Are we being sucked into the slowdown?

JAY JOSHI  

One of the most talked about issues today is that of an ongoing economic slowdown. The Indian auto sector is witnessing worst downturn in the last 19 years, and a lot of jobs have been lost, and some major automobile companies suspended production for a few days. Speculations are rife about why this situation has arisen, and how is it affecting the common people.   

A recent comment by finance minister Nirmala Sitaraman on the issue also sparked controversy, when she stated that the reason behind the downturn in auto sector could be that the millennials are increasingly preferring app-based taxi services over owning a car. Additionally, minister of state for labour and employment, Santosh Gangawar stated that there are enough jobs, but there is a lack of qualified candidates to grab the available opportunities. How far is this true? How is the current economic slowdown affecting common people? These are some interesting questions thrown up by the current situation, and there are diverse viewpoints on this matter.   

Panaji-based financial advisor Girish Potdar outlines several reasons behind the current slowdown in auto sector. The problem of slowdown has been going on for quite a while, and it’s not something that has occurred only right now. However, it may be noted that  the slowdown has not been seen in the items of daily use for the common man,” says Potdar. “That said, there are many factors affecting the sale of autos. Firstly, it could be because the auto sector is amidst a shift to BS 6 norms. It may be that they don’t want to manufacture BS4 stage cars and are trying to sell the current stock before starting production on new norms. Secondly, they are also expecting a reduction in GST rates,” he says.   

On the other hand, Ankit Baviskar, an engineer from Mapusa believes that the economic slowdown is indeed affecting the common people in many ways. “There is some truth to it when people say that this is the effect of GST. When so much money is being slowly taken out of the economy, it is bound to affect people. As people do not have money to spare, prices of property have slumped, and stock markets are down too. Closer home, owing to negativity in national and global markets, tourism in Goa has been affected negatively for the past two years, and there is also an ongoing downturn in mining. So yes, it’s affecting everyone,” says Baviskar.  

Ajay Lad, an investor from Pernem avers that income disparity is one of the reasons behind the ongoing economic slowdown. “Perhaps this is because of the growing gap between the rich and the poor. As the rich become richer and more wealth is concentrated in their hands, the people who are not as financially affluent begin to lose purchasing power. Thus, when people have no money to spend, products don’t sell. This in turn creates problems for the industrialists,” says Lad, but he points out that automobiles are seen as luxury goods, and basic necessities are still within range of common people in Goa.   

Aditya Jog, a Mumbai-based engineer however states that the slowdown is affecting many sectors of the economy, and there are various reasons behind the current economic woes. “When it comes to cars, yes, i myself have cancelled plans to buy a car due to easy availability of app-based taxi services. Also, there is so much traffic on roads these days, it makes one think that avoiding the car is a wise decision,” says Jog. “Vegetables too are a bit expensive now because the production was hampered in the recent rains and floods. Secondly, i do feel the pinch when I go out for dinner or movie because GST adds a lot to the prices. So, I have decided to cut down on outings,” says Jog.   

If economic definition of the term downturn is to be considered, it’s a natural phase between two periods of economic growth, and economies do recover from the same. The only question that remains now is how long will the current slowdown last? And how deep will it cut the ordinary citizens?