Is the worst economic impact of the Coronavirus over? How will the Govt create 10-15 million jobs in a year?
We can all agree that 2020 was an awful year and economic growth across the world, other than in just a few countries, came to a grinding halt. In India, the pitiable sight of millions of labourers and workers walking home to their villages, some not able to complete their journeys due to fatal accidents or the virus itself, was possibly the most tragic sight of the year. Even well-heeled white collar workers in several industries, including the media, found themselves pushed to the wall and tens of thousands lost their jobs in several industries across the world. But as more details emerge and demand rebounds, the most pessimistic projections for economic growth, which seemed doomed after the contraction in the first quarter, and projections of a 15-20 per cent decline seemed like reality. But as the economic activity seems to have revived, projections for the total decline for this fiscal have gone down from the earlier 15-20 per cent to now a decline of under eight per cent for the entire year, as predicted by the National Statistical Office. Even if you do not trust the Government, the predictions by other global financial institutions and banks are showing that the economic decline in India has been mitigated. The demand for products like automobiles and consumer durables appears to have come back, and even grown, as the December sales figures for cars have displayed. And predictions for the next year have grown dramatically, with some figures showing as much as 10 per cent growth.
But will the job growth come back? With a net decline in jobs last year, and many millions of young people joining the market over the past year, that is the biggest single problem with the Indian economy. How will the Government create 10-15 million jobs in the public and private sectors in the coming year? Can it be done through demand creation with lower taxes and incentives such as reductions in the Goods and Services Tax? That is an open question. The hands of the Indian Government are tied; with some farmers demanding higher prices for their produce and taxes already quite high, what can be done? This will require creative thinking from the Government’s quarters, and the mandarins should carefully listen to the economists and domain experts with different thoughts across the board. The stock markets are booming but, without the creation of jobs, the problems will just be kicked down the road and an army of unemployed youth will pose a major problem for any Government that is in power. And, sadly, this is a problem not just in India but one that is haunting almost all countries across the world.
