I honestly cannot believe
we are now 6 months into this year. This pandemic filled nightmare year. How
could we have got this so wrong ? 2020 was going to be the fancy year, the fun
and happening year. The culmination of two decades into the millennium, the yeas
in which millennials turn adults. And ,
if you subscribed to the political propaganda, and had read the books of Abdul
Kalam, this was the year India was going to makes its mark (Remember the book, India 2020 ?)on the world.
Well India has left
and will leave its mark on the world. The world’s largest lockdown has turned
out to be hogwash, and India has accelerated itself into the top 5 of the world’s
COVID affected countries. Long predicted by the world’s non-Indian infectious disease
experts, this statement was ‘fake-news’ed by India’s politicians early on. Even
now, the Govt denies India has community spread, and is getting ready to
organize political rallies for the upcoming state elections.
And here is the bare
truth : we are yet to peak.
It does not inspire
confidence when scientific consensus is thrown out in favour of political propaganda.
To be fair, India is not the only country to do so, almost every country has fudged
their numbers, if rumour is to be believed, to look better than others. But while
some others have genuinely put in the hard work and effort to fight this
invisible enemy, ours is a case of being attacked on multiple fronts.
The plights of India’s
poor migrant labours was the first of these. This was followed by reported
intrusion at the border with China. And now , the country is hearing about the
border being redrawn with our northern ally Nepal. PM Modi and his cabinet has long denied the reported
slow down in our economy, but now the pandemic has brought it to stop. There is
now a half planned, and half-hearted attempt to restart manufacturing in this
troubled economy, and to ‘turn the virus into an opportunity’. It is balderdash
that the nation can do in a few months what it could not do in more than 70
years. But the biggest gobbledygook of all was the stimulus package announced
by the govt, which was mostly repackaging of previously announced plans, with
the govt delegating responsibility of the stimulus to the nation’s
already trouble banks. It did not help that a section of the media sided with the
govt’s lies to keepthe people in the
blind.
Day to day life has now
become increasingly dangerous in India. The govt no longer cares (if it ever
did) about its people, and is focussed on upcoming elections, and making the
people work for the govt, instead of the other way around.
Ask not, they say,
what the nation can do for the people, but what the people can further do for
the nation.
S&P Global
Ratings on Thursday said the Indian economy will shrink by 5 per cent in
the current fiscal as it joined a chorus of international agencies that are
forecasting a contraction in growth rate due to coronavirus lockdown
halting economic activity.
Stating that COVID-19 has not yet been contained in
India, the rating agency in a statement said the government stimulus package is
low relative to countries with similar economic impacts from the pandemic.
"The COVID-19 outbreak in India and two months
of lockdown -- longer in some areas -- have led to a sudden stop in the
economy. That means growth will contract sharply this fiscal year (April 2020
to March 2021)," it said. "Economic activity will face ongoing
disruption over the next year as the country transitions to
a post-COVID-19 world."
Forecasting a 5 per cent contraction in 2020-21
(versus 1.8 per cent growth forecast it
made in April), S&P said growth is expected to pick up to 8.5 per cent in
the following fiscal (up from the previous forecast of 7.5 per cent). The GDP
is projected to expand by 6.5 per cent in FY23 and 6.6 per cent FY24.
Earlier this week, Fitch Ratings and Crisil, too,
projected a 5 per cent contraction for the Indian economy.
While Fitch Ratings had stated that India has had a very stringent lockdown
policy that has lasted a lot longer than initially expected and incoming
economic activity data have been spectacularly weak, Crisil had said the
country's fourth recession since Independence, first since liberalisation, and
perhaps the worst to date, is here.
On Thursday, Fitch Solutions (which is separate
from Fitch Ratings) forecast real GDP to contract by 4.5 per cent in FY2020-21
saying "high unemployment will depress consumer spending, while widespread
economic uncertainties will curb investment in the private sector.
Moody's Investors Service on May 8, forecast a
'zero' growth rate for India in FY21.
In the past 69 years, India has seen a recession
only thrice – as per available data – in fiscal year 1958, 1966 and 1980. A
monsoon shock that hit agriculture, then a sizeable part of the economy, was
the reason on all three occasions.
This time around agriculture is not the reason but
a dent to industrial and economic activity caused by lockdown, which was first
imposed on March 25. The lockdown has been extended thrice till May 31 with
some easing of restrictions.
S&P Global Ratings expects varying degrees of
containment measures and economic resumption across India during this
transition.
"COVID-19 has not yet been contained in India.
