As per the latest data released by NSSO, the GDP of India declined by 23 % during Q1 of FY 2019-20. Critics are saying that the negative growth is not only due to harsh lockdown but this declining trend can be noted from the past 2-3 years. COVID pandemic hit the economy more worsen. Massive job loss has been noted in all industries. If there is no job loss, there are high salary cuts.
The agriculture sector is the least hit sector as the ruby crop did well, all thanks to the good monsoon across the country. As a result of which rural demand is not affected by the pandemic. On the other side, urban demand is worst hit due to the massive job loss and migration of workers to the villages.
As per critics, the economy will take 2 to 3 years to get it recovered as the loss caused due to lockdown is permanent. As the consumption in urban areas is gone down, private sectors are not interested to invest and as a result, there is less employment.
It is interested to know that; urban demand is created by employees working in private sectors who are suffering from job loss and pay cuts. On the other side. Private sectors are not investing due to less demand and applying cost-cutting measures.
The government should come forward to break this weird circle of demand of supply to increase urban demand. Many countries are running wages guarantee scheme to ensure that the employee will get an equal salary as he was getting pre-covid era and ensuring no job loss. The government of India should also give financial help to private sector employees. Instead of focusing on the supply side, the government should make more emphasis on the demand side. In this way only. this cycle can be broken and demand can be normalised.
Also, the most important vertical of demand i.e. government spending to be a focus on. The government should increase spending on infrastructural activity to get the migrant workers back to urban areas.