Home >News >India >PM to meet states, UTs over two days – five things to watch out for

NEW DELHI: Prime Minister Narendra Modi, in a meeting with chief ministers on Tuesday and Wednesday, is likely to discuss crucial issues relating to the ailing economy and measures to revive it, containing the spread of the virus and a roadmap for the country after 30 June when the lockdown ends.

The meeting will take place amid forecast that fiscal 2021 will be painful for the economy, businesses and India as a whole. Besides, the high-level meeting is likely to have agendas such as jobs crisis, rising covid-19 deaths and cases in a few states, possibility of financial support to states and the overall healthcare readiness.

Here are five things to watch out for:

Reviving Economy: Despite business activities gradually resuming, it is widely believed that the Indian economy will see one of the worst years in recent times. India’s chief economic adviser to the finance ministry, Krishnamurthy Subramanian, has already said the government had estimated the economy to grow at 1.5%-2% and a V-shaped recovery is expected in the second half of the current fiscal but “whether that recovery will happen in H2 or next year is not certain".

When Modi meets the chief ministers, the issue of economic recovery, how to boost demand in the market and what role the states can play will be a key agenda on the table. Besides, the impact of stimulus package on the ground, the resumption of normal train services, the issue of migrant labours and the possibility of their return to economic centres is likely to be discussed. The 70-day plus lockdown that started 25 March had brought the economy to a standstill. The Centre has since eased restrictions significantly but a surge in covid-19 cases, formal sector jobs crisis, and negative consumer sentiment may lead to a significant contraction in GDP in FY21. While rating agency Standard and Poor (S&P) has projected the economy to contract by 5% in FY21, the World Bank has projected a contraction of 3.2%.

Rising infections and high death numbers in June: The surge in coronavirus cases and high death numbers in June are expected to be on the table when Modi meets the states. Around 40% of the total covid-19 deaths have come in June alone. Besides, the infection numbers are going up rapidly, and in the last few days, the country is reporting 10,000 plus cases per day. The positive side, however, is the recovery rate is now more than 50% of the total infections. As India increases its testing capacity, the number of fresh cases will jump further. There have been reports of shortage of healthcare infrastructure and alleged overcharging by private healthcare providers. The central government may amplify the role of private sector in covid-19 control with the states and how to engage with private entities to enhance hospital bed availability, critical care facilities, and ensure fair and transparent charges for services.

The top four states: While covid-19 now has a pan India footprint, four key industrial states are witnessing the maximum number of infections. Maharashtra, Tamil Nadu, Delhi and Gujarat have so far reported 224,000 positive cases of the total 342,000 plus cases in the country. The visible gap in health infrastructure in Delhi, the far higher death and case rate in Maharashtra and rising cases in Tamil Nadu has posed fresh challenge not just for the states, but for economic activities and job creation. Modi had a meeting with his top officials on 13 June to take stock of the covid-19 situation in the country, and had tweeted that he has “reviewed the roadmap ahead and steps to contain the pandemic in the parts where most cases are coming from". The roadmap may be discussed in detail on Tuesday with 21 states and union territories (UTs), and with the rest 15 on Wednesday.

Jobs and MSMEs: The issue of job creation is most likely to figure in the high-level meeting. While casual and non-wage work including agricultural works have returned in the rural economy, decent formal sector employment is still absent at large across India. Besides, the massive job cuts in corporate sector and the growing pain of micro, small and medium enterprises (MSMEs) stands a good chance to be taken up during the meeting.

While the recent stimulus package announced by the Centre for various sectors to boost liquidity is expected to be on the table, the constant demand from the MSMEs that they need a better handholding, wage stimulus, and financial support beyond loans may be discussed in detail. MSME deploys around 110 million people and is a driver for jobs creation. Unless their revival happens faster, formal sector job creation will continue to lag. According to credit rating agency, Crisil, MSMEs are facing an existential crisis and their revenues are expected to fall by a fifth in this fiscal.

Financial support to states: Reeling under a shrinking economy, the states are likely to demand financial support from the central government. Delhi has already sought 5,000 crore and other states and UTs may follow during the meeting. As states are looking to ramp up testing, there is a likelihood of they demanding ample testing kits, and fund for fixing the health infrastructure. India is currently testing around 4,200 people per one million population, which is way less than many countries. In the UK, the testing ratio is over 101,170 per one million populations, and in Spain, the numbers are 103,232 tests per million people.

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