{"id":206,"date":"2020-04-04T05:46:00","date_gmt":"2020-04-04T05:46:00","guid":{"rendered":"https:\/\/blog.kisansabha.in\/?p=206"},"modified":"2020-05-08T05:53:13","modified_gmt":"2020-05-08T05:53:13","slug":"coronavirus-indias-bailout-may-not-be-enough-to-save-economy","status":"publish","type":"post","link":"https:\/\/blog.kisansabha.in\/index.php\/2020\/04\/04\/coronavirus-indias-bailout-may-not-be-enough-to-save-economy\/","title":{"rendered":"Coronavirus: India&#8217;s bailout may not be enough to save economy"},"content":{"rendered":"\n<p>Mohammad Alam is one of thousands of workers standing in a food queue in India&#8217;s capital, Delhi.<\/p>\n\n\n\n<p>The factory where he worked shut down after Prime Minister Narendra Modi announced a 21-day lockdown to stop the spread of coronavirus.<\/p>\n\n\n\n<p>A daily-wage labourer, he has no other source of income, so he has been forced to come to a government centre for food. &#8220;I don&#8217;t know how I will survive, I will have to borrow to feed my family,&#8221; he says.<\/p>\n\n\n\n<p>Neeraj Kumar, a migrant worker, decided to flee.<\/p>\n\n\n\n<p>He and his family joined a throng of people leaving the city soon after the lockdown announcement was made. Public transport systems were stopped, leaving people with no choice but to walk.<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><img fetchpriority=\"high\" decoding=\"async\" src=\"https:\/\/ichef.bbci.co.uk\/news\/736\/cpsprodpb\/8B55\/production\/_111496653_neeraj2.jpg\" alt=\"Neeraj Kumar with wife\" width=\"472\" height=\"265\"\/><figcaption>Image captionNeeraj Kumar and his wife are among thousands who fled cities after the lockdown was announced<\/figcaption><\/figure>\n\n\n\n<p>Mr Kumar, his wife, and their 10-year-old daughter had already walked more than 40km (24 miles) when we spoke to him. &#8220;There is no work here, that is why we are running away. There are no buses, I have to walk another 260km to get to my village,&#8221; he said.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.bbc.co.uk\/news\/world-asia-india-52047263\">India has announced a $23bn (\u00a318bn) relief package<\/a>&nbsp;to help people like Mr Alam and Mr Kumar who are part of India&#8217;s unorganised, informal industry which employs 94% of the population and contributes 45% to its overall output.<\/p>\n\n\n\n<p>This industry is already bearing the brunt of the lockdown with thousands finding themselves unemployed overnight.<\/p>\n\n\n\n<p>&#8220;No-one will be allowed to go hungry,&#8221; Finance Minister Nirmala Sitharaman said while announcing the package &#8211; a combination of direct cash transfer benefits and food security measures.<\/p>\n\n\n\n<p>But the economic fallout of this unprecedented lockdown has been dire. Businesses have closed, unemployment has risen and productivity has fallen.<\/p>\n\n\n\n<p>India&#8217;s growth engine was actually sputtering well before the threat of outbreak arrived. Once one of the fastest growing economies in the world, its growth slowed to 4.7% last year &#8211; the slowest level in six years.<\/p>\n\n\n\n<p>Unemployment was at a 45-year high last year. Industrial output from the eight core sectors at the end of last year fell by 5.2% &#8211; the worst in 14 years. Small businesses had only just begun to recover from the controversial 2016 currency ban that came as a body blow to the cash-consuming informal economy.<\/p>\n\n\n\n<p>Now, experts say the coronavirus outbreak is likely to further cripple the already frail economy.<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><img decoding=\"async\" src=\"https:\/\/ichef.bbci.co.uk\/news\/736\/cpsprodpb\/87B0\/production\/_107163743_gettyimages-646177468.jpg\" alt=\"An Indian customer hands over cash to a food grain merchant at a wholesale trading shop in Bangalore\" width=\"471\" height=\"264\"\/><figcaption>Image captionIn 2016, India withdrew 85% of all currency notes from the economy<\/figcaption><\/figure>\n\n\n\n<p>So while most welcome the government&#8217;s measures, they feel much more needs to be done to minimise the economic impact.