Let’s ready for 'New Normal'

Indian economy being aspirant of becoming USD 5 trillion in size, witness the heat from rating agencies, which keep on downgrading the rating in anticipation of Low or Negative GDP growth.

Signs of economic distress was already there, COVID 19 and unprecedented outcome of same further gave a jolt to the GDP growth rate (FY19-20 contains the only fraction of lurch, the major impact can be seen in numbers of FY20-21, when so ever released)

Let’s look back to numbers, to develop some understanding on GDP growth rate movement (for last 7 fiscals);

FY 13-14 - 6.4%, FY 14-15 - 7.4%, FY15-16 - 8%, FY16-17 - 8.2%, FY17-18 - 7.2%, FY18-19 - 6.8%, FY19-20 - 4.2%

Mind it, 4.2% is the lowest for the previous 11 years. The growth story of GDP was derailed since the second half of FY16-17, two major reasons for the declining growth rate can be

• The slowdown in domestic consumption and,
• Too many reforms in the short span (cause no consolidation after each reform) and pitfalls in implementation

Resultantly, India's fiscal deficit roaring high to 4.6% of GDP in the fiscal year 19-20, while the government had set a target 3.8% of GDP, whereas NK Singh committee (Constituted under Budget Management and Fiscal Responsibility, Act of 2003 – Mr. NK Singh is Chairperson of 15th Finance Commission) recommend reducing the same to 3%. The full-year fiscal deficit stood at Rs 9.36 lakh crore, against a target of Rs 7.67 lakh crore. In FY18-19 fiscal deficit was 3.56%.

Pain may remain for some more time, especially ongoing fiscal; for instance, the growth rate of production Index of Eight Core Industries for April 2020 declined by 38.1% (provisional) compared to a decline of 9% (provisional) previous month of March 2020. In view of nationwide lockdown during April 2020 due to the COVID-19 pandemic, various industries experienced a substantial loss of production. This index is released by the Office of Economic Adviser, Department for Promotion of Industry and Internal Trade.

1. Coal (weight 10.33%) production declined by 15.5 percent,
2. Crude Oil (8.98%) production declined by 6.4 percent,
3. Natural Gas (6.88%) production declined by 19.9 percent,
4. Petroleum Refinery (28.04%) production declined by 24.2 percent,
5. Fertilizers (2.63%) production declined by 4.5 percent,
6. Steel (17.92%) production declined by 83.9 percent,
7. Cement (5.37%) production declined by 86 percent and
8. Electricity (19.85%) production declined by 22.8 percent

In order to come out of a prevalent hostile scenario, we (all the stakeholders - be it business, government, and society ) need to identify the balanced way (with Inclusive Innovational Initiatives) of protecting lives and also ensuring ‘new normal’ run of trade and commerce activities at the same time.

Innovation can be technological or can be a social mutual understanding. In order to illustrate the social mutual understanding, example of some major markets places in the nation's capital (Delhi) can be taken; where tenant and landlords mutually decided to reduce the rent to 25% (where it is less then INRs 30,000 pm) and 33% in other cases; considering the cash-crunch.

In the education sector, institutions start looking for technological innovation, in the form of online platforms for teaching and learning; in order to ensure uninterrupted learning. Now the challenge is to identify the evaluation mechanism of the students who are learning online and also to evaluate the effectiveness of pedagogy; to ensure outcome-based learning rather than just leaning.

State PSUs are also moving forward to protect their and public interest, and to illustrate their initiative; although just a day or two back, a decision is taken at the central government level to infuse capital to Power Dis-coms @ 9% credit facility; but we already know the pathetic condition of Power-coms; In Punjab, PSPCL launch an advance payment option with lucrative benefit (in form of 12% p.a. return on advance payment amount by the customer).

Hence we must be ready for new normal, open for changes rather resisting them; so that eventual loss of lives due to outcome of a pandemic should not be more than direct loss due to infection; because each life is important for us.

Thanks for reading

Today's is a world bicycle day, I request you all to designate one day in a week as bicycle day; when you will use a bicycle to commute (or any other vehicle, with no carbon emission) in order to improve environmental footprint. Universities and Commercial large organizations inside their campus and premises must start using bicycles and e-rikshaw.

And pray to almighty that damage should be least when Nisarga will hit financial capital.

Stay happy and healthy!!!