New cases have been averaging more than 6,000 a day over the past week as
authorities begin easing stringent lockdown restrictions gradually to prevent
economic costs from blowing out further. We currently assume that the outbreak
peaks by the third quarter," it said.
India has grouped geographical zones into red,
orange, or green categories based on the number of cases. Areas currently
classified as red zones are also economically significant, and the authorities
could extend mobility restrictions.
"We believe economic activity in these places
will take longer to normalize. This will have knock-on impacts on countrywide
supply chains, which will slow the overall recovery," it said.
The rating agency said high-frequency data for
April showed major economic costs for India - purchasing managers index (PMI)
for the services sector was 5.4, on a scale where anything below 50 indicates a
contraction of business activity from the previous month for the sector.
Also, service sectors, which account for high
shares of employment, have been severely affected, thus leading to large-scale
job losses across the country. Workers have been geographically displaced as
migrant workers travelled back home before the lockdown, and this will take
time to unwind as lockdown measures are lifted.
"We expect that employment will remain
depressed over the transition period," it said.
S&P said India has limited room to maneuver on
policy support. The Reserve Bank of India has cut policy rates by 115 basis
points but banks have been unwilling to extend credit. Small and mid-size
enterprises continue to face restricted access to credit markets despite some
policy measures aimed at easing financing for the sector.
"The government's stimulus package, with a
headline amount of 10 per cent of GDP, has about 1.2 per cent of direct
stimulus measures, which is low relative to countries with similar economic
impacts from the pandemic. The remaining 8.8 per cent of the package includes
liquidity support measures and credit guarantees that will not directly support
growth," it said.
The rating agency said the big hit to growth will
mean a large, permanent economic loss and a deterioration in balance sheets throughout
the economy.
"The risks around the path of recovery will
depend on three key factors. First, the speed with which the COVID-19 outbreak
comes under control. Faster flattening of the curve -- in other words, reducing
the number of new cases -- will potentially allow faster normalization of
activity. Second, a labour market recovery will be key to getting the economy
running again. Finally, the ability of all sectors of the economy to restore
their balance sheets following the adverse shock will be important. The longer
the duration of the shock, the longer recovery," it added.
Acknowledging a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak, it said some
government authorities estimate the pandemic will peak around mid-year, and
that has been used as an assumption in assessing the economic and credit
implications.
When,
towards the end of the first decade of the present century, Narendra Modi began
speaking frequently about something he called the 'Gujarat Model', it was the
second time a state of the Indian Union had that grand, self-promoting, suffix
added to its name. The first was Kerala. The origins of the term 'Kerala Model'
go back to a study done in the 1970s by economists associated with the Centre
for Development Studies in Thiruvananthapuram. This showed that when it came to
indices of population (as in declining birth rates), education (as in
remarkably high literacy for women) and health (as in lower infant mortality and
higher life expectancy), this small state in a desperately poor country had
done as well - and sometimes better - than parts of Europe and North America.
Boosted to begin with by economists and demographers, Kerala
soon came in for praise from sociologists and political scientists. The former
argued that caste and class distinctions had radically diminished in Kerala
over the course of the 20th century; the latter showed that, when it came to
implementing the provisions of the 73rd and 74th Amendments to the
Constitution, Kerala was ahead of other states. More power had been devolved to
municipalities and panchayats than elsewhere in India.
Success, as John F. Kennedy famously remarked, has many fathers
(while failure is an orphan). When these achievements of the state of Kerala
became widely known, many groups rushed to claim their share of the credit. The
communists, who had been in power for long stretches, said it was their
economic radicalism that did it. Followers of Sri Narayana Guru (1855-1928)
said it was the egalitarianism promoted by that great social reformer which led
to much of what followed. Those still loyal to the royal houses of Travancore
and Cochin observed that when it came to education, and especially girls'
education, their Rulers were more progressive than Maharajas and Nawabs
elsewhere. The Christian community of Kerala also chipped in, noting that some
of the best schools, colleges, and hospitals were run by the Church. It was
left to that fine Australian historian of Kerala and India, Robin Jeffrey, to
critically analyse all these claims, and demonstrate in what order and what
magnitude they contributed. His book Politics,
Women and Wellbeing remains the definitive work on the
subject.
