80 crore Indians pushed below the poverty line: Economist Arun Kumar
In the fourth episode of ‘To The Point’, economist Arun Kumar tells Asiaville that India is witnessing an “economic depression”. He claims that the lockdowns and the economic crisis triggered by the pandemic has pushed 80 crore Indians below the poverty line.
“We are the worst performing nation in the G20…That’s a big cause of concern. We have to explore reasons for that,” Professor Arun Kumar told Asiaville. He argued that the slump in the Gross Domestic Product is because a large section of the Indian economy is based in the unorganised sector which creates 94 per cent employment and 45 per cent of the economic output.
The latest data released by the Ministry of Statistics and Programme Implementation shows that India’s GDP growth rate contracted by 23.9 per cent in the first quarter of 2020, that is, between April and June. With this, India became the worst-performing nation among the G20 nations.
Professor Kumar, who is a renowned Indian economist, said that the lockdown restrictions imposed due to the COVID-19 pandemic has left nearly 20 crore people jobless. He claimed that the present crisis could be even worse than what is being projected in the data released by the Ministries and organisations such as the Centre for Monitoring India Economy (CMIE).
How could this have happened? Is COVID-19 to be blamed for the deepening economic crisis or is it the Central Government’s failure that led us to this situation?
In the recent Goods and Services Taxes (GST) council meeting, Union Finance Minister Nirmala Sitharaman reportedly said that we are facing an “act of God” which may even “result in the contraction of the economy”.
We asked Professor Kumar as to whether the deepening economic crisis is an “act of God” or an act of bad governance.
“The problem started with the pandemic. No doubt about it...The lockdown was necessary but it had to be planned properly. And that is where the government has erred. It didn’t plan for the lockdown properly because it was busy with other matters which could have been postponed,” the economist responded. He further added that the Central Government was not pro-active in fighting the economic fallout of the COVID-19 crisis.
Several non-Bharatiya Janata Party (BJP) governed states such as Delhi, West Bengal, Punjab and Chhattisgarh have taken on the Centre head on, and demanded the compensations that were promised under the GST law.
While Delhi Deputy Chief Minister Manish Sisodia has termed the Centre’s refusal to compensate the state governments’ loss in revenue as the “biggest betrayal by the Centre in name of federalism”, West Bengal Finance Minister Dr Amit Mitra accused the BJP-led Central Government of violating the agreed upon conditions with regards to the GST.
Professor Kumar said, “The Centre should borrow (loans from the RBI) and give to the states on the basis of what (revenue) they are losing.”
He said that the state government would have to, under the present circumstances, face the consequences of the loss of revenue due to the pandemic.
The former Jawaharlal Nehru University professor said that there is a crisis looming over the banking sector.
He said that India is witnessing an “economic depression” and suggested that the Central and State governments would have to reduce all inessential expenses and push to increase rural employment.
"The survival of the nation is at stake. And therefore, we all have to sacrifice," he said, while making it clear that it is not only the State and Central governments that will have to cut down on expenses, but also the organised sector. Only then will it be possible to combat the economic challenges ahead of the country.
Watch the full interview here: