China has come roaring back from the devastation of Covid-19, and the United States, Europe and Japan are finding their feet. But the hundreds of millions of laborers and shopkeepers who keep India’s economy running still cannot find relief.
India’s economy shrank 7.5% in the three months that ended in September compared with a year earlier, government figures showed Friday. The data reflects the deepening of India’s severest recession since at least 1996, when the country first began publishing its gross domestic product numbers.
The new figures firmly ensconced India’s position among the world’s worst-performing major economies, despite expansive government spending designed to rescue the thousands of small businesses severely battered by its long, hastily imposed lockdown.
Nikhil Das, 62, a manufacturer of silk ties and scarves in New Delhi, says his business is teetering on the edge of collapse. His sales, which depend on demand from luxury shops and airport retailers, have fallen by 80%. He needs payments from customers to make up for his manufacturing costs, but retailers who cannot move his wares still owe him more than $50,000.
He has idled six workers he once paid for each tie and scarf they made, and he has been treated for stomach pain that his doctor has attributed to stress.
“The money supply chain is broken,” Das said. “It is a constant source of tension to me.”
The Indian government has committed $50 billion, roughly 2% of India’s annual economic output, to help small businesses, as well as cash transfers to low-income workers as part of a $266 billion economic package.
For the average Indian worker and entrepreneur, it has not been enough.
An estimated 140 million people lost their jobs after India locked down its economy in March to stop the outbreak, while many others saw their salaries drastically reduced, the Mumbai-based Center for Monitoring Indian Economy said. As the lockdown was eased, many went back to work, but more than 6 million people who lost jobs have not found new employment.
In a June survey by the All India Manufacturers Organization, about one-third of small and medium-sized enterprises indicated that their businesses were beyond saving. The industry group said that such a “mass destruction of business” was unprecedented.
Small and medium-size enterprises employ about 80% of the labour force.