Wasn’t it obvious to observe long queues and violations of social distancing in-front of the wine shops as soon as they re-open? Most of us resort to different means of escape when the reality is ugly.
The CMIE data shows that the unemployment rate went up to 27.1 % recently with mostly small traders and labourers losing their jobs. This figure translates to about 122 Million people being unemployed and this number might go even higher looking at the current scenario. Moreover, many would find it difficult to find another job.
Now if we talk about the businesses, then most of them are facing losses with their operations shut. The tourism industry is the worst hit during this crisis and it would be the last one to recover. Airlines, Entertainment, Real Estate, Retail are amongst the worst hit as well.
What are the issues India is dealing with currently?
The latest stats declared by MoHFW show:
-Total Number of cases in India: 49,391
-Current active cases: 33,514
The recent opening of the lockdown in some areas has observed an upsurge in the number of cases and hence a cause of concern.
With the unemployment rate being the highest ever recorded at 27.1 % it calls for some strict actions to be taken by the government. Unemployment is seen to cause various problems such as physical and mental health problems, drug abuse, domestic violence, increased crime rate, increased suicide rates, poverty, and reduced flow of money in the economy. With millions being unemployed, coronavirus waiting outside their doors, and no savings left; it is no less than a nightmare.
Difficult times for businesses
Most of the businesses have been shut for the past few months leading to no income but the expenses still running. The rent, salaries, electricity bills and interest on bank loans must be paid even though they have not been operational. Moreover, even though operations in some parts of the country have resumed but it would take a long time to get back to normal. Some businesses might not even recover in the near future. A sudden decrease in their operational capacity of various businesses is disturbing as well.
With such difficult times when various employees have lost their jobs and many businesses are facing huge losses, we can expect a rise in the number of NPAs. Various Indian Banks have recently dealt with the problem of high NPAs. Are they ready to face another one?
The prices of petrol and diesel have been spiked up amidst low crude oil prices. Such high fuel prices would increase the inflation rate in the coming months. Moreover, the constant fall in the value of rupee is another reason that would contribute to inflation. Thus, we might experience stagflation soon owing to the unemployment numbers and expected rise in inflation.
With such economic issues and the spread of coronavirus, the only thing that can get worse is a lack of proper infrastructure. Except for few developed cities India doesn’t have enough hospitals and doctors. Moreover, even the plight of rural hospitals hasn’t got much attention till now. Various rural areas don’t even have a hospital and even if they do, they do not have ventilators and other required machinery.
India’s stance till now
PM Modi announced a nationwide lockdown to curb the spread of the novel coronavirus on 24th March. The timely decision for lockdown has seemed to be a good strategy to curb the spread. Furthermore, the government has taken a loan of $ 1 Billion from the World Bank, $1.5 Billion from Asian Development Bank, raised approximately $1 Billion through the PM CARES fund and is still trying to raise more funds internationally and from within the nation.
Added challenge: The nation is dealing with various economic problems as mentioned above and stand as a challenge for the government. Controlling the spread of coronavirus along with dealing with a falling economy is a difficult problem at hand.
How transparent is the PM CARES fund?
PM CARES fund qualifies for Tax exemption as a CSR expenditure, hence many corporates donated for the cause. Surprisingly, the Union Ministry of Corporate Affairs only allows contribution towards PM CARES for a tax exemption and not towards any “Chief Minister’s relief fund” or “State Relief fund for COVID-19”.
The cause of concern is that PM CARES fund would be audited by an independent auditor and not CAG, moreover it will have no transparency. Only publicly declared donations will be known to the nation. Also, there’s no information available on how the PM CARES fund is being utilized. Hence, the total collection and allocation of the fund remains unknown.