COVID -19 hit agriculture, small and medium industry cry out for financial help from the Govt

Lakshmana Venkat Kuchi *

It is a matter of great relief that COVID-19 numbers are coming down across the country, and barring a scare from Delta Plus variant virus, the situation is thankfully under control. Not only the Covid cases are coming down, but the positivity rate and deaths are also lower indicating the ebbing of the scary second wave that cost the country dear, in both deaths and economic devastation.

The situation in few States like Maharashtra, Madhya Pradesh, Tamil Nadu, and Karnataka gives cause for some concern, as here the new Delta Plus variant, feared to be more contagious and spark the third wave in the short run, has been detected. Madhya Pradesh witnessed the first death due to this virus variant.

But on the whole, the situation is much under control and several States are in different stages of unlocking and opening up, leading to the opening of businesses that could lead to an improvement in the economic recovery process witnessed in the country. Reports suggest businesses are on the recovery track in sectors like automotive, fast-moving consumer goods, hospitality, and real estate.

This sure is a welcome sign and the industry expects the recovery to make more ground going forward as vaccination picks up pace. The economy suffered a big hit from the two waves of Covid and recovery is going to be a slow process as the unlocking takes place, with caution as the biggest watchword as States begin relaxing lockdown norms and ease Covid restrictions and allow more businesses to open.

But one thing that must be drilled into the conscience of the masses is the need for Covid Appropriate Behaviour and masking up as the threat of a third wave is very real, and is expected sooner than soon, especially in Maharashtra that has once again seen a slight rise in a number of cases. Besides, the State has also recorded the presence of Delta Plus mutant strain, expected to be much more contagious and dangerous.

This brings us to the fact that preparing for the third wave is what the Central and State Governments must do lest we do not get caught short like we did when the second wave exploded leading to the crumbling of the health infrastructure across the country.

The shortages in oxygen, hospital beds, ventilators, and drugs led to hundreds of thousands of deaths across the country, sparking allegations of Government apathy as also lack of preparedness. Fortunately, now that is behind us.

The Union Government is working on a Rs 20,000 crore Covid response package- to prepare for the third wave. The package is to help the Governments focus on health infrastructure, treatment facilities, ramping up of hospital beds, strengthening and procurement of essential medical equipment and drugs and strengthening rural and urban health facilities, setting up more laboratories and testing centres.

But for the present, life is limping back to normalcy though not up to pre-Covid levels but the slow and cautious opening up is causing cheer to the people and to the economy.

The industry is cheerful that there is a perk up in demand for fast-moving consumer goods, indicating an overall rise in demand, which is making companies to scale up operations, as they anticipate higher demand in the times to come, as vaccinations gather pace.

Company executives are hoping that with the market now growing the capacity utilization of factories is also likely to see an upward trend in tune with the rising demand. Better news from the manufacturing sector is that it views the adverse economic impact of the second wave as likely to be falling in the near future.

Market analysts and global rating companies estimate that the revival of the country’s economy was underway. There is a gradual recovery in the Indian economy as per few rating agencies which forecast a growth rate of 9.5% over the previous year but are worried about the Delta Plus variant and urge the people to follow strict Covid Appropriate Behaviour in their daily lives.

The second wave was more severe in its impact that it affected the rural economy harder than the first one did. During the first wave, agriculture turned in much better than expected performance despite the absence of any financial support from the Government. It was the agriculture reported an increase in gross value added in 2020-21 and it sustained rural economy and drove the country’s economy as well during the last five years.

But the second wave devastated the rural economy as well, giving rise to the question as to whether agriculture would continue to be the saviour as the third wave poses a major threat. The second wave hit the majority of households, which suffered job losses and a decline in incomes.

Capturing this distress in the rural areas is going to be very difficult. It remains to be seen if official statistics would be able to capture the real extent of the problem and the economic distress in rural areas accurately. What one can glean from the reports coming from different States is that the impact of declining incomes and job losses can be seen even in villages.

Agricultural wages are either stagnant or have fallen and alongside there is rising inflation, cutting down the purchasing power of the people. Given the rise in prices of inputs of agriculture, the farming activities become more economically unviable. If this situation is not arrested, then agriculture may not be able to continue as the saviour of the economy in the near future.

For agriculture to remain a key driver of the economy, it would require the right intervention of the Government at the Centre and leave the State levels to protect farming activities and also support villagers by giving them direct income support to perk up demand in the economy and also through various subsidies, and protection from rising inflation that effects a rise in prices of agricultural inputs.

If the rural economy does not get urgent intervention and support from the Government, it could face a humanitarian crisis as well. We must be happy that Covid numbers are coming down and an economic recovery appears imminent. But recovery is possible only if agriculture and small and medium enterprises–both employment generators–get the immediate financial support of the Union and State Governments.