Covid relief or revenge?

 

The economy and livelihood of the people are again fallen in crisis due to the second wave of Covid. The BJP government said in January 2021 that it would vaccinate 300 million Indians by the end of July 2021. But as of May 22, only 4.1 crore Indians have been vaccinated with 2 doses In India on an average 10.8 million people are vaccinated against Covid-19 per week. If the same pace is continued 75 percent of the population will be vaccinated only by the end of 2024 says business standard.Prakash Javdekar, falsely proclaims that everyone will be vaccinated against Covid by December.

Despite the huge shortage of Covid vaccines across the country, The BJP government has allowed only three private companies, Bharat Biotech, Serum Institute and Reddy's Lab, to manufacture Covid-19 vaccines.

 

Although the research infrastructure of these companies for Covid vaccine production has already been funded by government, Vaccines are not made available free. The BJP government is complicit in helping these companies to reap profits by inflating the vaccine price at will. Many public sector organizations and companies in India have viral vaccine manufacturing infrastructures. In Tamil Nadu there are 2 well known vaccine producing institutes, one is  Pasteur institute (Public Sector) in Ooty and the other is Kings institute, Chennai.

 

Unless other companies are allowed to involve in  Covid vaccines manufacturing, it will not be possible to scale up as per requirement and vaccinate everyone within  time. The export price of Indian vaccine is cheaper than the domestic price! . The BJP government has neither provided vaccines free of cost to the states nor provided funding for procuring but left them to compete with private companies. Pfizer and Moderna have stated that they can distribute vaccines only to the central  government. By shirking its responsibility the BJP government asked the states to buy vaccines directly from those companies.

 

Center for Sustainable Employment at Asim Premji University recently released Working India Status Report 2021. The first wave of Covid in 2020 reduced household income of 23 crore people in India below the national minimum daily wage of Rs 375, and the pandemic  increased the poverty rate in rural areas by 15 per cent and in urban areas by almost 20 per cent the report says. More than 46 percent of women lost their jobs as a result of the general lock down, and seven percent of men lost their jobs. Due to travel restrictions economic activity was reduced. A 10.5 percent drop in traffic led to a 7.5 percent drop in revenue, it added. The report recommended a fiscal stimulus of Rs 8 lakh crore to alleviate the suffering of the people.

 

Last year March, during the first wave of Covid , without providing any financial assistance or mitigation measures, by bringing in a general lockdown  with 4 hours notice Modi government did a big mistake.  During the second wave of Covid also it is making again the same mistake. The government has said the fiscal stimulus will be announced only after the second wave subsides. Hunger watch survey indicated an increase in the level of poverty in marginalized people and their quality and quantity of consumption has fallen down.Due to general lockdown people lost their jobs, livelihoods, taken into debt they are struggling to cope up, how will they  survive the second wave of Covid,Does the BJP govt ask them to consume the infected air .

 

The Ministry of Finance has announced that the second wave of Covid could hinder the economic progress then why it doesn’t announce any relief measures, was it because those already announced are just nominal!.

 

Narendra Modi has vowed to make India the world's manufacturing hub through Make in India scheme. But since the BJP government came to power, the share of the manufacturing sector in the economy has dwindled. The Center for Economic Data and Analysis (CEDA) pointed out that the amount of employment generated by the manufacturing sector in 2020-21 has halved from five years ago. The manufacturing sector, which employed 51 million people in 2016-17, employs only 27.1 million people in 2020-21. The share of the manufacturing sector has declined from 16.7 per cent in 2016-17 to 15.5 per cent in 2020-21. It also suggested that the country's manufacturing sector could be improved and rehabilitated only by providing financial assistance to alleviate the declining purchasing power of the people.

 

According to the International Labor Organization (ILO), unemployment in India rised to 7.11 per cent in 2020, the highest in the last 30 years. CMIE reported that the unemployment rate among women rose from 12.8 percent in March to 17 percent in April. Between March and April, 83.8 percent of those affected by unemployment were under the age of 30. In April alone, 96 lakh people lost their jobs.

