who wished to migrate to home town, arranged for the return, special trains for easy commute, etc. It was an unthoughtful action that resulted in news, sights unaware to a human eye, in this case, that eye is me. Sorry to say but this action was worst than someone killing the father of the nation.
Views Personal and expressed only to express ways to better the GDP growth rate.
