Modi’s Report Card: China, Economy and Covid-19

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(It may be sheer coincidence that today happens to be our Prime Minister Narendra Modi’s 70th birthday and my scientist-friend-turned-columnist has brought out an excellent piece.  This report card is our humble ‘gift’ to the Prime Minister.  The author, as a scientist, has put everything in right perceptive to ensure none to find any partisan views in his analysis.  Yes, as a true and practicing scientist.   – EDITOR)

(Dr RK Chadha)

The opinions and perceptions on an issue vary depending on domain expertise and narrative builders from politics, arm chair TV anchors and intellectuals in the society.  Very often these are very different from ground realities, though there are a few exceptions.  This report card analyses the performance of Modi government in these difficult times and it is left to the readers to form their own opinions.

Modi government’s tough response against the Chinese incursions along LAC silenced the initial bickering in the Opposition.  Shedding the defensive approach and occupying the strategic heights along south of Pangsong Tso on 29-30 August, 2020 surprised Chinese army and made them run helter-skelter looking for safe hiding places.  The shock was so intense that in spite of several attempts to regain the lost ground they faced a resurgent Indian army and were beaten back severely making them lick their wounds and sulk helplessly.

This change in the outlook from defense to offence reflects the resolve of the leadership in putting India on top of the world map.  The recent visit of Prime Minister Narendra Modi to Ladakh boosted the morale of the Indian army and their belief in his leadership to stand with them and lead from the front.  His capacity to take tough decisions and no-nonsense approach has won him appreciation in the country as well as in the entire world.

The Defense Minister of India gave a stern warning to China that India is prepared to resolve the conflict in a peaceful manner.  But there should be no doubt that India will protect its sovereignty and territorial integrity at all cost, if provoked.  How the conflict unfolds is anybody’s guess but one thing is clear that this is a new and strong India and the world should learn to respect it.

In this testing time nation requires that every citizen stands united setting aside all our differences. All our parliamentarians should abide by the message of the Prime Minister in the Monsoon session and strengthen his hands against the aggressor China.

The bold and speedy approach of Narendra Modi in the second term of his government has made opposition nervous.  The positive actions taken in the last one year has made people very happy and sent his popularity soaring and beyond the reach of any other leader in the country.  Fearing a backlash the entire Opposition and their left liberal partners are in silent mode and are trying to divert the attention of people towards the shortcomings of Covid19 pandemic and economic slowdown.

The statement of the former Congress President Rahul Gandhi shows his immaturity and lack of understanding of the situation on both these issues.  He attacked the government on contraction of GDP in Q1 of 2020 to -23.9% which coincided with the total lockdown period during March-June.

Donning the role of an astrologer, Mr. Gandhi shared his March video in which he said that an economic tsunami is coming and India should prepare itself to fight both corona virus and economy devastation.  What a prediction by our genius expert economist Rahul Gandhi in these times of pandemic as if the entire nation was ignorant of the situation in the country.  Thank you, Mr. Gandhi for this enlightenment.

Let us analyze the actions of Modi government on Covid19 pandemic and guess what else others could have done better.  Although corona virus first appeared in China in late 2019 it was hidden from the world, initially.  On January 7, 2020 a novel corona virus (nCoV) was identified and was temporarily named as 2019-nCov.

It was subsequently named the Covid19 and World Health Organisation (WHO) declared this outbreak a pandemic on March 11, 2020, a royal 2 months, later.  India was amongst the first few countries in the world to clamp a total lockdown after a fortnight of the declaration and continued till June when partial openings were announced for essential establishments.

But all domestic and international transport, schools and restaurants remain closed to contain the spread of corona virus.  The world has acknowledged that the Indian lockdown was one of the most stringent in comparison to other countries.

After the announcement of the contraction of GDP in April-June 2020 quarter all hell broke loose.  The critics of the government had a field day and all sorts of statements were made predicting doomsday scenarios of the Indian economy in the coming years.  While it is true that the Indian GDP in Q1 declined sharply in comparison to other countries in the world, it was mainly due to the stringent lockdown in the country. The choice for Modi government in March was to choose between people’s life and economy and they chose the former.

