One of the biggest setbacks in last 100 years the Indian subcontinent has faced is Corona virus pandemic. It has exposed how inefficiently the country was performing in terms of health care and migrant workers management. The already severe unemployment crisis has become the worse in decades. Migrant workers being forced to walk to the distances unimaginable during the peace time. The present Indian government, in spite of putting its best effort to manage the crisis has failed to perform as expected. The announcements of schemes like Atma nirbhar bharat in mid of a crisis is like hiding the truth behind a new veil. Corona virus has already spread in major part of the country now and looks like its vaccine is going to take some time at least 1 year if it comes at all, before it reaches to everyone. Till that time this mishandling and mismanagement is leading to a biggest setback which will take multiple years to recover. People and the country may be pushed to abject poverty and huge debt levels in last few decades. From being ambitious of becoming biggest economy in the world to the new ambition of survival post Covid 19, the vision may shift.
Some things have to improve and need to improve if our country wants to get to the next level.
1) Political maturity, Still Illiterates are politicians
2) Lack of Entrepreneurial Mindset
3) Lack of necessary infrastructure (Health care, transport, Internet, sanitation etc)
4) Lack of opportunities for talented graduates specially in their hometown
5) Legal system which has one of the slowest resolution process in the world
6) Social security programs
Improvement in these areas again requires huge investments. Country's GDP is already troubled with this pandemic and the real question is from where the investments will come from. India's debt to GDP ratio was 69.04% in 2019. The debt-to-GDP ratio compares a country's sovereign debt to its total economic output for the year. If we look at Debt to GDP ratio of some of the developed countries US has Debt to GDP of around 115%, UK 313%, France 213%, Netherlands 513%, Japan is around 250%. While if we compare Debt to GDP of poor countries its always on the lower side.
Thus one way at present with the government to revive economy is by increasing the purchasing power of its citizen and that has to be done by increasing the investments although it has to come from debts. The initiatives taken in this regard need to be more concrete rather than just emerging on the midst of a pandemic. Countries like Japan which have been hardly hit by earthquakes have revived their economies multiple times from huge recession by doing this. Effect of investments will have a multiplier effect in increasing the total household income of families in India and eventually bring India back on its wheels.
Some things have to improve and need to improve if our country wants to get to the next level.
1) Political maturity, Still Illiterates are politicians
2) Lack of Entrepreneurial Mindset
3) Lack of necessary infrastructure (Health care, transport, Internet, sanitation etc)
4) Lack of opportunities for talented graduates specially in their hometown
5) Legal system which has one of the slowest resolution process in the world
6) Social security programs
Improvement in these areas again requires huge investments. Country's GDP is already troubled with this pandemic and the real question is from where the investments will come from. India's debt to GDP ratio was 69.04% in 2019. The debt-to-GDP ratio compares a country's sovereign debt to its total economic output for the year. If we look at Debt to GDP ratio of some of the developed countries US has Debt to GDP of around 115%, UK 313%, France 213%, Netherlands 513%, Japan is around 250%. While if we compare Debt to GDP of poor countries its always on the lower side.
Thus one way at present with the government to revive economy is by increasing the purchasing power of its citizen and that has to be done by increasing the investments although it has to come from debts. The initiatives taken in this regard need to be more concrete rather than just emerging on the midst of a pandemic. Countries like Japan which have been hardly hit by earthquakes have revived their economies multiple times from huge recession by doing this. Effect of investments will have a multiplier effect in increasing the total household income of families in India and eventually bring India back on its wheels.
Nice read...
ReplyDeleteWill the high debt levels won't affect the sovereign rating of poor country like India?
Yes Good point. In the short run soverign rating will further go down. Credit rating of a country comprises of multitudes of factors (social, economic and political), Some may be better managed than others and bring it back to the sustainable levels. Since we are talking about raising money within country by issuing bonds, FIIs may not subscribe much on basis of soverign rating but that should not deter DII and common citizens from having faith in their country.
DeleteNice brother
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