Siyavar Ramchandra Ki Jai.
How India can reduce scratching impact from Lower Investment, Employment and Productivity?
The economic crisis has resulted in large scale job losses and a marked decline in the rate of new job creation in most parts of the India, giving rise to a substantial reduction in employment rates and a sharp increase in unemployment. It’s scary. The pandemic, coupled with trade disruptions and Russia’s war on Ukraine, and now the Bank Run caused lasting harm to Asia-Pacific economies, damaging growth, productivity, and investment. And, slowly and emotionally but realistically – it has already hit Indian Economy. Specifically, it will leave very deep and long-lasting scars which, without swift and bold policy action, could restrict Indian growth well into the future but very nearly. My observation on recent capital climate and reactions of Government shows Asia is likely to experience the biggest output loss from the pandemic and Bank Run of all five major world regions. We need to worry us, not about West, as west PPP is still very high. They can survive three shocks in a year, but Asian Economy can’t take even two balance sheet to get fully destroyed. This scary.
You can measure the consequence of these medium-term output losses by comparing 2022 forecasts of growth to projections for the same period made in January 2020. You know how India made presence in declining mode. For Asia, we expect an average gross domestic product loss of 9.1 percent through next year, with greater losses for the region’s emerging and developing economies. The political class in India may have different opinion, may frame different things by data juggling, but the fact is – our boys and girls are losing job every month and no guarantee to have new employment very recently. And it will make impact on Bank. Car Industry and parasites who survive on rental income.
Leys go more deep into the situation. We are in Asia, let us examine Asia, and you will understand the gravity of crisis mounting on us. To rationalise Asia’s greater and more continued scarring economic crisis, we investigate three critical factors: investment, employment, and productivity growth.
Investment losses are an notable contributor to scarring in Asia. A quadrant of the region’s expected output losses result from reduced spending on investment projects. The effects are especially large in emerging economies, where we expect investment as a share of GDP to be 3 percentage points lower next year versus pre-pandemic projections, may sink more due to Bank Run in Europe and America. One concern for India a likely cause for this steep drop is by India in Asia’s high corporate debt. Businesses that borrow more are less likely to be able to expand or further invest, as this would add servicing costs to existing obligations. That would reduce overall capital spending, in turn reducing growth. This dynamic is important in the context of historically high corporate debt in Asia, which increased further during the pandemic, and is especially elevated in emerging economies compared to other regions, further in next 180 days it is going to make worst impact, if not cured holistically at US and EU. Greater borrowing alone accounts for at least 28 percent of the average drop in investment after recessions. Of these, smaller and less profitable firms with high debt tend to see the biggest investment declines. This reflects their difficulty securing external funding without collateral, as well as the limited internal funds these firms need to finance investment.
For employment, our calculations suggest that lower job growth would contribute about 2 percentage points to output losses in Asia and very worst in India, and this election year only political parties can give job, that too huge in number, and because election of this year may become more capital intensive upto USD $ 23 Billion by all parties, good for youths for a years time to spend in rally time.. Otherwise employment could remain depressed for many years because of both the long-term loss of labor force quality and the reduced quantity of workers.
Now, to relieve scarring, economic reforms are essential to reduce corporate debt, boost labor outcomes, and raise output:-First, an orderly reduction of corporate sector debt should be prioritized, to improve resistance to future shocks. Reforms to the insolvency framework can also allow a reallocation of resources to more productive firms.
Conclusions: Indian Economy could suffer significant long-term output losses in coming days, given diminished investment, productivity growth, and labor force participation. The people concerned need to be followed over a large number of years, a long term plan, which means that there is really a need for longitudinal or panel data to make this possible. Economic reforms are essential to mitigate this scarring. Asia should prioritize addressing the investment scarring from high corporate debt by promoting deleveraging, and mitigating education losses. A bold move is needed. Finally, Prime Minister needs to understand, rise of 1=2=3 significant corporate is not the rise of economy but cutting down others (Infinity – so called 1 and 2 pr 3). Thank You.