With The Sharpest GDP Drop In The History of The Country, Is Still Sab Changa Si?

Rural people and daily wage labourers have been affected the most by the pandemic and the lockdowns imposed as a result. (Source: Bloomberg)

With a drop of 24.4% in the GDP from April to September 2020 and a further contraction of 7.4% in the second quarter of the 2020–21 fiscal year, India faced one of the worst dips, if not the worst, in its financial history. And, although it saw a weak recovery in the third and fourth quarters, the overall rate of contraction for the financial year after adjusting for inflation was 7.3%.

Economic Contraction in India as compared to the world during COVID-19. (Source: Scroll)

According to data presented by Scroll, this has happened only four times in the history of the country (1958, 1966, 1973 and 1980), with the worst ever contraction before this financial year being 5.2% in 1980. While the country’s rural economy was already wounded, the second wave of the COVID-19 pandemic made the wound septic. The slight recovery of the economy acted as a band-aid, but a band-aid cannot really hold the wound where stitches are required to save the body.

According to CMIE, although the recovery sparked a wave of optimism, income, employment and nutrition still couldn’t recuperate themselves back to even the baseline pre-lockdown levels as 2020 came to an end. As the second wave ravaged India in early 2021, a major part of India went back into lockdown, the economic impact broke the backs of rural households, and also dented India’s chances at economic recovery.

CMIE data shows that although employment rates had recovered partially, incomes hadn’t. (Source: The Wire)

And although the finance ministry stated that the effect of the second wave on the economy would be much lesser than that of the first, several economists tend to disagree with that observation. With levels of poverty and rural unemployment rising steadily, economists are calling for urgent relief to be provided. And unless this relief is on the same lines as the Atmanirbhar packages that were provided during the first wave, it doesn’t seem like it will work.

With an urgent need to step up their game, the government need to turn its attention to the underprivileged sections of the society, the ones that are the most hard hit by the pandemic. And unless this is done to balance out the varying economic conditions in the country, no one has any right to say sab changa si.