The government has delivered nothing in terms of systematic poverty elevation but they have delivered everything for super normal profits. The government has been unable to plough back revenue from the super normal profits to be able to invest in income support, said Rathin Roy, Managing Director, Overseas Development Institute.
A raging second wave of covid-19 infections and a spate of state-specific lockdowns and restrictions across the country have dented India's recovery in the first three months of this fiscal. While there is an improvement in some high-frequency indicators, the data indicated the recovery is uneven.
India's core industries have registered a growth of 16 percent in May against the same period last year. However, India must take into account the fact that India was in the midst of a nationwide lockdown in May last year -- so even this 16 percent improvement is predicated on a low base, compared to April this year. India's core sectors have registered a contraction of nearly 4 percent in May and that has economists worried.
India's manufacturing activity has shown a contraction for the first time in eleven months. The purchasing managers' index dropped below a reading of 50 in June. Remember, any reading above 50 indicates growth.
If one were to look at the auto sales numbers, which are generally considered another key indicator of the economy's health. India's largest two-wheeler manufacturer Heromoto has done well in June compared to a year ago period, but its sales are nowhere close to pre-Covid levels.
Similarly, India's largest carmaker Maruti Suzuki sold 3.5 lakh units in the first quarter of this fiscal. That's nearly five times the number it managed in the first three months of the last fiscal. But again, these numbers are lower than pre pandemic levels.
However, there is a piece of positive news on the tax front, with strong corporate tax and income tax mop-up in the first quarter. Revenue Secretary Tarun Bajaj told CNBC-TV18 that the government is committed to meeting its 1.75 lakh crore divestment target this year. There is a ray of hope on the GST front too, with collections above 1 lakh crore for 8 months.
Given all this, where is the economy poised to make a comeback? Also, does the government have enough fiscal space to undertake further relief measures and provide stimulus? To discuss this and more, CNBC-TV18 spoke with Rathin Roy, Managing Director, Overseas Development Institute.
According to Roy, the government has delivered nothing to the common people except elevation of starvation and extreme suffering. It has delivered nothing in terms of second wave of COVID.
"The government has delivered nothing in terms of systematic poverty elevation but they have delivered everything for super normal profits," he said, adding that the government has been unable to plough back revenue from the super normal profits to be able to invest in income support," said Roy.
Roy said the government could have done better if they had better relationship with states. He added that instead it got into competition with states for fiscal resources and that has caused a bad situation.
For the entire discussion, watch video.
(Edited by : Bivekananda Biswas)