 

As of April 2021, 2.6 crore households and 3.7 crore individuals looked for joining the Mahatma Gandhi National Rural Employment Guarantee Scheme. Comparing to April last year the number of families seeking work has increased by 91 per cent and the number of individuals by 85 per cent. However, not everyone got it. Only 1.52 crore households and 2.07 crore people have got employment under this scheme.

 

 In 2020-21, 11.19 crore people worked for an average of 51.51 days under the scheme. As of May 17, 4.88 crore people had applied for jobs under the scheme, of which only 73 per cent had joined. People got job only for 50 days in this so called 100-day job scheme, it is quite normalized that many time they don’t get immediate pay and got defaulted. The Mahatma Gandhi Rural Employment Program is a demand driven program and it is the responsibility of the central government to provide employment for hundred days with proper pay to all job seekers. 1.11 lakh crore was allocated for this project in 2020-21. But in for the 2021-22  the government has allocated only Rs 73,000 crore and has not provided any additional funds despite calls for its implementation in urban areas as well, since unemployment has risen sharply. It only shows the BJP government's irresponsibility and callous attitude towards people.

Union Minister Nitin Gadkari has announced about the target of building roads worth Rs 15 lakh crore in the next two years. Under this scheme, construction of 40 km of roads per day is planned for the current financial year. People's tax money is being wasted on useless road projects like this. In no way this will improve the economy, the productivity of the country or the livelihood of the people.

 

The BJP government, which sought to privatize the state-owned Bharat Petroleum corporation limited, is now planning to permit 100 per cent foreign direct investment in it and the govt is also planning to  allow 100 percent FDI in all public sector refineries which  is highly reprehensible.

 

A Rs 20,000 crore Loan scheme announced last year to provide credit to small and medium enterprises affected by debt. So far only Rs 38.5 crore has been disbursed through this scheme and only 332 companies have benefited says Nitin Gadkari. Pratap Chandra Sarangi, Minister for Small and Medium Enterprises, recklessly said that the government has no information on the number of small and medium enterprises closed from 2015 to 2020!

 

RBI Governor Shaktikant Das has announced a loan of Rs 50,000 crore to upgrade the medical infrastructure in the wake of the severe economic crisis. Vaccine manufacturers, medical equipment distributors, hospitals, patients, can benefit from this. Small finance banks are allowed to lend to small microfinance institutions with assets of up to Rs 500 crore. As it is put under the PSL category, the interest rate will soften. There is no shortage of loan schemes like these here but only the number of beneficiaries is found to be low. Commercial bank lending in India also declined to Rs 89,087 crore in April. Banks have invested more in government securities than in lending. According to data from the central bank, banks have lent Rs 5.8 lakh crore in 2020-21, and invested Rs 7.2 lakh crore in government securities.

 

The RBI stated that liquidity support given for economic recovery had unintended effects of inflating asset prices and liquidity support could not be expected to continue indefinitely. This is only the indirect way of saying the interest rate is going to be upped shortly. The RBI also said that the fall in interest rates and equity risk premium (ERP) from 2016 to early 2020 had pushed up stock prices. None of this is an unintended consequence. It is only in theory that the liquidity increase and the loose monetary policy will ensure credit to reach the needy. But in practice It is a fact that has been confirmed at different times in different countries it only increases the stock market speculation. Even then saying it is only an unintended consequences meant only the poor understanding and inadequacy of neoliberal policies.

 

The US Federal Reserve has lowered interest rates to zero to help recovery from the Covid-induced recession. The foreign investors flocked to invest in developing countries to profit from interest rate arbitrage, i.e the difference in interest rates between developed and developing countries. That is why the amount of foreign direct investment in 2020-21 has risen to an all-time high of $ 81.72 billion. Foreign direct investment has increased by 10 per cent over 2019-20. FDI inflows have increased by 19 per cent to $ 59.64 billion in FY20-21, compared to $ 49.98 billion in 2019-20. Singapore is the largest investor in India (29%) in the fiscal year 2020-21, followed by the United States (23%) and Mauritius (9%). These foreign direct investments are not going to create new jobs in India, they are not going to raise the purchasing power or living standards of the people, these are speculative investments that are robbing India of its wealth. Do that require this much fanfare!

