New Delhi, Sept 2:The urban educated class has a fetish for statistics. So, when the Government came out with the GDP figures for the last quarter two days ago (minus 23.9 percent), it was as if the heavens had fallen. Every Indian, uneducated included, knew that the country was going through a rough patch because of a pandemic and people were suffering on account of unemployment and lack of money in hand. The vast majority of people, perhaps over 80 percent, are ignorant about what is called gross domestic product and it does not matter to them, anyway.
What matters to the country’s hinterland is the prospects of standing crops in the field, whether enough manure will be available to them for use on time, facility of small loans to farmers from village banks, flood situation in several parts of the country, etc. Even the ongoing pandemic does not worry them much. As long as the farm output is good or satisfactory, they have little to worry. They need no statistics to know if the agricultural operations are normal.
Even so, the silver lining in the GDP figures is that agriculture grew at a rate of 3.4 percent in the last quarter, the only sector that registered some growth. Among the worst performers were construction, manufacturing, services, mining, etc most of which affect the urban economy in the immediate term.
Prophets of doom say the worst is yet to come. In their eyes, the surging coronavirus cases and the resultant effect of reduced production will finish the country. There is no denying that the pandemic has caused serious uncertainty. But all is not lost. At least three vaccine candidates in the country are making good progress, one of them on its last leg of human trial. The pandemic has a cycle, according to experts, after which it has to peter out either on its own or through medical intervention. The country is already into the seventh month of the pandemic. Fortunately, the coronavirus strain in the country, according to many experts, is not as virulent as in other countries, namely Europe and China.
Some economists are predicting a V-shaped recovery after the pandemic is over. In other words, there is a likelihood of the economy doing well in 2021-22. At least the stock market seems to think so. Even the critics admit that power consumption, an important metric of development, is showing an upward trend and was a good sign. It means that industries, including manufacturing units, maybe slowly coming back to production mode. The last to lookup could be the construction sector which is both labor and capital intensive. Migrant labor is yet to return to construction sites fully because of fear of the virus. Plus, people want to save for a rainy day rather than get into heavy expenditure like a new home.
Significantly, the agriculture sector, meaning the rural population, will continue to drive the country’s economy in the short-term keeping the supply chains of essential commodities intact. The rural economy, surprisingly, also contributes sizeably to the FMCG (fast-moving consumer goods) sector. Ask even a multinational FMCG company like Unilever and it will tell you how its low priced pouches of consumer durables like Lakme and Olay fairness creams are a craze in rural areas and sustain its profitability in the sub-continent.
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