Macabre signs that the Indian economy is heading for a freefall

With reference to your incisive report “Fears rise of social unrest in India as climate change hits output of onions” (November 15): it is not merely the price of onions, which has destabilised a few governments in the past, that is agonising Indians. The economy is heading for a freefall. A survey by the National Statistical Office reports that consumer spending in 2017-18 has fallen after four decades. Rural demand has declined by 8.8 per cent. Rural demand for rudimentary items such as salt, sugar and spices has declined by 16.6 per cent. So, villagers are eating less, since salt and sugar are a barometer of the quantum of meals that people eat — they do not constitute a meal by themselves. The consumption of these ingredients has declined by 14.2 per cent even in the urban areas. It only means that people are becoming poor and are reducing food consumption.

Again, the telecoms company Vodafone Idea has posted India Inc’s highest ever quarterly loss, of about $5bn. Another operator, Airtel, posted a loss of $4.5bn for the same quarter. This is macabre. This clearly warns that one or both these companies could go under. Their chief executives have already hinted that if these losses continue, the operations will be unsustainable. Thus we are looking at the loss of maybe 30,000 to 50,000 jobs, including indirect job losses, such as vendors, sales staff, shopkeepers etc.

Furthermore, the banks in India are as jittery as the central bank; the Reserve Bank of India’s deadline nears to resolve defaulting companies’ loans amounting to Rs3.8tn. Retailers in malls and high streets confirm to me, on my market visits, that sales have declined by 15 to 30 per cent across various categories of products in the current year.

Incomes in the villages have declined after the demonetisation of November 2016. Many small businesses and tanneries have shut down. Villagers have lost jobs. Unseasonal rains have also dented farm incomes. Urban consumers are shy of spending money on clothes, cars or computers, since they are not sure whether they will have a job or a salary next month.

We need urgent steps, on a war footing, to restore consumer confidence in the future of the economy. While elections and temples are important, we must remember that people need to eat too, to live.

Rajendra Aneja
Aneja Management Consultants, Mumbai, India