GDP growth for 2020-21 will be lowest since 1952, less than 2%: Subramanian Swamy on coronavirus lockdown

GDP growth for 2020-21 will be lowest since 1952, less than 2%: Subramanian Swamy on coronavirus lockdown

FPJ Web DeskUpdated: Sunday, April 12, 2020, 12:43 PM IST
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Coronavirus outbreak has undoubtedly had an impact on every strata of the society. From poor to even the tycoon's in the industry, the deadly virus does not seem to have spared anyone.

Amid the pandemic, crores of investors money has been swept away. And several migrant labourers - wh0 have lost their jobs- returned their hometowns in the fears of the outbreak. Addressing the economic crisis, Rajya Sabha MP Subramanian Swamy said that he expects the growth rate of the GDP for 2020-21 will be the lowest since 1952—less than 2% annual rate.

"The Indian economy is headed for trouble partly because of a situation not of our making—the coronavirus pandemic—and partly because of our last six years of inappropriate economic policies," wrote Swamy in an article published by The Sunday Guardian.

He also praised Modi government for handling the situation "well and decisively."

Addressing the economic crisis amid the coronavirus pandemic, Swamy said "the problem for the nation is not that we cannot defeat the coronavirus, but that the already crisis-ridden economy has been shattered by the lockdown." He says that "we may thus win the coronavirus battle but be badly defeated by the war to save the economy from collapse."

The growth rate of the economy with proper index number based GDP has declined steeply over the last three financial years that is 2017-20. He says "while the annual rate for 2020-21 is not available, it is clear that the trend of decline has not changed and it has perhaps worsened due to the double whammy of coronavirus affecting output and employment and an already failed economic policy to boot."

He says that based on available data, he foresees that the growth rate of the GDP for 2020-21 will be the lowest since 1952—less than 2% annual rate. "Even before coronavirus hit us, we needed a 10%+ per year growth rate for a decade to wipe out unemployment from the country. Now even if we achieve 10%+ per year growth, it will not be enough to wipe out unemployment within the decade," Swamy said.

Further, Swamy believes that the economy now needs about $1 trillion investment in infrastructure to render self reliance in manufacturing and services sectors a reality.

"Economics is a technical subject of interdependent variables and parameters capable of objective mathematical and statistical analysis. It is no more a single commodity “demand-supply” subject. In economics today we no more deal with simple equations, but with matrices and multivariate calculus."

He said that "those who don’t understand this level of mathematical economics become leftists and IMF/World Bank advisers to India and moan on and on with a synthetic concern about poverty in India. They hand out the usual “class struggle” based silly arguments."

For the revival of the economy, Swamy said economic policy prognosis

must be structured on four pillars: Objectives, Priorities, Strategy, and Resource Mobilization. "Hence, an appropriate physical, financial, and human infrastructure has to be set up. This has not been done even today; and instead there is reliance on ad hocism and spin," he adds.

"It is true that the Indian economy is today headed for a serious crisis. It is, however, a myth that every crisis necessarily means an imminent collapse of the economy. The Indian economy is not very near a collapse yet; and collapse has not ever happened in our modern history simply because of our people’s resilience," Swamy writes.

However, despite all ups and downs, Swamy believes that the situation today in the Indian economy is retrievable. "A turnaround can be commenced within three months after the coronavirus pandemic is controlled," he says.

Swamy says that if the government initiates “real” and substantive reforms through economic policy changes—as was done in the 1990s of the previous century—and if we initiate major economic reforms that are credible and incentive-driven for the people, I expect that we should recover by middle of 2021.

Swamy suggested to PM Modi that he should replace the present lockdown scheme with a more decentralized scheme; and ensure as the first step that the MSME and daily wage workers in the agricultural and non-agricultural sectors are able to survive and revive soon.

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