THE CRUMBLING OF INDIA’S ECONOMY WITH PROF. MAITREESH GHATAK
Dr. Maitreesh Ghatak is a Professor of Economics at the London School of Economics and fellow of the British Academy. He previously taught at the University of Chicago. Presently, he is a research fellow at the Centre for Economic Policy and Research. He studied in Presidency College, Kolkata, Delhi University and received his Ph.D. from Harvard University in 1996. He is the co-editor of Economica and has also served as the Editor-in-Chief of the Journal of Development Economics. His work focuses on development economics, public economics, and economics of organisations.
In this conversation with Professor Deepanshu Mohan, Director of the Centre for New Economics Studies, Professor Ghatak talks about India’s growth rate projection during the time of the pandemic. He explicitly points out India’s economic growth has seen a downward trend since 2014-15 and predicts a further contraction of around 5%. He astutely observes that, “the economically sheltered minority, because of restrictions imposed in consumption possibilities, their savings have gone up, whereas for the rest of the population who do not have this income guarantee or assets to fall back on, essentially they are going to fall into a debt.”
Professor Ghatak stresses on the importance of the informal sector and the recent unemployment crisis in his talk. He explains that the organised sector of the Indian economy which makes up only about 3% of the population provides them access to regular, monthly income. But the remaining 97% of the population is still left out from such a structure which adds to the rising inequality, especially during the lockdown period. Dr. Maitreesh Ghatak brilliantly euphemisms this to the ‘built-in depressor’ concept; in which if a whole fraction of the population is essentially debt ridden, even after if the economy recovers, the majority of the population will bear the burden of paying off existing debts. This hinders their ability to get back to their normal economic levels.
He provides insight on the policies and response of the government to the pandemic. Although Professor Ghatak was quite understanding of the rather uncharted territory that the policy makers are navigating through during the pandemic, he professes “As economists, we know that you cannot just have sticks, you need carrots.” Professor Ghatak highlights India’s problematic rudimentary welfare safety net in the economic packages announced by the government which was not optimal in protecting its citizens against the ills of economic severity. In his view, the government also fell short in its implementation leading to unintended and unplanned consequences.
He concludes with a discussion on the idea of economic growth which is to improve the living of ordinary people by boosting their income. In the process, he briefly comments on the recent labour law reforms that were undertaken in various states during the pandemic. For Professor Ghatak, flexible labour laws goes a long way in creating a conducive environment equipped with greater hiring and better social safety nets.
Interpreting the Gendered Impact of Recent Economic Shocks
Dr. Ashwini Deshpande is Professor of Economics and Founding Director of Centre for Economic Data and Analysis (CEDA) at Ashoka University. Her Ph.D. and early publications have been on the international debt crisis of the 1980s. Subsequently, she has been working on the economics of discrimination and affirmative action, with a focus on caste and gender in India. Her analysis, which is often backed by reliably sourced statistical data, sets her research apart and gives a conclusive and convincing nature to her arguments. Her area of specialization helps us understand the crisis from a different perspective.
Professor Deshpande in her opening statement employs statistics to comment on the severity of the lockdown imposed in the month of April. She refers to the data sent out by the Blavatnik School of Government at the University of Oxford. According to the data, the stringency index places India’s lockdown measures to be most stringent in the world. Using this, she talks about the impact of stringency on jobs in India and the gendered aspects of this impact.
Professor Deshpande, in this interaction, presents a high-frequency data set from the Centre for Monitoring Indian Economy (CMIE) which has been observing unemployment rates from January 2016. Prof Deshpande carefully analyses the information particularly pertinent to April 2020, when the impact of the lockdown was harsh.
To analyse these spiking unemployment rates, she uses a gendered lens and compares the job losses of women to men in the Indian context. She specifically exclaims that in absolute terms, “many more men lost jobs in the first month of lockdown than women” but in relative terms, more women lost jobs to men in 2020.
In another set of data she analyses the time spent in household work by men and women which has completely changed since April 2020. She highlights that working patterns have changed because of the normalisation of work-from-home. This is mainly because women thought that they have to discharge their domestic duties which they were primarily responsible for and would often ask their employers to work from home or to be afforded flexible timings.
Previously, this was looked down upon by employers as it hinted towards a lack of commitment towards their work. Now, with the normalisation of work-from-home patterns, the stigma attached to working from home would definitely shift radically.
She also sheds some light on the ASHA workers who have acted as the frontline workers during the pandemic. This group formed exclusively of women have acted as a response team during the pandemic. They, however, have been poorly paid, mistreated and have faced the imminent threat of getting infected from the virus.