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Indian Economic Slowdown: Path to Recovery May go Through Dusty Rural India

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Shimla-After the release of economic growth figures for the April-June quarter of FY20 by Central Statistics Office last week, at least we have a consensus on one sobering fact: Indian economy is in the doldrums, and we no longer are the fastest growing economy in the world.

A sizable slowdown has been reported across most segments-manufacturing, farm, mining, construction, real estate, financial, professional services IT, auto, etc. The data on display is alarming considering the huge bearing these sectors have on employment. The slowdown of such enormous scale is likely to increase India’s unemployment rate in the coming months that stood at 6.1% in FY18- the highest in the last 45 years. For some time now, there has been a manifest lack of demand and investment sentiments in the market.  

In the thick of all this, disconcerting is the lowest consumption growth in the last 18 quarters – remember the consumption growth was the major driver behind the rapid growth story of the Indian economy and it accounts for significant  55-58% of the GDP.  

One of the major reasons for the decline in consumption growth is the shrinking rural wages, which is the result of the unacknowledged farm crisis going across the country for a few years now. As per the World Bank collection of development indicators report, the rural population in India was 66.46% of the total population in 2017. The constant decline in rural wages resulted in a substantial decline in disposable income, hence, the demand too weakened. The constant decline in food prices bedevilled agriculture income and subsequently lowering the spending and hurting the rural demand. In economic, high inflation hurts the end consumers, similarly, low inflation impacts the producers. The lower inflation rate impacted the farm producers tormenting rural India badly.  

The favorable demographic profile (65% of the population in India is below the age of 35) of India, initially, acted as a stimulus for attracting investments. As the younger population of a nation aspire their own house, car, yearly holiday, white goods, electronic gadgets, etc. But, as India’s much-touted growth story has failed to generate enough jobs, sagging the aspirational spirits of the youth. Thus, resulting in the slackening of demand, in return, this affected the confidence and sentiments of the investors in the Indian market.

 It has a cascading impact in an economy, as an investor invests in anticipation of demand and keeping in view the market sentiments; at present both these factors are lacking in the India economy. 

Another reason for the economic slowdown is the decline in the saving rate from 34.6% to 30% over five years in India; the worst dip is in the household savings-the biggest source of Investment and accounts for 61% of the total savings- dropping to 16.3% from 23.6% over the same period.  The 18% & 28% GST slabs, that covers 43 % and 19% of the good and services respectively also took a toll on the disposable income, weakened the demand and eating up the savings among the great Indian middle-class.

The credit household debt has also increased manifold in last decade. This has reduced the purchasing power and reduced saving of the household in India.

The credit growth over the years has remained weak- in spite of successive rate cuts by the RBI- owing to the problem of NPA plaguing the banks. The recent liquidity woes in the Non-Banking Financial Companies (NBFC) – shadow banking – have also fuelled speculation, instability, and stress in the financial market. This mess in the financial sector has impacted the investments as reflected by the subdued CAPEX cycle also.  

The gig economy (responsible for 96% of the employment in the country) is yet to recover from the double whammy of demonization and GST. A testimony to this is the high unemployment rate prevailing in India. Gig in India is too big to be ignored.  

Besides this, weakening currency and decline in export only piled up the concerns in the economy, in spite of favorable crude oil prices and low inflation. The aftermaths of the trade war and global slowdown have also started to reflect on the Indian economy.

In India, the richest 10% owes 77.4% of the national wealth; the poorest 60% have 4.7% only. This represents the widening cleavage between the rich and the poor, the growing plutocracy is a concern for developing nations like India. As more and more wealth is concentrated in few hands, instability in the economy increases, making the macroeconomic parameters vulnerable. For such economies with rising plutocracy, a gloomy economic prognosis beacons.

The next few months will be critical for the Indian economy, as demand and investment sentiments need to be spiked up. The disposable income must be increased immediately by revamping at the multiple tax slabs under the present GST regime and replacing them with a simpler lower single tax slab. The technical issues with the input tax credit software should be addressed immediately. This will sort out the delay input credit and reduce its proceeding time too. We need a simpler GST rather than the labyrinth one.

A major part of Rs 1.76 lakh crores given by the RBI to the government can be used on the public expenditure, this will revive the infrastructure projects and boost disposable income and revive demand. This will also bolster the credit demand which has been facing a massive downturn.  

For decades now, the Indian growth story was riding on factors like a demographic dividend, a huge market for consumption and a strong base of saving to stimulate investment. But, the time has proved that such a model can’t work for long only on these factors. All these factors are favorable for economic development but, it has to be buttressed with policies that produce high enough economic growth with sufficient jobs; cultivate a conducive investment climate and boost confidence in the system. At present, there is a perceptible lack of these elements.

 In developing nations, an economic model driven by consumption growth can’t work for long, rather economic model should be driven by continuous investment. 

In India, unfortunately, all the limelight is hogged by urban India, whereas rural India remains unnoticed. Few quarters of stress in the auto industry becomes front-page news; on the contrary years of farm stress does not get any mention. Although, the path to the economic recovery may go through dusty rural India and foster on the sweat, toil and hard work of the prosaic gig economy. Albeit, it may not make a beaming headline. Rural India, for one more time, will not mind; as it never did earlier. 

A former banker, interested in matters on economics, globalization, emerging markets, financial sector and public policy; Economic and Management graduate. He lives in Shimla.

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Pics of This Policeman Are Making HP Police Deptt Proud, Melting Hearts

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Policeman in Chail solan helping elderly during curfew

Solan-Pictures of a policeman approaching an elderly woman and later carrying a heavy bundle of fodder for her are making Himachal Pradesh Police proud. This policeman is being applauded by not only the people but also by his department. 

