Time to focus upon the consumption sector

India has now entered the second phase of the pandemic. Even after the vaccine been discovered, the mayhem and pandemonium are not confining themselves to rest. Rather, the picture turns out to be more gloomy as time passes. The segment which seems to be affected more is the economic sector. As we have observed last year, the economic growth stagnated and even fall behind the already decided targets. According to some reports, it could have even shrink-ed by 9.6 %. With such a downturn in the economy, the associated indicators like employment, saving, trade, tax collection, etc. all have shown the downside, which has impacted the overall economic situation of the nation. Oxford economics has documented the low growth rate for the nation so far. According to them, the GDP will observe a downside from 11.8 percent to 10.2 percent. This has to be seen in the context that, it is now only the initial phase of the current year and still a lot more brunt has to be bear by the Indian economy.

For the proper working of the macroeconomic cycle, the nation has to keep the cycle going. Therefore, the production and consumption of the products need to be carefully observed and analyzed, so that the element of disruption may not creep into the cycle. Lockdown, as the government is now been focusing upon will surely have a deleterious impact upon the economy. But then, the government has to deal with this unprecedented situation effectively and at the same time should not be compromised with the issues like national health. But the consumption and utilization of the essential services will remain as such. This is actually the silver lining in this case, as the consumption of these sectors needs to be enhanced by segregating its supply to the different sections of the society. In this scenario, the government needs to strengthen the consumption of these products. It is imperative to deviate from the definition of demand in such cases, as the government needs to supply the products even to those people, who have inadequate purchasing power.

The phenomenon of ‘credit’ can very well be taken care into account. There is a need for the immediate supply of essential goods to the different sections of society. It will help in two ways. Primarily, it will supply the essential products and services to the much-needed people and at the same time, it will augment and enhance the consumption sector of the economy.

Historical evidence has shown that the decline in the consumption sector has had a very harmful impact upon the economy as well as upon the further potential of the economy to generate employment. Whether it is the 1929 great depression or the 2008 depression, evidence revealed that it is mainly the consumption sector that has revived growth. The unprecedented measures to solve any crisis in the economy, one should not wait for the worse situations, whether, there is always the scope of the application of these principles even under the situations that have not yet experienced any crisis.

It is high time now that India, should adopt such measures so as to revive its economy, and one such step, rather an important step, would be the increment in the consumption potential of the economy. Enhancing the consumption sector will also lead to lesser inequality in the society as a less unequal society is one of the important premises for consumption to grow fully.

About the author

vipal

My name is Vipal Bhagat, going to be doctorate in applied economics. My aim is to analyse and interpret the current economic happenings around us, according to the core and basic principles of economics.

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