The situation would have been even worse without a bountiful monsoon, which has galvanised the rural economy. India is truly fortunate that a majority of its people live in rural areas. But clearly, Covid has done enormous damage to the urban & manufacturing sectors. (1/5)
The ‘unlocking’ will be like a tide going out which will, I fear, starkly highlight the deprivation of daily wage earners, independent service providers & small enterprises. Bank loan portfolios will be in a precarious state & their finances will need shoring up.(2/5)
A huge setback for a country that was successfully battling poverty. So we need a ‘whatever it takes’ approach to rejuvenating growth. Modern Monetary Theory (MMT) hasn’t traditionally been favoured because it supports substantial deficit financing & risks hyperinflation (3/5)
But there’s less risk of hyperinflation with paralysed consumption. We temporarily must jettison a fear of rating agencies. Need to support banks&they must support MSME’s. Need more stimulus for consumption esp. during the festive season. Livelihoods & lives are at stake. (4/5)
To end with better news, a strong recovery seems highly possible, underpinned by rural revival of demand. Last month, our Tractor sales were robust & Auto sales also moved back into positive territory. A strong shove & we can get our economic boat sailing swiftly again. (5/5)
