INDIAN ECONOMIC COLLAPSE IS A MYTH
| Ishaan Arora - India's Youngest Author - 18 Sep 2019

 

By ISHAAN ARORA
We have all heard talks of the Indian economy being rendered a lost cause. Many believe that the most apt way to project it geometrically would be as a downward spiral… but how true is this? CAN the sum produced by a billion plus people be subject to a judgement THIS black and white?  Are Indian finances really going to be progressively fragmented, or is the entire idea of a breakdown an elaborate fallacy?


First of all, let’s make a clear distinction between the words ‘collapse’ and slowdown. I never said that the economic slowdown was a myth. It is a reality, as crystal-clear as one can be. However, the word ‘slowdown’ here refers to an economy that- literally- slows down. It experiences a slump- mostly a seasonal one- and bounces back again. The word collapse on the other hand points to something vastly more far-reaching, and in case those condemning our fiscal framework to damnation haven’t noticed yet, it also carries a tone of crippling finality. Yes, we have been caught in the midst of a slowdown- but to spray-paint it with layers of ominous speculation is categorically wrong, and comes with a few caveats. 


To the Indian politicians who believe in subliminal political and economic separatism, a fact-check. The economic depression of 2019 is not endemic to India. It is a worldwide phenomenon. Be it the American domestic strikes of 2018, or economic sanctions on Russia following its invasion of Crimea- you can’t speak in terms of India alone when broadly referring to this. 

When talking about India in this respect, it is of utmost importance that one looks at the localized implications of this global scenario.
So, that’s why the Indian automobile sector is failing in Fiscal Year 2020, with an 18.71% decline in sales of automotive vehicles since FY2019. Large-scale investment has been pulled off from the Indian ecopolitical landscape. Whose fault is this gargantuan fiscal fiasco, as some like to put it? Can all of this really be pigeon-holed as the singular consequence of the 2016 Demonetization and the GST bill? No, not at all. They have been instrumental in preventing the Indian economy from plummeting towards an eternal downturn, and are the exact reasons that I choose to term this scenario a ‘slowdown’ rather than a ‘collapse’. Let me explain.

The Indian economy was scrupulously washed clean in the days of Manmohan Singh’s government, with the then-Union Finance Minister P Chidambaram acting as the primary perpetrator of numerous scams, whose magnitude sent shockwaves across India. 

De La Rue- a banknote-paper manufacturing conglomerate- had been in charge of printing the Indian Rupee for the RBI, a role sanctioned by the UPA government. In 2010, De La Rue announced that the security of its banknotes was being compromised by a few of its employees- thus threatening the Indian economic field to be overrun with counterfeit, untaxed and untraceable currency. This created monumental precedence, thus setting in motion a countdown of the Rupee’s hyperinflation and inevitable collapse. 

So, when faced with an imminent National crisis, what did the Congress do to save the Rupee- something it has blamed the BJP for ‘mismanaging’? Instead of ordering De La Rue to cease operations, the UPA government continued with their contract as if nothing had changed, condemning the Rupee to an apocalyptic skyfall. The CBI later proved that this has been the sole reason behind the creation of a flux of counterfeit currency, which was then transferred illegally to Pakistan. From there, the money was used for years to finance everything from Al-Qaeda operations, militancy in Iraq; and insurgency, mass brainwashing, and stone-pelting in Kashmir. 

After the BJP came to power, De La Rue was permanently decommissioned in 2015, following which Prime Minister Narendra Modi reorganized the Indian Rupee by demonetizing all notes of Rs. 500 and 1000 in 2016. This was the singular reason for the rapid downfall in stone pelting operations in Kashmir since the summer of 2015, and being the bold move that it was, it cleansed the Indian economy of an Earth-shattering monetary surplus. Contrary to the Congress’ allegations, the Indian economy bounced back to a 7% growth rate in just months, effectively overtaking China to become the World’s Fastest-Growing Major Economy. For comparison, the growth rate of the USA had been a measly 2.3% during the same period.

This weekend, Union Finance Minister Nirmala Sitharaman announced a special window of Rs. 10,000 crore to fund abandoned urban housing projects, and a total of Rs. 70,000 crore for the housing as well as the export sector. This move will ensure a smooth revival of the sinking housing sector, given the fact that a majority of its investments were unprofitable, untaxed and thus unreliable- prior to the 2016 Demonetization.