<\/p>\n\n\n\n<p>&#8220;While free extra rations have been sanctioned, how will the poor access what is due to them?&#8221; wonders economist Arun Kumar.<\/p>\n\n\n\n<p>&#8220;The government should devise a way of using the army and state machinery to physically distribute food to the poor.&#8221;<\/p>\n\n\n\n<p>With thousands of migrant workers stuck miles away from their homes, the seamless distribution of cash and food needs to be the government&#8217;s top priority, he adds.<\/p>\n\n\n\n<p>And it&#8217;s not just migrant workers at risk.<\/p>\n\n\n\n<p>Farmers are also vulnerable to a potential economic shock from the lockdown &#8211; the agriculture industry contributes nearly $265bn to GDP.<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><img decoding=\"async\" src=\"https:\/\/ichef.bbci.co.uk\/news\/736\/cpsprodpb\/1694\/production\/_106808750_gettyimages-912458692.jpg\" alt=\"An Indian farmer carries sugarcane to load on a tractor to sell it at a nearby sugar mill in Modinagar in Ghaziabad, some 45km east of New Delhi, on January 31, 2018\" width=\"465\" height=\"285\"\/><figcaption>Image captionIndia&#8217;s agrarian crisis is a major stumbling block<\/figcaption><\/figure>\n\n\n\n<p>The government says it will give farmers 2,000 rupees ($30) in April as an advance payment from an $80 annual pay-out to tide over the situation.<\/p>\n\n\n\n<p>&#8220;This money will be inadequate because exports have stopped. Prices in cities will rise because of profiteering and in rural areas they will drop because farmers won&#8217;t be able to sell their crop,&#8221; says economist Arun Kumar.<\/p>\n\n\n\n<p>The outbreak has happened at a critical farming time &#8211; the new crop is ready, waiting to be sold.<\/p>\n\n\n\n<p>Economists warn India&#8217;s challenge will be in transporting this food from villages to cities in the midst of the lockdown.<\/p>\n\n\n\n<p>If supply chains don&#8217;t work properly, a lot of food will be wasted and lead to massive losses for Indian farmers.<\/p>\n\n\n\n<p>Experts warn that India is also at the brink of a major unemployment crisis.<\/p>\n\n\n\n<p>Economist Vivek Kaul says people who work for small businesses may end up with job and salary losses. &#8220;I know of places where companies are actively discussing how many people they need to fire,&#8221; he says.<\/p>\n\n\n\n<p>And that&#8217;s not all.<\/p>\n\n\n\n<figure class=\"wp-block-image is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/ichef.bbci.co.uk\/news\/736\/cpsprodpb\/551D\/production\/_108498712_mediaitem106964610.jpg\" alt=\"India factory\" width=\"466\" height=\"261\"\/><figcaption>Image captionJob losses and salary cuts are a very real possibility for thousands<\/figcaption><\/figure>\n\n\n\n<p>With flights suspended until mid-April, the shutdown is also bound to push India&#8217;s fast-growing aviation industry into peril.<\/p>\n\n\n\n<p>The Centre for Asia Pacific Aviation (CAPA) has assessed that the Indian aviation industry will post losses worth nearly $4bn this year.<\/p>\n\n\n\n<p>This will likely have a cascading effect, affecting the hospitality and tourism industries. Hotels and restaurant chains across the country are empty and are likely to remain so for several months, sparking worries of large-scale layoffs.<\/p>\n\n\n\n<p>The automobile industry, a key indicator of a country&#8217;s economic growth, has also been forced to hit the brakes &#8211; experts are estimating losses of nearly $2bn.<\/p>\n\n\n\n<p>So, is India&#8217;s relief package enough?<\/p>\n\n\n\n<p>Experts say it&#8217;s a drop in the ocean compared to bailouts in countries such as the US, China and Singapore.<\/p>\n\n\n\n<p>They say India now also needs a larger stimulus package soon to help businesses weather this extraordinary crisis.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mohammad Alam is one of thousands of workers standing in a food queue in India&#8217;s capital, Delhi. The factory where he worked shut down after Prime Minister Narendra Modi announced a 21-day lockdown to stop the spread of coronavirus. 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