 

These are not sustainable constructive investments made to increase India's productivity or  employment. These Opportunistic investments make as much as profit and be ready to run at anytime.. In April alone, 9,435 crore foreign investment flowed out of the Indian capital market and  1,729.4 crore net foreign investment flowed out in May to not risk the second wave of Covid-19. You can see the continuous run away  of foreign investment once the US Federal Reserve raises interest rates.          

 

Rising prices and health care costs have further eroded people's net income and consumption. The revenue and purchasing power of working people alone have fallen during this corona period. Corporations have increased their revenues through a number of strategies. Corporate net sales grew by 12.5 per cent in the fourth quarter of 2020-21, and the revenue of 213 corporations grew by 9.5 per cent, according to the data given by the Finance Ministry. The creamy layer is raking in profiteering, Ambani has grown to become Asia's first billionaire with a net worth of $ 76.5 billion. Adani is now the second richest man in Asia with a net worth of $ 66.5 billion.

 

Corporations with a profit of over Rs 5 crore are required to spend 2 per cent of their profits on corporate social responsibility schemes. Currently the central government has announced that corporate donations to the PMCare fund will be considered as spending for their corporate social responsibility. When there is a lack of transparency in knowing who is donating to the PM Care fund. Such an announcement would be in favor of tax avoidance by big corporations.

 

Housing savings in India fell to 22.1 per cent in the December quarter from 28.1 per cent of GDP in April-June last year. Economists warn that declining household savings and declining revenues will have an impact on domestic consumption. Consumption accounts for about 60 percent of GDP.

 

Labor laws in India have been amended to increase working hours and intensify labor exploitation. But the World Health Organization warns that working long hours can have serious health consequences, of the 194 countries surveyed, South Asian countries and the West Pacific region being the most affected, , it was found that 35% of those working more than 55 hours a week are prone to suffer from paralysis and 17% of those working for more than 55 hours a week are found to be prone to heart problems.

 

This year the dollar index has fallen below 90 twice, once in January and once in May. As a result, the rupee and other Asian currencies has appreciated against the dollar. The share of the US dollar in global foreign exchange reserves has fallen to a 25-year low of 59 percent. It marks the fall of the dollar and the rise of other currencies.

 

Inflation:

Whole price inflation rose to an eight-year high of 7.39 per cent, driven by hiked up petrol, diesel and metal prices. Consumer price inflation rose to 4.29 percent in April, while food inflation rose to 2.02 percent. Prices of vegetables fell by 14.18 per cent. Fruits became dearer by 9.81 per cent. Pulses became dearer by 7.51 per cent. Egg prices rose 10.55 percent. Oil and fat prices have increased 25.91 percent. Prices of fish and meat have increased by 16.68 per cent.

 

Industrial growth in March:

According to the Index of Industrial Production released by the Ministry of Statistics, the IIP has increased by 22.4 percent in March. Due to low base this does not indicate real growth, there was a sharp decline in the economy during last march because of the general lockdown implemented to curb the spread of Covid. In the primary sector, mining output increased by 6.1 percent. Production in the manufacturing sector fell 25.8 percent. Electricity generation increased by 22.5 percent.

 

In use based classification, Production of primary products increased by 7.7 per cent. Production of capital goods fell by 41.9 percent and non durable consumer goods decreased by 27.5 percent. Production of construction materials are increased by 31.2 per cent and intermediate materials increased by 21.2 per cent. Productions of durable goods are also increased by 54.9 percent.

 

National Income (Provisional Estimate) for the financial year 2020-21:

The National Statistical Office has released provisional estimates of national income for fiscal year 2020-21 and GDP estimates for the fourth quarter (January-March).

The GDP in 2020-21 is estimated at ₹ 135.13 trillion. The growth rate, which increased to 4.0 per cent in 2019-20, has contracted by 7.3 per cent in 2020-21. Per capita income has shrunk by 8.2 percent.