There is a debate on the method of GDP calculation when the base year was changed to FY2012 and conflicting numbers emerged under new and back series. Without going into the controversy of exact numbers we analyze here the general trends of the economy.  When BJP took over from Congress in 2014 the annual growth of GDP was on the decline since its peak in 2006-07 under UPA-II government under Prime Minister Dr Manmohan Singh. The Modi government started well with several new changes and initiatives, which boosted the GDP growth in 2015 and 2016.  A well meaning initiative of Narendra Modi to demonetize the currency in November 2016 failed to achieve the objectives, but the intention behind the move was well appreciated by the people.  In the hindsight, it can be said that this move was a mistake which brought the growth down.

The demonetization affected the MSMEs most and led to the closed down of several small and medium scale enterprises and increased unemployment.  The GDP growth also showed a decline in the subsequent years. The introduction of GST, a very progressive economic reform, but too soon after demonetization, compounded the problem and further affected the economy.  The government realized its mistake and began implementing corrective measures to bring back the economy on rails after these twin reforms.

The Covid19 pandemic in 2020 brought the world economy crashing and India was also sucked into the crisis before it came out of its economic slowdown.  The economic contraction was sharp for Q1 2020 for India going to -23.9% but other developed countries like America, European countries and Japan also showed a decline between -22% to -9%.    But if one sees Year-on-Year performance then Indian slowdown came to -29.3%, America -31.7%, Japan -27.8% and South Africa to a whopping -51%.  The question is of perception as to how data can be presented to suit the purpose.

One thing which became absolutely clear is that wherever the lockdown was total and stringent the economy contraction was severe.  This is simple to understand.  During lockdown when all establishments are closed people don’t spend money and by default the government loses taxes and the earning comes down.  When there is no business activity the entire supply chain is disturbed.

Since India has a large unorganized sector the daily wage earners and other workers have to be fed and for that government needs money.  The choice comes down to allowing laborers and poor people either to die of hunger or feed them.  The government decided to give free ration to 80 crore poor people till November 2020 under PM Gareeb Kalyan AnnYojana at a cost of approximately Rs.90,000/- crores.

Under this scheme several other benefits like providing cover for safai karamcharis, ward boys, nurses, paramedics, technicians, doctors and specialists and other health workers were covered.  First installment of Rs.2000/- to farmers due in 2020-21 covering 8.7 crore farmers was released in April.  An ex-gratia of Rs.500/month to more than 20 crores women under Pradhan Mantri Jan Dhan Yogna was given.

Free gas cylinders to more than 8 crores poor families were provided.  MNREGA wages were increased, 3 crores aged widows were given Rs.1000/month for three months and wage earners below Rs.15,000/month in business having less than 100 workers were paid 24% of their monthly wages directly into their accounts.  The list is long and the total expenditure on this Yojna was a whopping Rs.1.70 lakh crores.

The Atmanirbhar Bharat Package with an allocation to the tune of Rs.21 lakh crores, allowed a lot of money in people’s hands under several schemes.  Small loans to MSMEs are increased, agriculture is given a boost, and small business men are supported under Mudra scheme so that people have money in hand to trigger the economic activity.

During this period the government spent more money than what it earned.  Some countries in Europe like Spain, Italy and France where the lockdown was not as stringent as India the economy contraction was less severe.  So, more stringent lock-down led to more contraction in GDP.   This was a harsh decision to make and Prime Minister Modi declared that no person should die because of hunger as economy can always bounce back over next few years.

The government turned this human tragedy into opportunity and boosted the Medicare in the country.  We all know that healthcare is pathetic in our country.  Several dedicated Covid19 hospitals came up along with health centers, testing facilities, extra beds were added and more beds in ICUs sprang.  The manufacturing of medical equipment got a boost like PP kits, sanitizers, ventilators, oxygen cylinders, N95 masks and several other accessories.  This provided a little relief in economic activity as India even exported this equipment to other countries during July-August, 2020.

We are already at the end of Q2 in September 2020 and again the critics have become active to paint a scary scenario of further slowdown in GDP.  Though it is difficult to hazard any guess, a look at certain parameters provides some insights.  The Q2 corresponds to Unlock phase of the pandemic lockdown in India since June when partial opening of certain establishments was allowed in stages.

