ECONOMIC IMPACT OF CORONA

As the devastating impact of Corona on the economy is quite perceptible, we have to look for the remedial measures and implement it before it is too late. Although the remedial measures are quite visible but government seems to be hesitating in implementing those remedial measure. The basic reason behind this hesitation of the government is “Academic Dishonesty” about Modern Industrial Capitalist Economic System. Due to this “academic dishonesty” the academic world portrays Capitalism as a self-sustaining system which it certainly is not. It is due to this “academic dishonesty” any stimulus/rescue package to economy is seen as “undue favour” to big industrialists. However if this “academic dishonesty” is dropped and the truth about basic nature is accepted i.e. capitalism is not a self-sustaining system and it is artificially sustained system then any kind of stimulus/rescue package to industry will be seen as “natural course of the thing” not as undue favour to “big industrialists”. This articles captures the “oldest academic debate” about the basic nature of capitalism (which got underway in early 19th century itself) and explains the ongoing crisis from that point of view. This article also exposes the duplicity of modern day text-book economics.

- Prashant Singh

Although, the deep negative impact of COVID-19 on Indian economy is a foregone conclusion but even before this corona issue the Indian economy was already in trouble. Therefore, in order to find out the remedial measures we will have to first understand as to why the Indian economy was in trouble even in pre-corona period, because the “basic reason and solution” of pre-corona crisis and post corona crisis are almost the same; only the magnitude of problem has changed, it has gone worse manifold. Therefore, we will first understand as to why the Indian economy was in trouble in pre-corona times.

Economic Slowdown: -Pre-Corona

It was quite surprising that Indian economy was in the grip of slowdown despite government was doing everything that was “theoretically correct” for economy i.e. inflation was quite contained, there was no policy paralysis, decisions were being made at very fast pace, projects were being cleared almost at lightning speed (that too without any “consideration”) etc. In addition to this the level of corruption (particularly at top level) has declined substantially, fiscal deficit was quite contained, so on and so forth. In short, one can easily say that this was (it still is) by far the most investor/business friendly government of India as far as “theoretical economics” is concerned. So why, despite all these positive factors, India was in the grip of slowdown even before corona? What were the reasons behind this?

This biggest reason was that policymakers of this regime are “too text-bookish” but the text-book theories of economics are not sound; they are based on two fundamentally wrong assumptions.