The pictures are taken in Chail area of the district where an elderly lady was carrying fodder for livestock from jungle during the relaxation period in curfew.

Head Constable Jasvir Singh Chail Solan

On seeing the elderly lady struggling with a bundle of fodder (green tree-leaves), which appeared to be heavy for her, an on-duty policeman carried the bundle on his back for her.

HP Police Helping People During COVID-19 Curfew

A resident of Kunihar in Solan district posted these pictures on his social media handle. He recognized this policeman as Head-Constable Jasvir Singh, who was also his classmate 17 years ago.

policeman in himachal helping old lady

We don’t know about this policeman in his personal life, but a mention of this gesture is important if seen symbolically in context to the police-citizens relationship.

This compassionate gesture of a policeman, in a time when the police is enforcing curfew and mostly seen dealing strictly with people to make them comply with the law, is melting hearts.

Visuals of people either being beaten or punished physically for breaking curfew did attract criticism not only from the people but also from the DGP SR Mardi.

However, the same policemen are also going a step ahead to help people in various ways during the COVID-19 crisis. In various districts, there are instances where policemen are even spending from their own pockets to help the needy around them. Perhaps, pictures of all of them won’t appear on social media but good policemen are there helping people while discharging their duty. 

These pictures remind us that policemen aren’t devoid of emotion and compassion.  Therefore it becomes duty of every citizen to support the police and make its job of maintaining law and order easier.

 

..SABHI POLICE KI VERDI WALE BURE INSAN NAHI HOTEInka naam mr.jasvir singh hai.mere shehar.(KUNHAR) ke nazdeek…

Posted by Sunny Shandil on Wednesday, 8 April 2020

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Rs. 1 Crore to HP Police Department for PPE and N95 Masks

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HP Police PPE kits and masks

Shimla-Himachal Pradesh Government on Saturday sanctioned rupees one crore (Rs. 50 lakhs from HP COVID-19 Solidarity Response Fund and Rs. 50 lakhs from State Disaster Response Fund) to Police Department for purchase of high-risk Personal Protective Equipment (PPE) kits and N-95 masks for police personnel of the State in the wake of pandemic COVID-19.

HPSEB Contributed 1.97 crore Towards Chief Minister Relief Fund

On behalf of officers and officials of H.P. State Electricity Board Limited, the Chairman of the Board, Ram Subhag Singh, contributed Rs. 1.97 crore towards Chief Minister Relief Fund on Saturday.

Chief Minister again made a fervent appeal to the people for the generous donation towards this Fund so that needy people could be benefited.

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17 People of Himachal Visited COVID-19 Hotspot Nizamuddin in Delhi: HP Govt

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Himachali's at Nizamuddin, Delhi

Shimla-Himachal Pradesh Government on Tuesday confirmed that as many as 17 people of the State were on the religious congregation at Delhi Nijamuddeen. All of them are under 14 days surveillance of Delhi Government at New Delhi and till now they have no symptoms of COVID-19.

These persons belong to Chamba, Sirmaur, and Kullu districts.

This large religious gathering at Delhi’s Nizamuddin has emerged as a virus hotspot with links to seven COVID-19 deaths. Among those who had attended the gathering, 50 have tested positive in Tamil Nadu, 24 in Delhi, 21 in Telangana, 18 in Andhra Pradesh, 10 in Andamans and one each in Assam and Kashmir after attending the gathering. 

Union Ministry of Home Affairs (MHA) shared details of foreign and Indian Tabhlig Jamaat (TJ) workers in India with all States on March 21, 2020, after COVID-19 positive cases among these workers surfaced in Telangana.

All the Tabligh Jamaat workers staying at Hazrat Nizamuddin Markaz are being medically screened since March 26. So far, 1203 Tabligh Jamaat workers have been medically screened.  Over 300 of them had symptoms of COVID-19 and were referred to different hospitals in Delhi.

Various nationals, particularly from Indonesia, Malaysia, Thailand, Nepal, Myanmar, Bangladesh, Sri Lanka and Kyrgyzstan had come for Tabligh activities.

Meanwhile, So far, 1339 Tabligh Jamaat workers have been shifted to Narela, Sultanpuri and Bakkarwala quarantine facilities as well as to LNJP, RGSS, GTB, DDU Hospitals and AllMS, Jhajjar. Rest of them are being currently medically screened for COVID-19 infections. No new case has been reported in Himachal. 

Usually, all the foreign nationals visiting India as a part of Tabligh team come on the strength of a tourist visa. MHA had already issued guidelines that they should not indulge in missionary work on a tourist visa. State Police would be examining categories of visas of all these foreign TJ workers and take further action in case of violation of visa conditions.

BACKGROUND

Tabligh Jamaat Headquarter (Markaz) is located in Nizamuddin, Delhi. Devout Muslims from across the country and also from foreign countries visit the Markaz for religious purpose. Some also move out in groups to different parts of the country for Tabligh activities. This is a continuous process throughout the year.

On March 21, approximately 824 foreign Tabligh Jamaat workers were in different parts of the country for missionary work. Besides, around 216 foreign nationals were staying in the Markaz. Besides, over 1500 Indian TJ workers were also staying in the Markaz while around 2100 Indian TJ workers were touring different parts of the country for missionary work. Since March 23, the lockdown has been strictly imposed by State authorities/police across Delhi including in and around Nizamuddin and Tabligh work came to a halt.

As of now, nearly 1400 confirmed cases and 35 deaths have been reported. During the last 24 hours, 227 new confirmed cases and 3 new deaths have been reported.

 

 

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