States are demanding fantastic amounts from the Centre to tide over the revenue loss caused by the lockdown. Suppose they lose two months’ revenue (March and April). That would be one-twelfth, 8.3% for each year. Can’t they bear this downtick in revenue?
Actually they can’t. All-State governments are bankrupt. Each year they borrow to the limit set for them by the Central government. (Yes, India is solvent only because the states can’t borrow beyond a preset limit. Otherwise, the vote bank managers would borrow the entire House of Morgan, will buy whole blocks in New York, and run away as India would collapse. Centre has no such limit. But it has International Monetary Fund (IMF), World Bank, and other rating agencies which immediately raise a red flag when borrowings go out of hand. We were saved from the Italian Godmother only by the international rating agencies.)
The construction industry labour would have left for the villages by the first week of April for harvest in any case. Nobody could have stopped them.
Coming back to the economy. Relax, sit back and relish Ramayana and Mahabharata. They are still captivating, mesmerising. Entire agriculture is alive and kicking. No effect of lockdown. Farm implements and fertiliser suppliers are doing business as usual. Goods traffic of Indian Railways is running. Passenger services cause only the loss, so IR is actually saving money. Power industry and mines are open. So are most heavy industry plants. Software engineers are of course can and are working from home. So Are many other professionals.
As individuals, I hope we have not become Americans in India. I mean, I hope we have savings to tide over the three months if incomes go to zero, which in many cases won’t be the case. As for the construction industry, labour would have left for the villages by the first week of April for harvest in any case. Nobody could have stopped them.
States see this as the opportunity to extort money from the Centre so that loot actually increases post-Corona. That is, like every natural calamity, they want to make sure that Corona is also just another loot festival.
They would not have been bankrupt, of course, if only they had allowed citizens to do business and trade and production. But then, who would bribe them? How would the junior study in America then?
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