Can India beat the Financial Tsunami that is coming?

The second wave has diminished, well, almost. Politicians will soon give themselves credit and publicize their work. Like, advertisements to show how they fought corona bravely. Or, sweets to distribute to naïve (especially middle class) people who will chow down on them.

Those who can still think, I mean those few remaining, who question. They are preparing for the third wave today so that mistakes of second wave are not repeated. At the same time, another massive wave is already here. However, most of us are ignorant about it.

This wave will also bring many to the streets. Millions will feel disappointed, lost and helpless. This is a wave of financial crisis which has been looming over country for some time now. Economically speaking, 2017 and 2018 weren’t that great either, thanks to Demonetisation and GST. The situation was already out of control more or less.

However, corona has speeded financial slowdown. Lakhs of people in middle class are no longer middle class. Whereas poverty doubled in size after the first wave only. Now, GDP has shrunk by 7.3% in FY21. It is the biggest shock to our economy in a long time.

Over the next few years when we grow again, it will be claimed that economy is growing at all time high speeds with so and so percentage. But when one has fallen so low any growth that follows will appear better than it really is. Technically, it’s called the low base effect.

In numbers, our 2018 GDP was 140 lakh crores.

In 2019-2020, it was 145 lakh crores.

In 2020-2021, GDP has fallen to 135 lakh crores.

So it has been falling down as numbers tell. But these are not just figures they also reflect ground reality. In fact, second wave also rendered 1 crore Indians jobless. Incomes of 97% households have declined according to CMIE.

Surprisingly, one of our neighbors has fared better. Today, an average Indian is poorer than 2019. On the other hand, Bangladesh’s average income has surpassed that of India’s per capita GDP. Key reasons:

  • Bangladesh’s exports grew at 8.6% every year.
  • Women labour force has consistently grown.

Here, on the contrary, women’s labour force participation has declined.

At the same time, day-to-day stuff is getting expensive. Not to worry; the ever so silent middle class will quietly buy anything and everything at high price without asking why.

5 ways that may help revive economy:

  • Opening up after speedy vaccination.
  • Infuse more money so that there is more spending.
  • Less speeches, more work.
  • Encourage businesses; letting them thrive.
  • Rediscover federalism; states get their due.

Bonus: Those who criticize or ask questions are not doing it out of spite. Adopting a progressive approach is all that those people want. No more boycotting questions or banning products or hating on those who question. We must work together, learn together, grow together towards 5 trillion USD.

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