This week’s been a topsy-turvy ride for the mood of Indians. For the first time in almost 40 years, our GDP has contracted. Consumption levels have hit new lows and businesses are struggling to stay afloat.
‘Consumption revival’ – newspaper editorials are replete with the repeated use of this term and so are the news analysts for channels talking about the stock markets.
Maybe we need a change in perspective (as is the case with most difficult-looking problems, solutions are fairly simple). Our economy is seeing low demand levels, what would a business do when faced with the same problem?
One, it would offer discounts on its offerings. In the same way, the government could offer a blanket reduction in taxes (especially consumption tax like GST) for a limited period. People would be left with more cash in their pockets, giving way to higher consumption – until the economy is rolling back on its feet again.
Two, a business would opt for better and targeted advertising of the value addition its products/services give to the consumers. In a similar manner, the government can push exports to consumers outside India by projecting the qualitative image of Indian products and services. The funds that flow in from outside will in turn push demand within.
Three, a business would study the true cause of fall in demand and make all out efforts to stay in the game until this root problem is solved. For the Indian economy, the reason of economic contraction is that people are grappling with job losses, pay cuts and loss of business. At this juncture, an effective government would help businesses stay afloat by offering them better loan repaying terms, cheap loans and other similar incentives to avoid any further lay-offs and pay cuts.
Every mature economy has to face its own share of problems time and again. How well and how soon it overcomes the same determines its authority and buoyancy in the future.
It would do us all good if the government takes a page from the book of India Inc. and goes all out to bring the consumption back on its feet.