The GDP numbers for the June quarter should not have surprised anyone. The April-June period was the peak of the Covid-19 lockdown. Why, global economies suffered huge contractions, with the UK topping the list with more than a 20 per cent drop in the second quarter. Of course, that can be no consolation to anyone feeling hard done following a record 23.9 per cent drop in growth in the June quarter. In the last 40 years, the GDP had not slipped into the negative territory even once. The coronavirus pandemic being a black swan event, the challenge for policymakers is to find ways to minimise its effects on the economy. On this score, however, there is little agreement. Despite a couple of well-publicised relief packages, there is wide consensus that the government needs to do much more to spur consumer demand. Companies and consumers alike are hit by income depression. Uncertain future in the absence of a vaccine to tackle the rampaging virus has caused consumers and companies to conserve resources. Even after the gradual reopening of the economy, demand continues to be listless. Admittedly, the second quarter numbers will be better but there will be a year-on-year shrinkage in this quarter as well. Surprisingly, data for employment for the month of August points to a fall, while the previous three months had registered an uptick. The unemployment rate was higher in August as against the previous month. One ray of hope was the manufacturing purchasing managers’ index, which in August, was higher after five months. Aside from agriculture and allied sectors, which grew 3.4 per cent in the April-June quarter, no sector of the economy stemmed the sharp deceleration in growth. Revenue collection in the quarter registered a precipitous drop, with 53 per cent lower GST. Expenditure, on the other hand, grew exponentially. At over Rs 6.62 lakh crore till end-June, fiscal deficit had already logged 83.2 per cent of the total budgeted target for the full year. And remember, we are still in the second quarter. Such grim numbers call for further fiscal stimulus to spur demand. The monetary side measures have been exhausted, consumer inflation constricting space for a fresh easing of rates. Though the options of the government are limited, the promised package to spur growth needs to be unveiled soon. A lot depends on the intensity of the pandemic and its likely retreat. If it continues unchecked, despite selective lockdowns across the country in badly-hit pockets, the economy will have a tougher time regaining momentum. On the whole, this year is set to see the worst growth in decades, with the GDP estimated to shrink between eight to ten per cent. We all are expected to tighten our belts further.
Tact, intellect behind Pranab’s glorious run
Former President Pranab Mukherjee, 84, who died on Monday from Covid-19-related complications, was rightly described as a man for all seasons. He had this extraordinary knack of befriending leaders across the entire spectrum of politics. Rising from a teacher in a district college, he attained almost everything there was by way of elective office, through his excellent rapport with generations of leaders in his own Congress Party and, later, with the leaders of the non-Congress parties as well. The only high office which he wanted desperately but which remained out of his reach was the Prime Minister’s. Sonia Gandhi preferred a political novice, Manmohan Singh, rather than the veteran and widely-experienced pipe-smoking professor from Bengal. He had earned her distrust due to a misunderstanding stemming from his stated wish to become PM following Indira Gandhi’s assassination. Sonia was determined to have her husband installed in the prime ministerial 'gaddi'. After a short stint outside the Congress umbrella, he returned to his alma mater, and soon occupied key ministries. In this, he was helped by the head of a corporate group which had `cultivated’ Mukherjee from the time he first became a deputy minister for industrial development, way back in the 70s. The relationship between the corporate house and Mukherjee proved beneficial for both. Having held all the key portfolios in several Congress governments and with Prime Minister’s post unavailable, Mukherjee sought the President’s post. Sonia was not enthusiastic, determined on Hamid Ansari, with an eye on the Muslim vote with the added advantage of keeping out the man whom she least trusted. Thanks to Mamata Banerjee and Mulayam Singh Yadav, Mukherjee occupied the highest constitutional office in the land despite Sonia. In his last years, he came particularly close to the leaders of the RSS-BJP, controversially becoming the chief guest at a RSS event in Nagpur.