The last couple of months saw some sudden, traumatic and frightful changes. The battle against Covid-19 is still a long way to go. The shadow of an uncertain future looms large. A recent RBI survey shows there is immense fear among Indians over jobs, income, price rise and expenditure.
The RBI telephonic survey covered 5,300 households from 13 major cities like Delhi, Mumbai and Ahmedabad that are hit most by the pandemic.
The survey results show the country’s appalled economic situation. It reveals that people are anxious about employment. They aren’t as confident as before to spend beyond the basic necessities. Also, people have learned to cut extra costs from their monthly expenditure.
CST at historic low, shows the RBI survey
The urban Indians’ pessimism reflected in the record low current situation index (CST) at just 63.7 against 85.6 in March. CST is a parameter that shows people’s perception about existing economic situation and their expectation about future. It’s shocking to realize these developments as many of us probably were happily planning our next trip during this summer soon after we began the new year.
Lockdown made it worse…
The future expectation index also painted a gloomy picture with just 97.9 in May compared to 115.2 in March. Since the nationwide lockdown was imposed on March 25, majority of Indian households didn’t spend in anything “extra” beside food and alcohol. Pay cuts, inflation anxiety, lay offs and the fear of the virus deteriorated their mental health. Our economy is gasping for breath now. The situation worsened as our economy’s pre-Covid-19 show was pretty depressing.
Experts said the general consumer behavior will not change instantly even if the virus dies down eventually. Rather, the downward trend will follow next year as well. RBI governor Shaktikanta Das accepted last week India will witness a recession in the 2020-21 financial year.
The scene is no better abroad
Now many of us believe that the grass is always greener on the other side. But in this case it is not. According to the survey of a British research firm, similar fear has gripped several countries but since they are economically better placed than India, the figures vary. If the fear of job loss is 86% in India, it is just 31% in the UK, 33% in Australia, 41% in the US and 71% in Hong Kong.
According to the survey, over 84% of the Indian population expressed satisfaction over the Centre’s way of handling the Covid-19 crisis. Whereas the majority of countries in the world are unhappy over their respective governments’ response to the crisis.
What does our Supreme Court say?
On Thursday, India’s apex court said that the Centre should not put the country’s economy over health. The RBI recently filed an affidavit, declaring that it won’t support forced waiver of interest during six-month moratorium period as it would affect the health of banks and depositors’ interests.
Almost slamming the RBI, the apex court said granting moratorium will be detrimental without giving any relief on interest.
So is there any hope after Covid-19 crisis?
No doubt the coming days pose a tough challenge for all of us. Experts have suggested several measures to revive the economy. Some of them are
- The Centre should focus on upgrading the health, public transport and municipal services. Drinking water, sanitation and power supply services must be developed.
- The government should play a key role in improving the public health and tertiary care infrastructure. Work in this regard should start from the panchayat level itself.
- Our transport system requires greater public investment. A country’s economy develops faster if it has a great transportation system. Smooth and quick movements of goods and manpower can boost the economy.
- Developing the transport sector comes with the objective of better rural-urban connectivity.
- The public sector should be left to work freely. The government must ensure steady support to provide adequate finance so that the economy regain momentum.
Along with the above measures, we believe, both the ruler and the Opposition should sit and discuss the way ahead, instead of just fighting with each other. All we need is planned economic measures and not politicians aiming chairs at each other in Parliament. Nothing but a poor political collaboration will diminish our chances to bounce back.