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COVID and its impact on India | New book relies on economics to shine light on human face of tragedy

Arun Kumar, an economist with a decades-long career in academia and writing, has come up with the book Indian Economy’s Greatest Crisis, an accessible and comprehensive survey of the havoc wreaked on the Indian economy by the pandemic.

January 31, 2021 / 11:42 AM IST
Prime Minister Narendra Modi launched an employment scheme for migrant workers on June 20, saying that during COVID-19 enforced lockdown the talent from cities returned to villages and it will now give a boost to development in rural areas. Launching the 'Garib Kalyan Rozgar Abhiyaan', Modi said there are some people who might not appreciate efforts of villagers in the fight against coronavirus but he applauds them for their efforts.

Prime Minister Narendra Modi launched an employment scheme for migrant workers on June 20, saying that during COVID-19 enforced lockdown the talent from cities returned to villages and it will now give a boost to development in rural areas. Launching the 'Garib Kalyan Rozgar Abhiyaan', Modi said there are some people who might not appreciate efforts of villagers in the fight against coronavirus but he applauds them for their efforts.


Indian Economy’s
Greatest Crisis: Impact of
the Coronavirus and
the Road Ahead
by Arun Kumar

(Penguin Random House)

Even as the COVID crisis scars Indian lungs and bellies, lives and wallets, we are seeing serious writing about it already. That’s remarkable. And what writing! It should be enough to make many Indians eat their words that mock intellectuals. The word ‘intellectual’, of course, has become a catchall cussword for the wisest among us, who hold the authorities accountable and point to the desert path through which the authorities can lead us out of the crisis. Now more than ever, when much economic fact has been replaced by spin, and the current administration is peddling unreliable economic and healthcare data, we need experts who not only manage to see through the mirages of the present, but also build a prognosis about the future. Luckily, we in India still have those experts.

Arun Kumar, an economist with a decades-long career in academia and writing, has come up with the book Indian Economy’s Greatest Crisis, an accessible and comprehensive survey of the havoc wreaked on the Indian economy by the COVID crisis followed by the half-baked lockdown. The book is more than a litany of numbers, however; it is also a moving portrait of the hell wrapping its jaws around the poorest members of our society. The author must be commended for exposing what lies under his enquiries into the science of money, namely compassion for the poor and those who are struggling. The author must also be praised for presenting economic ideas in accessible language while retaining nuance. Because of these qualities, this book can potentially improve the conversations around post-lockdown governmental measures, and should be read by economists, NGO employees working in COVID relief, journalists covering the Indian economy, and most of all, by our popular leaders, who have badly muffed the governmental response to the pandemic.

The book relies on economics to shine a light on the human face of the Indian tragedy. The author does an admirable job of mapping its scope. Page after page explores the impact on various organs of the economy, from the agricultural to the industrial to the service sector. Page after page shows how, in a globalized world and an interconnected Indian economy, distress in one sector has impacted another, then another, and another, putting the Indian economy, in the author’s words, in a “tailspin”. The author puts it bluntly: “The situation is worse than what was faced during the Second World War”. A crushing time, which calls for extraordinary measures, but these measures are yet not forthcoming: “The Indian government has largely pushed through policy changes that were on its agenda since 2014, which will only deliver over the long term, without helping increase demand in the short term”, writes the author.

The author succeeds in the crucial job of critiquing the government over its handling of the pandemic, which led to havoc in the economy and hurt the poor the most. The pandemic was lifted “without taming the disease” which led to a “surge in the number of cases”. The lockdown should have been extended, says the author; the government should have given given preference to life over livelihood, while simultaneously providing a ‘survival package’ chiefly for the poor, and those who struggled to meet basic needs such as food and healthcare. The author writes, “… why does anyone have to die of hunger when the country has a huge surplus of foodstock? In April (2020) there was a stock of 75 million tonnes of foodgrain and rabi was a bumper harvest, which resulted in even larger foodstock… All of this could have been distributed to the poor and the newly unemployed”. The people returning to villages could have been given work through Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) and in urban areas through a similar scheme. The author says that even before the pandemic, the Indian economy was already in recession because of the disaster of demonetisation and the bungled implementation of the Goods and Services Tax (GST), a situation which was worsened because of the burden of Non Performing Assets (NPAs) lying with the banks. In this situation, the author asks, how is a V-shaped recovery possible? “It will be a shallow U-shaped one,” he writes, and a slow one.

The author is appalled to read the finer details of the government’s stimulus package for the Indian economy. The package contains “long- and medium-term policy measures that will have little immediate impact on an economy in crisis”. While these measures appear impressive in terms of numbers, they largely ignore the poor. This is no anomaly. The author says that Indian governments, whether BJP or non-BJP, have always given a cold shoulder to the poor: “[A]n executive that has hardly even prioritized the welfare of the vast majority of the people it is supposed to serve… for policymakers, the poor don’t count.” Who counts, then? Businesses, for which the government hastily lifted the lockdown, and which are the major beneficiaries of the stimulus package, with only ten percent of the stimulus devoted to the migrants and the unemployed.

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But businesses will struggle to survive, the author says, because demand is low. The author masterfully reminds us that most Indians work in the unorganized sector, precariously balancing on the cliff’s edge below which lurks starvation. And of course, the services sector, which contributes a large share of GDP, was mostly paralysed during the lockdown. Non-essential manufacturing too ceased. Incomes collapsed. Where is the demand for products and services to come from? Can the rich prop up the entire economy through their consumption?

At this point, we are given a compassionate look at the unemployment crisis, industrial crisis, loss of incomes and savings. Several times, while reading, I had to pause to get hold of my emotions – so forcefully does the author present one harrowing fact after another to highlight the human face of the Indian economic crisis, caused by a pandemic and worsened by incompetent leadership.

The author suggests several measures to improve the state of the economy somewhat and relieve at least some of the suffering of marginalized Indian citizens. I will not offer spoilers; in brief, the author says the government will have to discard the fashionable but mistaken policy of withdrawing from the economy. It will have to expand the public sector in crucial areas such as education. The author suggests sweeping governmental aid to the poor and to healthcare, and government measures to prevent economic collapse.
Suhit Kelkar is a freelance Journalist. He is the author of the poetry chapbook named The Centaur Chronicles.
first published: Jan 30, 2021 07:20 am

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