Updated: Sep 26, 2020
Hey guys, welcome back. A few days back I talked about our falling GDP. I highly recommend that first, you read that post and then come back to this one.
In these times everyone is talking about the problems in our economy, I did that too. Now let's just go a step further and think about how can we revive it.
For those who don't understand what GDP is I will explain it in simple terms in a bit or if you want to understand it more deeply click here.
Imagine that you are a tea seller, and you sell tea at four places every day.
1. A Housing Society
2. A Private Company
3. A Government Office
4. A Coffee seller.
Let me explain the fourth one in a detail, both you and a coffee seller, sell beverages in a particular area. You both have a setting that if a person asking for coffee comes to your shop you will send him to his shop and vice versa.
Now in today's times, the problem is that due to the COVID lockdown, the company was shut, so for the past 5 months business from that company is not coming. The Housing Society has stopped the orders because of Hygiene reasons, people have stopped coming out of there houses so no business from the fourth source as well.
However, the government office was turned into a COVID test center so business from there has increased.
Now think that the tea stall is our countries economy and the total tea sold is the total of the cost of all the goods and services of our country. The four clients are the engines of the GDP growth of our country.
We already know that:
Now, let's understand what does -23.9% GDP growth means, in basic terms, it means that we have sold 23.9 % lesser goods and services as we did last year. For a more detailed look check this post.
We all know that all this is bad and we can blame 100 organizations, but let's go a step further and ask what can we do?
Our ex-RBI governor Mr. Raghram Rajan has suggested some solutions to save our tea stall, let's look at them.
In these difficult times, because of fewer customers if the tea stall shuts opening it again will be a very big issue, so here the government should help the tea seller because if the shop shuts the tea seller will not buy any more tea leaves and if that happens the tea leaf company may shut and the chain will go can and it will only hamper our economy. If the tea seller gets some money in advance, he will not close the tea shop and whenever the vaccine for COVID comes, he will be able to recover quickly helping our economy too.
This time can be spent building infrastructure! This will have two main benefits, Infrastructure sector is one of the most hit sectors in India, if we invest some money and time in building it, the job losses can be recovered and in long term, it will help us the general public as well as the businesses. If the infrastructure is better, the cost of transport of the raw materials to your tea stall will reduce helping you recover faster.
To do the first two, our government needs funds and how can our government raise funds to help our country, either government takes loans or increasing there revenue which is basically taxes. But a more rational approach could be that we increase our exports. We should take help from our private sector to save small businesses. In this period businesses that have done well like Reliance, Amazon and Walmart can be urged to help small businesses.
BECAUSE THEY CAN AFFORD IT.
And that's the message for all of you as well.
Come back to the original question, What can we do?
Maybe you can pay it forward, I mean you can give some advance to your domestic help or maybe give some money to the guard of your society. Probably their worries about food will reduce. Perhaps you can give micro-loans, they start from only ₹50. Feasible you can order something from small businesses online, and give them a chance to survive for another day or two.
Anything is better than nothing, Our GDP and the economy will only revive, when people will have some certainty, people get the power to buy a cup of tea back.
The situation is bad the outlook is even grimmer, but the first step to change a bad situation is to accept that it exists.
People and big organizations will distract us, the more they distract us the more focused we need to be.
If the problem is ours we are the only one to think of solutions.
Everyone Complains, we just have to go one step further.