GDP numbers at a low

The country did not need the GDP figures to know that the state of the economy was bad. However, the recently released numbers are telling. The deceleration in growth over eight successive quarters underlines the country’s increasing economic weakness. The lockdown has, naturally, made things far worse, as life, and commercial activities connected with it came to a screeching halt. Some economists have even questioned the 3.1 per cent growth number, which, as it is, makes it the slowest quarter in the past 10 years.

Without going into the debate on the data, it does not take a rocket scientist to explain that the April-May figures are going to be worse. The economy is in a shambles. The poor bore the brunt, but the damage is spread over all sections of society. Attempts by the government to infuse cash through the MGNREGA scheme into accounts of the poor have met with some success, but it is not expected to kick-start the economy. Various packages announced by the Finance Minister have fallen short of expectations. The slide in household consumption is visible, as people lost jobs or took pay cuts. The spending power of the middle class has shrunk.

Even as some businesses have resumed, much of the regular economic activity still stands frozen. Many economists believe the worst is yet to come. The government will have to do more. The declared financial package has not managed to stimulate demand. While government spending has increased, private consumption, which is the main engine of the economy, has fallen significantly. The Covid-19 fallout has battered the world. Measures taken by certain other countries, such as Canada, provide pointers. The government needs to be proactive in putting more money in the hands of the people. It needs to step in to do more and provide more. We all know that the figures for the next quarter are going to be dismal. To minimise the damage, what is needed is transparency, numbers that can't be questioned, and a proactive approach by the Central government.

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