With the counterfeit catastrophe finally over, the GST Bill passed by the Modi government boosted the Indian economy even further by unifying our taxation policy across all states, nullifying all overhead charges permanently. This, coupled with a plethora of trade deals signed with more than 50 nations, brought in ‘Ease of doing business’ to the Indian economy; and the setting up of new tax-free Special Economic Zones all across India under the programme ‘Make in India’ is actively converting it into a manufacturing hub of the future. Samsung having opened its largest-ever cell manufacturing plant in the world in Noida last year is a living proof of this revolution.

Now, back to the topic of the failing automobile sector in India- why was this happening? Apart from a tumbling world economy, this was largely because of hastily implemented environmental conservation plans by the National Green Tribunal, like banning the use of diesel automobiles in the National Capital beyond 10 years. This, along with the 2019 Pakistani military conflict, and the uncertainty surrounding the General Election results culminated in a shaky stock market, which devoured the automobile industry bit by bit. But one has to remember that India emerged victorious from the conflict following the Balakot Airstrikes, and India re-elected the BJP in a landslide victory, enabling stable governance. These factors eliminate the volatile market conditions caused by national politics and defense-related perceptions.

All this is a collective, surefire guarantee of a return to fiscal normalcy. Despite this, however, the Modi government plans to leave no stones unturned in the recapture of the Indian markets. 12 public sector banks have been institutionally restructured in a series of mergers announced by the government, to pool national finances in an hour where the Indian citizen wants to be assured of safe personal funds. Also, one mustn’t forget that the Indian economy is the most significant example of a seasonal economy. Economists predict national growth to rise again by the festive season later this year- a season where enhanced consumer demand alone magnifies national growth potential by an estimated 5 times.

And not to forget the recent historic repeal of Articles 370 and 35A, which ushered in a titanic change in Jammu and Kashmir, one of not just social and constitutional equality, but also of economic equality. For the first time ever, Jammu and Kashmir will be able to contribute directly to the Gross National Domestic Product without overheads, corruption, baseless prohibitions and circulation of counterfeit banknotes. Earlier, mainland Indian citizens were prohibited from buying land or property in J&K. This had a disastrous effect on the Kashmiri economy, wherein very few businesses could emerge without concrete investments. This is why the Kashmiri state government became the single major employer in the valley.

Now, private companies will be able to prosper in Kashmir. Women have also been granted equal economic and fiscal rights as men, following the implementation of mainland Indian laws in Kashmir. They can now buy and inherit property, and would not be given impartial treatment with regards to job opportunities. Thus, about half of the Kashmiri population would become an active contributor to the Gross State Domestic Product.

As for the tighter restrictions on automobiles, much of these had to do with concerns for the environment. Given their effects on the automobile industry, the NGT has relaxed its regulations, and the union government has implemented practical, long-term solutions to the climate problem- in a way that doesn’t prove detrimental to market conditions.This month, India hosted delegates of the 196 member nations of COP14- The United Nations Convention to Combat Desertification right here in Greater Noida. Factories located in the NCR have been ordered to track and minimize their particulate matter discharge, or face immediate suspension.

Beside this, the construction of the East and West Delhi peripheral highways, and the construction of vertical gardens on roadway pillars throughout the city-state have successfully brought down air pollution levels in the Capital by a whopping 25% since last year. Under the Swachh Bharat Abhiyan, Uttar Pradesh has become the first state in India to have 100% accessibility to public toilets. These efforts are indicative of the Government’s concrete ambitions to preserve both the economic and environmental integrity of India.

India on the Global Stage
As I pointed out before, the global economic crisis of 2019 is not endemic to India. Now, given all these factors, what is behind this multilayered money massacre?
Basic social science says that if multiple small issues detrimental to public welfare occur coincidentally within the same frame of time, they tend to bring down the whole social framework if not managed properly.

Microcosm, when combined with microcosm, leads to macrocosm. But we’re talking about the international stage here- where everything on the front lines is macrocosm to begin with. So, when factoring in different, seemingly unrelated, yet major global issues together, one starts to understand why things are the way they are today.

The following factors, combined with economic sanctions on Russia, the 2018 domestic strikes in the USA, Brexit, and the looming threat of more countries exiting the EU in the UK’s footsteps; have tattered the world economy:

Yemen’s Houthi rebels carried out drone strikes on 2 major petroleum facilities operated by Aramco- Saudi Arabia’s state-owned petroleum conglomerate- this week. This has cut off 5% of the global petroleum supply.

