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Economic despair may expand due to COVID-19
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SME Times News Bureau | 06 Mar, 2020
Former Prime Minister Manmohan Singh on Friday said the country has
becomes a majoritarian state in economic despair expressing concern over
the possibility of coronavirus causing further decline in the economic
growth and called for the need of the government to put together a
detailed and meticulous plan to boost consumption demand and revive the
economy.
"India faces imminent danger from the trinity of social
disharmony, economic slowdown and a global health epidemic. Social
unrest and economic ruin are self-inflicted while the health contagion
of COVID-19 disease, caused by the novel coronavirus, is an external
shock. I deeply worry that this potent combination of risks may not only
rupture the soul of India but also diminish our global standing as an
economic and democratic power in the world," wrote the former Prime
Minister in a national daily column published on Friday.
He said
that while crisis due to coronavirus (COVID-19) was an external shock
for the country, the riots in Delhi and worsening economy were
self-inflicted injuries he expressed in an article.
As part of
reforms, the government should put together a detailed and meticulous
fiscal stimulus plan to boost consumption demand and revive the economy
he opinionated.
In the column, the former PM wrote that social
unrest will only worsen the economic slowdown in the country. Calling
social disharmony and economic slowdown, self-inflicted wounds, he also
pointed to the threat posed by COVID-19 epidemic.
Regardless of
whether this virus will enter our shores on a large scale or not, it is
now evident that the economic impact of COVID-19 will be very big.
International bodies such as the World Bank and the Organization for
Economic Co-operation and Development (OECD) have already pronounced a
sharp slowdown in global economic growth. There are reports that China's
economy may even contract, which, if it happens, will be the first time
since the Cultural Revolution of the 1970s. China today accounts for
nearly a fifth of the global economy and a tenth of India's external
trade. The forecast for the world economy is quite dire.
This is
sure to impact India's economic situation too. Millions of small and
medium businesses in India that account for more than three-quarters of
all formal employment are part of the global supply chain. In such an
integrated global economy, the COVID-19 crisis can further slow India's
GDP growth by half to one percentage point, other things being constant.
India's economic growth was already tepid and this external health
shock is bound to make things much worse , he wrote.
Referring to
the social unrest due to CAA resulting in lesser investment for India,
he wrote "At a time when our economy is floundering, the impact of such
social unrest will only exacerbate the economic slowdown. It is now well
accepted that the scourge of India's economy currently is the lack of
new investment by the private sector. Investors, industrialists and
entrepreneurs are unwilling to undertake new projects and have lost
their risk appetite. Social disruptions and communal tensions only
compound their fears and risk aversion.
"Social harmony, the
bedrock of economic development, is now under peril. No amount of
tweaking of tax rates, showering of corporate incentives or goading will
propel Indian or foreign businesses to invest, when the risk of
eruption of sudden violence in one's neighbourhood looms large. Lack of
investment means lack of jobs and incomes, which, in turn, means lack of
consumption and demand in the economy. A lack of demand will only
further suppress private investments. This is the vicious cycle that our
economy is stuck in", the post read.
He said that India needs to
be prepared to deal with Covid-19 regardless of the magnitude of the
impact and must brace itself for the economic shock emanating from it.
He listed out a three-point plan for the Narendra Modi government to
deal with various sorts of crisis prevailing in the nation. He said that
first and foremost the nation must prepare itself to deal with
COVID-19. Second, the government must either withdraw or amend the
Citizenship Amendment Act and end the toxic social climate in the
nation. And lastly, the government needs to put together a detailed and
meticulous plan to boost consumption demand and revive the economy.
He
recalled the crisis of 1991 when the nation faced economic slowdown due
to balance of payments and the rising oil prices due ti the Gulf war.
He said that people at the helm then were able to turn the crisis into
an opportunity by bringing in drastic reforms to revive the economy.
He
said that he did not want to spread panic but it was his duty to speak
the truth. He said the situation in the country was grim and the India
that all of us knew and cherished was slipping away.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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