That the economy will contract this year is not in doubt but there is no unanimity on the extent of contraction. The official estimate is around five per cent while the ratings agencies reckon it could be closer to seven per cent. Some economists perceive it will be as high as 15 per cent. Whatever the actual deceleration in the Covid-19-hit economy, the Government is expected to take proactive steps to stem the decline. The RBI’s annual report, released on Tuesday, noted that it would take “quite some time to mend and regain” the pre-Covid momentum. It said that for the first time ever, the GDP will shrink this year. Given the agreement on the sharp drop in GDP, the policy prescriptions meant to boost growth are still not in place. Some of the fire-fighting measures already implemented are bound to be inadequate to boost growth. The government is too cautious in pump-priming the economy. While the sharp slowdown is due to a general lack of demand, private consumption is unlikely to pick up unless people have surplus funds. Post-Covid, consumers are careful in spending on non-essential items. Saving for a rainy day in these difficult times has sharply curbed discretionary spending. Then again, large sectors of the economy remain under lockdown. Though much higher than in a normal year, government spending by itself may not be enough to compensate for the loss of incomes in large swathes of the private sector. Regardless of the official claim, the actual size of the Covid-relief package is much smaller. In spite of a niggardly relief, fiscal deficit is set to rise sharply. Cheap oil has helped the Government recoup some of the additional expenditure but the higher fisc at a time when inflation is ruling at about seven per cent limits its space for much expansion. Printing money to put in the hands of consumers in order to boost consumption is an option recommended by those impatient with the government’s cautious approach on the fiscal deficit. This approach is fine during normal times, but these are hardly normal times, argue some economists. In the year of the pandemic, keeping the fisc under control should not be a priority. Instead, a generous relief package alone may help keep the GDP contraction at manageable levels. Liberal financial assistance for companies hit by the disruption will mitigate the pain to some extent. We may not be in a position to follow the example of the US, the UK and Japan, which have lifted the lid on cash for all economic actors, but the sorry state of a vast swathe of the private industry and trade calls for a generous infusion of cash. Meanwhile, in the bleak scenario, agriculture alone is a ray of hope, but it too cannot provide full employment to the rural poor. Migration to urban centres is already underway. Besides, agriculture accounts for about 14 per cent of the GDP. Without revving up the urban economic engine, the GDP contraction is bound to be much higher than officially estimated. Any delay in a large infusion of cash in the hands of the people to pep up demand may further hinder revival of demand.
A very undignified stubbornness
Clearly, Prashant Bhushan is determined to force the apex court to punish him. Repeated appeals by the court to allow him to say sorry for its contempt so that both can move on were most stubbornly frustrated by the PIL lawyer. At Tuesday’s hearing, the court again gave him an opportunity to apologise. But Bhushan would not budge. Let me go unscathed, or punish me, he seemed to suggest. The court faces a serious dilemma. Letting him go without even a mild rap on the knuckles would be an act of generosity, nay, high-mindedness. But the only problem in pursuing such a course is that Bhushan and his ilk, who daily pillory the higher judiciary in the garb of a fair and just criticism, will be further emboldened to traduce it. Forgiveness will be read as weakness by the likes of Bhushan and his band of supporters in the Bar and outside. The conduct of judges is tested daily on the anvil of well-established norms, proprieties, principles and precedents. No such concerns seem to curb the freedom of lawyers like Bhushan. They do as they please. The misuse and abuse of PIL for private and commercial ends is often sought to be masked by an assertion of well… public interest. Bhushan should name and shame the lawyers and others behind this well-known scam. What prevents him from trying and cleansing the Bar? Judges are an easy target. Is it because exposing the wrongdoing of his colleagues may leave him vulnerable?