CONSEQUENCES OF COVID-19 FOR INDIAN ECONOMY

reported in a daily newspaper last week, at an Sbiorganised conference of banks, the current Governor of the Reserve Bank of India, a bureaucrat and one who rose to this post through cronyism, and not because of his knowledge of macro finance theory, pontificated that it was “uncertain how long will it take for demand conditions to normalize”. Is this called confidence building by telling the truth or abandoning green shoots?

By “uncertain” he meant a string of uncertainties— from “supply chains, state of banks, demand, to the pandemic effects on future growth”. In simple English, he meant to say that the Government was clueless now. No surprise. Ministry of Finance was clueless when earlier this same RBI Governor was a civil servant in that Ministry, and remains clueless today.

Since 2015, I have written several times even while the GDP growth rate that year (on a statistically “upgraded” base year price index) had been at 8%, predicting that economic parameters showing a tailspin had begun. I had suggested an effective remedial economic policy for the MOF to pursue. I was proved right thereafter since under Arun Jaitely’s spin, the ailments were not addressed, and therefore year after year the GDP growth rate declined. Precorornavirus

pandemic i.e., prior to the lockdown, the financial year 2019-20 which ended on 31 March 2020, the GDP growth rate had fallen to just 3%—even less than the 1950s rate of growth of 3.5%, which was referred to, mockingly, as the Hindu rate of growth [when Nehru and his socialists were proudly peddling the outdated 1930s Soviet economic planning model].

Many fawning columnists then wrote that the PM may be able to “cover up” the economic and financial downslide from 1 April 2015 to 31 March 2020 by blaming the coronavirus for the decline of GDP growth rate.

But that spin today is no more even passably credible.