China’s unethical and downright undemocratic attempts to curb free speech in the autonomous regions of Hong Kong, Macau, and the independent territory of Taiwan, by means of passing the Extradition Bill Amendment have left Hong Kong- the single major financial center of Southeast Asia- in chaos. It is easy to imagine the effect this would have on not just Hong Kong’s $381 Billion GDP, but the outside world as well.

The widely-covered Amazon Rainforest fire of 2019 threatens to convert a gigantic portion of Brazil to a barren wasteland, chalking a sudden end to all economic activities supported by it. The Brazilian agriculture, shipping and manufacturing sectors lie in distress, while President Bolsonaro- at the height of his ego- has turned a blind eye towards them, rejecting all attempts by the international community to provide Brazil with both monetary and firefighting aid.

The Ebola virus has resurfaced in Africa, and its Zaire strain is currently unleashing hellfire on the helpless populace of the Congo countries, devastating their already vulnerable economy.

However, history- along with the fall of empires during times of global calamity- has also borne witness to new superpowers rising to the top of the food chain. Whatever happens to world politics, the wheel of world economy will keep spinning with the human race, so there always will be a nation at the top. But how likely is it for India to reclaim her throne in the coming years? Highly likely.

While the attacks on Saudi Arabian Aramco facilities have cut off 5% of the world petroleum supply, and also India’s 2nd largest petroleum supplier- Saudi Arabia, this would hardly have any effect on the Indian economy in the long-run. The 12-bank merger announced by the Indian union government, and manufacturing surplus from the ‘Make in India’ and ‘Ease of Doing Business’ programmes are more than enough to cover for the rising oil expenses. While oil expenses rise temporarily, competition in other economic sectors would bring all-round market prices down- providing a net benefit to the Indian consumer.

Apart from this, because of a monumental trade agreement signed by PM Modi last year in Saudi Arabia, Saudi Arabia agreed to export oil, natural gas and other commodities to India in exchange for Indian Rupees rather than American Dollars. This obliterates extra expenditures by both countries in the form of conversion charges and overheads, leading to higher profit margins and smoother trade.

Now, the world turned to China for the manufacturing of consumer products because China had a large and young population, and their economic operations were inexpensive. But that was decades ago. Today, Chinese manufacturing has become more competitive than even Western manufacturing, and brands are moving out of China to establish base elsewhere in the world. No wonder the USA banned the import of Huawei phones over false allegations of “industrially-achieved espionage”! Oh no, it was because the USA is a capitalist market that cares for its own assets over those of others.

So what does this mean for India? Today, it is India that possesses the largest population of youth in the world, and skilled youth at that. The global manufacturing base is predicted to shift entirely to both India and the African continent in the coming 20 years, but one must remember that national borders arbitrarily set by colonial powers hundreds of years ago plague Africa in the present.

The Africa of today, unfortunately, stands politically divided, and incapable of playing host to a large economy because of a severe lack of infrastructure. India on the other hand, possesses all essential infrastructure necessary for such a herculean economy.

But one may ask, what would we do when eventually, our own manufacturing becomes competitive? Well, unlike China, India hasn’t just invested in manufacturing, it has also invested in the most important resource of all- human resource. India boasts of the largest English-speaking population in the world after only the USA, and Indian institutes of eminence like the IITs and IIMs supply the world with bright minds. India is already one of the largest hubs of Information Technology in the world, and as the number of skilled workers grows higher in India, it will become the single largest one.

The Indian economy is thus not collapsing, but merely slowing down temporarily. In the long run, the global financial condition will magnify investment potential in India, and induce a rapid rise in skilled employment opportunities.

Measured by Purchasing Power, India already factors in as the country with the 3rd highest GDP in the world. In the next 20 years, India stands to be the strongest contender towards becoming the world’s largest manufacturing and IT hub, and the Modi government’s ecopolitical reforms are only reinforcing that fact. (The views expressed in this article are Author's personal.)


(Author Ishaan Arora is a 15-year old, 10th grader of Lotus Valley International School Noida; Holds the distinction of being India’s Youngest Author, having authored and published 2 novels - first at the age of 8, & second at the age of 10; Has been felicitated by the President of India, Shri Pranab Mukherjee; HRD Minister, Prakash Javadekar, Cricket legend Sachin Tendulkar; and Oscar-awardee author Vikas Swarup; Also a singer and sketch artist, and has keen interest in social issues and science.)    

Photo Caption: Ishaan Arora in front of Parliament of India / Ishaan Arora along with his Father Shri Rajeev Arora and Mother Mrs. Suman Arora presenting a copy of his Book to HRD Minister Prakash Javdekar.

Image Credit (Last) - Wikipedia 

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