India Turns To Deregulation To Boost Pandemic Economy
Indian Prime Minister Narendra Modi is looking to governmental overhaul and deregulation as the solutions for the country’s coronavirus-ensued economic crisis, The Wall Street Journal (WSJ) reported.
The plans supported by Modi and his Bharatiya Janata Party, voted on last month, included broad, sweeping changes that dismantled a long-standing regulatory system making farmers sell most of their crops via government-sanctioned wholesale markets which are dominated by traders and middlemen, rather than directly to consumers, according to WSJ.
And the new rules included labor measures establishing higher numbers of companies that can fire workers without government permission, made more requirements for companies to unionize, eased rules that prevented women from working night shifts, and limited the ability of unions to perform strikes, WSJ reported.
In addition, the social security program was expanded to include many contract workers, WSJ reported.
India’s economy was lagging even before the pandemic. But now, the economy has contracted by almost a quarter, affecting the poor most acutely, according to WSJ. Workers who had migrated to support their families by working in the cities had to come back home as the economy crashed.
India’s economy has taken the most drastic fall of any of the world’s largest economies during the pandemic, with a gross domestic product (GDP) fall of 24 percent in the second quarter. The government blamed the shutdown measures it had to implement to stave off the virus.
At the end of August, an estimated 19 million people has lost their jobs.
This month, India announced a stimulus package to boost consumer spending. The federal government plans to inject $6.6 billion into the through a range of spending measures, including $1.6 billion in advances and allowances to federal employees, who would then be required to spend the extra pay on nonessential goods before the end of March.