BackCovid-19 recovery: Data is telling an interesting tale
The animal spirits are coming back to lift India out of the dejection of hopelessness
PremiumThe Deepavali crackers whooshing, spinning and bursting seemed to belie the overall gloom of an erosion of economic well-being in India—not only is there money with people, there is money to celebrate. Data from the Reserve Bank of India (RBI) on household savings is saying something similar—household savings more than doubled in the first quarter this year against last year (read RBI bulletin for November here.) Indicators on manufacturing and services are doing better, goods and services tax collections hit the psychologically important ₹1 trillion mark in October. Companies have tightened belts and data shows that while the top-line is down just over 9% for listed non-finance firms, profit after tax is up a huge 41% July to September (read here). The stock market is on a liquidity plus sentiment fuelled rush, shaking off the March’s fear-fuelled crash, and is now at a lifetime high, gaining almost 70% from the year’s low. The balance of payments is looking good. Exports are picking up. Business sentiment is perking. The bounceback looks real.
But listen to individual stories around you and you see distress—most troublingly captured by the suicide of a poor small-town aspirant, whose parents could not meet the cost of big-city education. Of daily wagers without work. Walk past any market and see the shuttered storefronts and ‘For rent’ signs scrawled on old cartons stuck on the glass front. Of drivers and household help without work. Of white-collar workers sitting at home jobless. Which reality is true? India has several stories that run at the same time and each slice of population is dealing with the economic hardship in the way it can.
The poorest have been looked after by both the Centre and states with free food or highly subsidized food supplies. The Union government has an outlay of almost ₹2 trillion as part of the PM Garib Kalyan Package (read more here). The push to getting credit to the small and medium enterprises is still work in progress, but is reaching at least a part of the population. A large section of the organized workforce has seen a marginal impact with lower salaries, and they have savings and assets to liquidate and use. Even the lower-middle and middle-middle classes have found a way to stay afloat, some dipped into their provident fund money that saw almost ₹40,000 crore being withdrawn till 31 August (read here). Some sold some gold, others borrowed from friends and family to get by (read the report here). In all these stories, it is the emerging aspirant who has been the worst hit. The first-generation big-city migrant, the daily wager, the driver, the cook, the security guard, the beauty parlour worker has been left jobless. With very little to fall back on, this swath of population has hurt the worst. There are stories of kids dropping out of colleges and institutes since the parents can no longer afford to pay the fees and living costs. But, says a senior banker, this is also a resilient class that has big survival skills. They are not sitting and stressing, but taking its skills horizontally—from being waiters to zipping around on bikes delivering food. From working in a call-centre in the day and working at a pizza shop at night.
India is seeing a massive creative destruction where the dead wood is getting removed from workplaces, real estate costs are getting rationalized as work from home becomes more the norm than the exception, and with the understanding that India simply does not have the public finances to support a UK or France-type handouts to citizens, it is every family, community and friends’ circle for themselves.
In this manthan of events, the largest noise and the highest risk is coming from and to those who have lost the survival instinct—the children of the Indian privileged who have been cotton-woolled into losing the fire in the belly that makes a difference when things get rough. Debating 71 kinds of gender while living off the money your parents made is another level of dysfunction that is under threat. Decode the woke anger across the world in this context—the pandemic is threating the continuation of their lives they are used to. India today has two narratives in the country. One, where we shake our heads over the economic disaster while sipping expensive beverages. The other is looking at survival, getting on with life and living it. I think the stock market is hearing the latter and ignoring the chattering class.
We still don’t know when and how the pandemic ends. Or whether this is just the first of the many disasters ahead. But what we do see is the animal spirits coming back to lift a country out of the dejection of hopelessness of a few months ago.
Monika Halan is consulting editor at Mint and writes on household finance, policy and regulation
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