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Why did India’s GDP contract by 23.9 percent in the first quarter of FY 2020-21? Why was the Rs 20 Lakh crore economic package not fruitful? How can the economy be brought back on track?
Speaking to The Quint, veteran economist Rathin Roy explains what led to the steep fall in GDP, what crashed India's economy and what can be done to overcome the economic crisis in the country.
What explains the crashing economy?
The Indian economy had started slowing down in 2016. The growth rate is continuously falling and our financial condition is deteriorating. There is a constant dip in tax-GDP ratio.
Government expenditure is also falling due to limit on loans. And the disinvestment program has failed in last three years, while many things about the spectrum, I think, was largely fake.
The central government became smaller and growth also decreased. It was sluggish. The situation is such that the GDP growth dropped to 5 percent even before the COVID-19 pandemic hit us... businesses collapsed and unemployment increased.
What should be the five steps to overcome the economic crisis?
By 2024, we will have to create a slum-free India. We should learn from the crisis faced by migrant labourers, and know that slum removal should be our priority.
We will have to spend 300-400 percent more on healthcare, both public and private. Government shouldn’t change policies frequently and should prioritise railways over airways. Lastly, we must focus on environment.
Why does the government hesitate in taking big steps?
Few ministries have clearly outlined ideologies. So, wherever there’s intention, work is being done. But, there’s lack of intent within the finance ministry.
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