The government isn’t too optimistic about the GDP figures and ratings in the future but is hopeful of an economic recovery soon. It hopes that the economic package announced by Finance Minister Nirmala Sitharaman would bear results, however, finance ministry sources said that as long as the lockdown is on, it is difficult to give a timeline on how soon it will bear results.
The government, however, claims that with relaxations in Lockdown 4.0, which allowed more economic activities, the manufacturing sector has seen a spurt in many cases to up to 33%. The government admits room for improvement but given the circumstances, it is a good sign. The problem, however, remains with the shortage in specialised labour. This is because most labourers have decided to go back to their homes given the uncertainties of the Covid-19-induced lockdown.
The government is trying to address the issue of labour shortage. The labour ministry is in touch with state governments to find a way to convince the migrant workers to come back eventually. In the meantime, the manufacturing sector is being encouraged to give jobs to the local labourers. However, it is tough to do so for those sectors that require trained labour.
Another problem confronting the government is the loss of jobs or salary cuts. While the government does not want to step-in on this yet as it "understands that employers are finding it difficult to sustain payment of salaries or keeping staff as there is little economic activity" but, sources say finance and labour ministries are speaking to each other to find a way out.
The real problem, however, remains with the state governments. Unhappy with the conditional increase in rate of borrowing from the Centre and demanding more money from it, the GST Council meeting scheduled for mid-June has become critical. The states are expected to extract their pound of flesh and the Centre is aware of it.
Finance ministry sources said that they would encourage states to begin more non essential activities and if this means states would want more from the Centre by way of taxes then a middle path can be arranged.
As of now, the government is looking at opening up more of sectors like hospitality and tourism and has ordered easy bank loans for the same. It is hopeful this would bring more employment opportunities, helping the economy to come back to life slowly.
The government is also looking forward to make the country a favourite alternative investment destination to China. For this, it has to compete with countries like Sri Lanka and Vietnam among others but hopes that the prime minister's push and diplomatic skills and outreach can work the magic. The government is working at introducing more Standard Operating Procedure (SOPs) post Lockdown 5.0.
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