India Looks to Combat Economic Crisis and Spur Growth
October 16, 2020
Even before the pandemic hit, India’s economic growth was slowing. When the virus hit the nation, the economy contracted by nearly one-quarter, the biggest drop for any of the world’s major economies. Facing both an economic crisis and an ongoing health crisis, the government has enacted sweeping changes in recent weeks, hoping to spur growth.
Prime Minister Modi and his party have pushed through a series of deregulatory changes that are impacting everything from agricultural fields to factory floors. Economists who spoke to the Wall Street Journal say that the changes initially caused confusion, given how rapidly they were passed, but may ultimately improve the country’s economic prospects, especially in the agricultural industry, which accounts for 17% of the nation’s income and employs nearly two-thirds of the working population
One of the biggest changes is the dismantling of the long-standing system whereby farmers had to sell to government-approved wholesalers. They can now bypass these middlemen and sell directly to consumers or food processors. Some smaller farmers have expressed anger over the change, as they currently have no one to sell to and will struggle until buyers can be found. They also worry that further deregulation will remove guaranteed price floors, leaving them with little leverage when competing with larger farms.