Friday, November 08, 2019

Pollution of their minds.

During the Great Depression from 1929 to 1932 in the US, sales of new cars from Ford Motor Company fell by 86%, wrote Vivek Kaul. "For those who lost their jobs, it obviously made sense to postpone purchasing a car. Even those who were not impacted by the Great Depression postponed their car purchases (and purchases of other things as well) given that they had a huge fear of losing their jobs." This was the "feedback loop" that entrenched the Depression. India is not in a depression, or even a recession, but a similar feedback loop is operating. Domestic car sales, two-wheeler sales and housing sales are all down. Even, "The total number of passengers carried by the Indian Railways fell by 2.1% year-on-year during the period July to September 2019." The economic slowdown is because people have stopped spending. Increase in retail sales during the festival season in October has been tepid.  Is it purely psychological? No, said Prof Himanshu. "The current crisis is primarily a result of the missteps and misadventures of the National Democratic Alliance regime over the last five years." The windfall from the sharp fall in the price of oil was not used to alleviate the crisis in agriculture during two years of drought in 2014-15. Cutting financial support to farmers, demonetization, poor implementation of Goods and Services Tax, coercive tax administration and suppression of economic data resulted in this loss of confidence in the government. Burning of crop stubble by farmers in Punjab and Haryana is partly responsible for the severe air pollution in Delhi. Asking farmers to pay for labor to remove stubble manually is not fair to them because, "Farmers not being able to recover their costs, especially in cultivation of perishables, such as vegetables, is a regular story in India,' wrote R Kishore. The government is to import onions as prices have shot up because excessive rains have destroyed crops. Farmers have lost a portion of their crop and lowering prices through imports will destroy them financially. There is no escape because there are no jobs. Farmers normally boost their earnings by working in the construction sector but 460,000 flats are lying unsold. The government is to set up an Alternate Investment Fund (AIF) worth Rs 250 billion, with money from the State Bank of India (SBI) and Life Insurance Corporation of India (LIC), to pay builders to complete unfinished projects. Lower consumer spending means lower tax collections putting a strain on the budget. The government is trying to extract $13 billion in past fees, along with penalties and interest, from telecom companies. Voda Idea may go bankrupt. What is the idea of trying to create jobs in the construction sector while losing jobs in telecom is impossible to understand. Seems that they do not understand as well.

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