The Indian economy has been volatile with the varied sentiments of the
yet to get back to normal. The reduced consumption and salaries have
the purchasing intent of the customers.
Where we have witnessed economic starvation in entire 2020 that seems to
continue in 2021, we also see the start ups and gig economy booming. The
year has been speculative with GDP, yet the question remains once we see the
locks in the shopping malls and the significant reduction of people going
malls. The layoffs of the people at an advanced age with minimal chances to
them back to jobs is alarming.
As of April 15, 2020 Amazon founder and CEO Jeff Bezos' wealth soared an
additional $25 billion during the pandemic—after being down for a bit
the early days of the outbreak and the stock market's initial free fall.
Eric Yuan, the founder and CEO of Zoom, online video conferencing
company, also had a rapid rise in his wealth throughout the outbreak and
reported to be worth about $2.58 billion.
So, even when billionaires are getting richer, the market continues to see
recession. The declining jobs and salaries and economic depression continues
post-2020 also. Paradoxically, even though the market have a flood of jobs,
they are at the junior most level to drive the business and increase the
revenue at the cost of layoffs at senior mid and even senior-level
employees. This is also a threat to the talent of country. This has led to
shift even the middle class to the poor segment of the society. So, even if
the worker has got a currency and money, but is the requisite quantum of
money really getting circulated?
The majority opinion is that there will be deflation and will take good time
to build up a healthy economy. Well with new money pumped up by central
banks, the companies will build up their business, yet the demand issues
will create a lag in supply.
With reduction in wages and salaries even when the market will be full of
supplies, it has taken a heavy toll on our people. The significant increase
in the number of suicides of people who were on debt from market does not
only reflect the monetary decline, yet also the decline in the Happiness
Index of the country. Hence the spin is expected to be deflationary.
Deflation is always fearful as it leads to weakening of the economy. It is
very important to have real sentiments of the economy
Historically, there have been most of the times inflation and not deflation.
Few are recalled-
- The Great Depression, recession in 1929 when the output didn't
return to the previous long term trend till 1942.
- Deflation in Japan in mid- 1990s
Is wealth being created?
According to World Bank, this year the global economy is expected to shrink
by 5.2 per cent. This is one of the deepest recessions, with largest
fraction of economies witnessing decline in per capita output since 1870.
As per World Bank Group Vice President for Equitable Growth, Finance and
Institutions, Ceyla Pazarbasioglu " Our first order of business is to
address the global health and economic emergency. Beyond that, the global
community must unite to find ways to rebuild as robust recovery as possible
to prevent more people from falling into poverty and unemployment."
The central bankers had been running fast to stay in the same place. The
economists are still wondering if inflation has lost its meaning. The flood
of cash can be done by creating new money to buy securities from nations
bank and pump liquidity so that the economy can further drive down long term
Wealth creation through serious entrepreneurs at the grass roots is a key
lever to improve the wealth creation in India.
There are also arguments on removing policies that undermine markets through
government intervention when are not necessary. Basically, privatisation to
According to bank's Global Wealth Migration Review of 2020, 7000 Indian HNI
migrated in 2019. The numbers were high as 7,000 in 2017, 6,000 in 2016 and
4,000 in 2015. The data speaks about 29,000 Indian dollar Billionaires and
millionaire who have shifted their base with either complete wealth or
As per Organisation for Economic Cooperation and Development (OECD)- there
has been a significant reduction in the price of good and services. There
are various concerns that global recession can lead to deflation.
The sum of consumer surplus and producer surplus is a social surplus or
economic surplus. The same is referred as wealth created by market. It is
going to be interesting to witness the creation of wealth, yet the new
stimulus will not be able to stop deflation which will support recovery and
return to normalcy in many areas of our lives.
(The author, an alumna of IIM-L is a leadership trainer, global speaker and
a writer. She was an Army Officer for more than a decade and part of a
skydiving team which jumped from a height of 14,000 ft)