This has initiated some economic activity since mid-June.  The GST collection in August 2020 was Rs.86,449 crores which is 86% of the collection in August 2019 indicating a steady recovery.  The e-bills transactions for August 2020 have been to the tune of Rs.13.8 lakhs crores which is 97.2% of the previous year.  In service sector, the Service Business Activity Index increased from 34.2% in July to 41.8% in August this year.

The electricity consumption is slowly creeping back to 97% in August 2020 since February this year.  The Railways collection is limping back slowly.  The steel and cement production is slightly lagging behind with production of 74.02 lakhs tones and 242.47 lakhs tones, respectively.  These indicators give some hope of better performance in Q2 of 2020.

The people in India criticize just for the sake of criticism without appreciating the efforts of the government.  In a fair analysis good work should be appreciated and bad work criticized so that fatigue in the system is avoided.  One example of this is, everybody now feels that government should have declared lockdown in February itself instead of March.  The decisions at a national level are taken based on data as faulty decisions can adversely affect the country.

In February there were only 3 cases reported in India and nobody knew the seriousness of the virus.  The WHO declared the Covid19 as pandemic only on March 11, 2020 when India has about 60 active cases.  At that time the government introduced airport screening and certain restrictions and advises like social distancing.

The total lockdown was implemented on March 24 when the active cases neared 500.  At -23.9% contraction of GDP people are so critical; imagine how much they would have abused the government if lockdown was clamped in February.

The rate at which the numbers of Covid19 cases are increasing in India is very alarming.  Crazy numbers are being predicted for India crossing 200-400 million by March 2021.  Till September 16, 2020 over 5 million confirmed cases are reported, out of which nearly 4 million have recovered.  More than 80,000 lives have been lost to Covid19.  It is really very difficult situation and people do not know whom to believe.  The confusing reports of the development of a vaccine for corona virus are adding to the confusion.

But there are a few silver linings in this gloomy atmosphere.  When compared to other countries in the world India has done fairly well keeping in view the population of the country.  In number of deaths India has the least deaths per million.  The fatality rate is 1.78% in comparison to 3.04% in America, 12.35% in UK, 10.09% in France, 1.89% in Japan and 13.18% in Italy.

The recovery rate in India is 77.3%.  India has crossed 5 crores testing by mid-September, 2020 and testing has increased to10 lakhs/day.  This is one of the reasons of high numbers of cases being reported.

The Opposition parties should stop blaming the government for failing to control spreading of corona virus.  Controlling the pandemic is the responsibility of both the government and the people of our country.  India is a very flaunting society and we believe in breaking rules.  We only fight for our rights and ignore our responsibilities.  We take pride in jumping traffic signals and ride two wheelers without helmets or four wheelers without seat belts which are essential meant for our safety and not to just escape fines.   Even during the total lockdown people were freely roaming without masks and crowding the grocery and other shops without maintaining social distancing.

Added to this, is the utter disregard to discipline during religious festivals, ceremonies and even birthday celebrations of certain VIP politicians and high ranking officials.  People belonging to minority communities openly defy court orders to take out processions and mass prayers during the pandemic and the government remains silent.

Preaching people that prayers and God will cure corona virus is often used by the clergy and political leaders to mislead innocent people.  But when people are infected with the virus they realize that even their God is helpless and then they run to the hospitals and doctors and take allopathic medicines mostly developed by atheists.  This is the level of education and ignorance in our country.  There is a strong need to develop a scientific temper in the society to live a peaceful life.

With all the imperfections and a heterogeneous Indian society, the Modi government has fared reasonably well with honesty and sincerity to control the impact of corona virus with limited resources at their disposal.  When we look at the most advanced and rich country like America which announced a special package of US$3 trillion, equivalent to the size of Indian economy, we realize that too suffered equally even with such enormous funds available to them.

Let all the political parties come together even at this stage and stop blaming Modi government for everything.  In the beginning they have targeted him personally, referring to Gujarat model for Covid19 cases.  Later, they are conveniently silent when cases in Mumbai and Bengal overtook.

Let us all realize that everything is not rosy in the country and any negative criticism may lead to a panicky situation which can be exploited by foreign powers through their agents in India.  A rethink is also required at the highest level of governance to combine both the hard work and Harvard to bring out the country from the depth of economic regress.

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