GDP grew by 1.6 per cent to 38.96 trillion in the fourth quarter of the 2020-21 financial year.

 

The GVA has fallen by 6.2 per cent in the 2020-21 financial year. Agriculture sector grew by 3.6 per cent, manufacturing sector grew by 7.2 per cent and electricity, water supply and other services increased by 1.9 per cent. Mining sector grew by 8.5 per cent, trade, transport, hotels and telecommunications grew by 18.2 per cent and public administration and defense grew by 4.6 per cent.

 

The GVA has increased by 3.7 per cent in the fourth quarter of financial year 2020-21. Agriculture has shown a growth of 3.1 percent and mining sector grew by 5.7 percent. The manufacturing sector has recorded a growth of 6.9 per cent, while electricity, water supply and other services grew by 9.1 per cent. Growth in trade, transport, hotel and telecommunications fell by 2.3 percent. Public administration and the defense sector grew by 2.3 percent.

 

Industrial growth in April:

The combined output index of eight key industries released by India's Department of Industry and internal trade promotion has fallen by 15.1 per cent in April. Compared to last April, Coal production has fallen by 46 per cent. Crude oil production has reduced 4.6 percent, petroleum refining products contracted by 1.1 percent and fertilizer production declined by 5.3 percent. Natural gas production has fallen by 12.3 per cent, steel production has declined by 20.7 per cent, cement production has declined by 15.2 per cent and electricity generation has reduced by 3.3 per cent.

 

India has announced a $ 1.4 billion trade deal with the UK which will boost UK’s growth by reducing import tariffs on UK goods, and also by creating more jobs in the UK. But in what way India is going to benefit from this, there is no clear answer!

 

Crystalina Georgieva, head of the International Monetary Fund, has expressed concern that poorer economies are at risk of rising interest rates when their economies are not in growth, and the compulsion to repay debt (especially in dollar terms) will choke them and affect the recovery of not only those countries but the global economy as a whole. But no plan has been put forward to write off the debt of poor countries. The move to create special drawing rights at least to reduce their debt burden has also been put on hold.

 

In April 2020, the G20 introduced a plan called DSSI to temporarily suspend foreign government debt repayments in 72 countries. Currently, the scheme has been extended to December 2021. But, the scheme will cover only 1.66 per cent of the debt to be paid by developing countries by 2020; a drop in the ocean!.

 

The economic stagnation and declining income of developing and poorer countries is more severe compared to developed countries. Developed countries are rapidly recovering from vaccines and with their economic dominance. Developing and poorer countries have fallen further back. It is only unemployment, hunger and poverty are growing there. The corona epidemic has further exacerbated the inequalities and gaps of capitalism. The capitalistic corona has acted in favor of the developed countries and has fostered stagnation and poverty in the developing and poor countries.

 

Worldwide, more than 17 million people have been infected with the Covid-19 pandemic so far. More than 35 lakh of them have died. Israel, the United States, Britain and Europe, which have largely received corona vaccines, are returning to normal life. In October last year, India and Africa put forward a proposal in the World Trade organization seeking a temporary waiver from patent/intellectual property rights on Covid vaccines, a temporary exemption from the TRIPS agreement. Developed countries, which have received large quantities of Govt vaccines, have continued to protest against this proposal. Now United States has given its support for this. However countries like Britain, the European Union, Switzerland and Japan are continuing their opposition. The final decision of which is expected by December.

 

The rulers are reluctant to end the world war against Covid-19 soon easily. They are getting more space, time, for the Opportunistic pharmaceutical companies to rake in profiteering .That's why they have been so slowly and relaxed delaying this proposal for more than ten rounds. During an humanitarian crisis, When crores of people are dying,  in such an unprecedented dire situation is it acceptable to continue negotiating for more than a year just to get a one-month patent exemption. The World Trade organization is only concerned about protecting the profits of corporations and only serves as a richmen’s club and a chat room of the wealthy.  International organizations with their so called concern are strangling the poor. It is better they didn’t shed crocodile tears like our PM.