Such were the elements of the 'Kerala Model'. What did the
'Gujarat Model' that Narendra Modi began speaking of, c. 2007, comprise? Mr
Modi did not himself ever define it very precisely. But there is little doubt
that the coinage itself was inspired and provoked by what had preceded it. The
Gujarat Model would, Mr Modi was suggesting, be different from, and better
than, the Kerala Model. Among the noticeable weaknesses of the latter was that
it did not really encourage private enterprise. Marxist ideology and trade
union politics both inhibited this. On the other hand, the Vibrant Gujarat
Summits organized once every two years when Mr Modi was Chief Minister were
intended precisely to attract private investment.
This openness to private capital was, for Mr Modi's supporters,
undoubtedly the most attractive feature of what he was marketing as the
'Gujarat Model'. It was this that brought to him the support of big business,
and of small business as well, when he launched his campaign for Prime
Minister. Young professionals, disgusted by the cronyism and corruption of the
UPA regime, flocked to his support, seeing him as a modernizing Messiah who
would make India an economic powerhouse.
With the support of these groups, and many others, Narendra Modi
was elected Prime Minister in May 2014.
There were other aspects of the Gujarat Model that Narendra Modi
did not speak about, but which those who knew the state rather better than the
Titans of Indian industry were perfectly aware of. These included the
relegation of minorities (and particularly Muslims) to second-class status; the
centralization of power in the Chief Minister and the creation of a cult of
personality around him; attacks on the independence and autonomy of
universities; curbs on the freedom of the press; and, not least, a vengeful
attitude towards critics and political rivals.
These darker sides of the Gujarat Model were all played down in
Mr Modi's Prime Ministerial campaign. But in the six years since he has been in
power at the Centre, they have become starkly visible. The communalization of
politics and of popular discourse, the capturing of public institutions, the
intimidation of the press, the use of the police and investigating agencies to
harass opponents, and, perhaps above all, the deification of the Great Leader
by the party, the Cabinet, the Government, and the Godi Media -
these have characterized the Prime Ministerial tenure of Narendra Modi.
Meanwhile, the most widely advertised positive feature of the Gujarat Model
before 2014 has proved to be a dud. Far from being a free-market reformer,
Narendra Modi has demonstrated that he is an absolute statist in economic
matters. As an investment banker who once enthusiastically supported him
recently told me in disgust: "Narendra Modi is our most left-wing Prime
Minister ever - he is even more left-wing than Jawaharlal Nehru".
Which brings me back to the Kerala Model, which the Gujarat
Model sought to replace or supplant. Talked about a great deal in the 1980s and
1990s, in recent years, the term was not much heard in policy discourse any
more. It had fallen into disuse, presumably consigned to the dustbin of
history. The onset of COVID-19 has now thankfully rescued it, and indeed
brought it back to centre-stage. For in how it has confronted, tackled, and
tamed the COVID crisis, Kerala has once again showed itself to be a model for
India - and perhaps the world.
There has been some excellent reporting on how Kerala flattened the curve. It seems clear
that there is a deeper historical legacy behind the success of this state.
Because the people of Kerala are better educated, they have followed the
practices in their daily life least likely to allow community transmission.
Because they have such excellent health care, if people do test positive, they
can be treated promptly and adequately. Because caste and gender distinctions
are less extreme than elsewhere in India, access to health care and medical
information is less skewed. Because decentralization of power is embedded in
systems of governance, panchayat heads do not have to wait for a signal from a
Big Boss before deciding to act. There are two other features of Kerala's
political culture that have helped them in the present context; its top leaders
are generally more grounded and less imperious than elsewhere, and
bipartisanship comes more easily to the state's politicians.
The state of Kerala is by no means perfect. While there have
been no serious communal riots for many decades, in everyday life there is
still some amount of reserve in relations between Hindus, Christians and
Muslims. Casteism and patriarchy have been weakened, but by no means
eliminated. The intelligentsia still remain unreasonably suspicious of private
enterprise, which will hurt the state greatly in the post-COVID era, after
remittances from the Gulf have dried up.
For all their flaws, the state and people of Kerala have many
things to teach us, who live in the rest of India. We forgot about their
virtues in the past decade, but now these virtues are once more being
discussed, to both inspire and chastise us. The success of the state in the
past and in the present have rested on science, transparency, decentralization,
and social equality. These are, as it were, the four pillars of the Kerala
Model. On the other hand, the four pillars of the Gujarat Model are
superstition, secrecy, centralization, and communal bigotry. Give us the first
over the second, any day.
This will one of
those big years for me. Correction - biggest year. Life changing. Things are
never going to be the same again. I will be looking back to these times forever
from this point. Am I ready for it ?
Oh yes. Ready as I
will every be.
But the truth is, no
one is really ready for these things. You just go with it.
