Vaccination is the Only Way Out of the Coronavirus Pandemic

With every passing day, the total numbers of the new coronavirus infections a day are increasing and hitting new peaks. In the last 24 hours, around 1.7 lakh new cases have been recorded across India which is almost double of the peak of the first wave. In every single state, the numbers of reported new infections are increasing and many states like Delhi, Maharashtra, Chhattisgarh, West Bengal, Rajasthan, Punjab, Karnataka, Tamil Nadu and Uttar Pradesh etc. are recording the highest ever new COVID19 infections.

फ्रैक्चर, प्लॉस्टर और चुनाव

अभी मैं उहापोह की स्थिति में पेंडुलम की तरह डोल ही रहा था कि चच्चा हाँफते हुए कहीं चले जा रहे थे। देखकर लगा कि चिढ़े हुए हैं। जैसे उन्होंने कोई भदइला आम जेठ के महीने में खा लिए हों और जहर की तरह दाँत से ज्यादा मन एकदम ही खट्टा हो गया हो। जब मैंने उनकी गाड़ी को अपने स्टेशन पर रुकते नहीं देखा तो मैंने चच्चा को जोर से हॉर्न देते हुए बोला,

‘अरे चच्चा! कहाँ रफ्फू-चक्कर हुए फिर रहे हैं। पैर की चकरघिरन्नी को थोड़ी देर के लिए मेरे स्टॉप पर रोकिए तो सही! क्या पता कोई सवारी ही मिल जाए?’

चच्चा पहले तो गच्चा खा गए कि बोला किसने लेकिन जैसे ही उनकी याददाश्त वापस लौटी तो खखार कर बोले, ‘तुम हो बच्चा! मैं समझा कि कोई और बोल रहा है?’

Increasing Price of Petroleum Products and Indian Economy

Considering the shock caused by the nationwide lockdown, very high fiscal deficit of the union and state governments and increasing coronavirus infections caused by the second wave, India at this stage cannot afford to derail the economic recovery process just because of high inflation induced by very high petroleum prices in the economy. So it's high time for the central as well as the state governments to not only put aside the greed of collecting high revenues from the petroleum products and reduce the prices of petroleum products without wasting any time through coordinated efforts but also develop a mechanism that can ensure that prices of petrol products remain stable in a given band adjusting the custom duty and VAT in a proportionate way. For this the central government in consultation with the state governments can either set up a commission to come up with a workable formula or migrate to the Goods and Service Tax (GST) regime with a new GST slab for the petroleum products. At present the prices of the petroleum products can be brought down by reducing the excise duty and VAT simultaneously but this should be a temporary practice till a permanent mechanism is in place. Else, over time this greed of the governments would prove more counter-productive than increasing the tax revenues.

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पेट्रोलियम पदार्थों व सोना की कीमतों की तुलना

मनुष्य स्वभाविक रूप से पदार्थों, घटनाओं व व्यक्तियों की तुलना करता है। यह प्रवृत्ति मनुष्य के स्वभाव में अन्तर्निहित होता है। सामान्यतः तुलना आधार उक्त पदार्थ की उपयोगिता व महत्ता के आधार होता है। कई बार ये तुलना असंगत पदार्थों, घटनाओं व व्यक्तियों के बीच किए जाने की प्रवृत्ति भी देखी जाती है जो अक्सर बेतुका व बेमानी ही होता है जो कुछ निहित स्वार्थों (राजनैतिक, सामाजिक, आर्थिक या सांस्कृतिक) के पूर्ति हेतु किया जाता है। हालाँकि कई बार असंगत तुलना भी कुछ परिणामों तक पहुँचने में उपयोगी होता है। लेकिन एक तथ्य यह भी है सोना व पेट्रोलियम पदार्थों की कीमतों में एक सीधा संबन्ध होता है।

The Second Wave of COVID19: Hospitality and Education Sectors to Suffer the Most

The second wave of the coronavirus infections is going to hit every sector of the economy. If the daily numbers of infections remain very high for a longer period, it will derail the business confidence to some extent and slow down the recovery cycle in the economy. A part of the economic recovery and the improving sentiments and the confidence in the economy is expected to reverse due to the increasing COVID19 infections and falling mobility in the economy. But it must be noted that Indian economy, like all other economies, has adjusted to the new but harsh realities relating to the Coronavirus pandemic. Due to this, the recovery process is not going to halt and is expected to continue but at a slower rate than expected. However, the hospitality and education sectors along with the allied sectors will have to bear the brunt of the second wave of the COVID19 infections the most.

Cash Strapped States, Fiscal Deficit and Infrastructure Expansion

From the previous years' Union Budgets, it is clear that there has been a healthy increase in the budgeted capital expenditure of the central government. Coupled with the planned borrowings by the central government in the first half of the current fiscal year and corporate investments, the budgeted capital expenditure by the central government will provide the required support to the struggling economy in the form of asset creation as well as employment opportunities. This will help in providing the required infrastructure support needed for India's goal of double digit growth and $5 trillion economy but this alone wouldn’t be enough.

The central government’s effort to erect infrastructure across the country needs to be aligned and supported by the state governments. Without their aligned expenditure and political support, the ambitious plan of the central will slow. But a look at the financial conditions of the states doesn’t suggest the same and it is quite visible from the budgets of the states. With the constrained financial capabilities, states wouldn’t be able to spend on the infrastructure projects in the same way and scale as the central government plans. Even their ability to borrow from the market is very limited under the Fiscal Responsibility and Budget Management (FRBM) Act 2003.

The Second Wave of Coronavirus Infections and Indian Economy

It is quite possible that India will touch the previous coronavirus peak of 97,860 daily new cases in a few days! The way new daily cases are being recorded for the last few weeks, it wouldn't be surprising that India may cross the one lakh mark today itself! The second wave of infections is in full swing in India despite the fact that India had successfully flattened the corona curve with less than 10,000 daily infections. What does it tell? Is this an achievement? No! Clearly, it is not. Rather we collectively as a nation have failed ourselves in the fight against COVID19 by letting our guard off. It is happening when we have already vaccinated more than 7.3 crores individuals till yesterday with more than 30 lakhs daily vaccine doses. This really poses a question if we as a nation and society have learned anything from the previous experiences? From the prevailing situation, it can comfortably be said that besides the medical professionals (low case fatality rates) and the policy makers (no knee jerk policy response), we have learned very little or nothing!

Rising Inflation Poses Risk to the Recovery in the Indian Economy

It must be noted by the central government that if the inflation continues to elevate in coming months and breaches the upper band of the targeted consumer inflation, it will hurt every sector of the economy and the demand. The fall in the demand in the economy will affect revenues of most of the businesses particularly the micro, small and medium enterprises (MSMEs) adversely. This fall in revenues will increase the risk of survival for most of these MSMEs and might lead to increased numbers of insolvencies and bankruptcies in the economy. Rise in the insolvencies and bankruptcies will worsen the non-performing assets (NPA) conditions in the economy gravitating and complicating the banking and financial sector crisis further.

In such a peculiar situation only the central government along with the state governments can provide relief to the economy else increasing inflation will extend the economic recovery period to create more problems for the economy. The governments should at this point of time put aside their greed to collect more revenues from the petroleum products to finance the increasing deficit and put a dynamic mechanism to check the rising prices of the petroleum products. Rather they should focus on diversifying and collecting more revenues from other sectors of the economy by increasing the economic activities as further increase in the inflation would be a constraint for the economy as a whole.

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Time to Change the Monetary Policy Stance

The IMF has raised the alarm about the high leverage positions in the economies across the globe and the loose monetary policies being pursued by the central banks to increase the economic activities in their respective economies. The IMF is worried that the loose monetary policies and very high leverage in economies may result in instability due to increased financial vulnerability. Even the chances of financial crises are increasing due to the ballooning asset prices and credit boom across the economies.

Loose monetary policies and high leverage play a very important role in increasing economic activities during such crises. Many firms in India due to the easy availability of credit and the moratorium provided to the borrowers as well as the suspension of IBC have been able to survive and the economic activities are back to pre-COVID period. But other economic factors indicate that RBI has to change the direction of the monetary policy.

Farm Sector Distress is Symptom not the Cause

Denial is not a solution to any problem as the problem never ceases to exist but is the most convenient tool for the responsible to avoid any question, scrutiny or criticism. Every year thousands of farmers across India suicide due to farm sector distress. However it is difficult to ascertain and segregate how many of them commit suicide due to farm sector distress and other reasons. But the administration in the governments (central and states) have over time developed a peculiar habit of denying and not accepting this fact straightforwardly. In many states, the government agencies fail to even compile the data for the same perhaps to avoid the onus from them. However, even if the state governments don't compile the data regarding the farmers' suicide or the central government fails to procure the same from the states, there exist the problem of farm sector distress and farmers' suicide in India and is duly acknowledged.