Issues related to Economic growth

An unrest, a slowdown and a health epidemic


From UPSC perspective, the following things are important :

Prelims level: Not much.

Mains level: Paper 3- Dealing with the trinity of social disharmony, economic slowdown and and global health epidemic.


India faces imminent danger from the trinity of social disharmony, economic slowdown and a global health epidemic.

Social disharmony

  • Violence in Capital: Delhi has been subjected to extreme violence over the past few weeks. We have lost nearly 50 of our fellow Indians for no reason. Several hundred people have suffered injuries.
    • Communal tensions have been stoked and flames of religious intolerance fanned by unruly sections of our society, including the political class.
  • University campuses, public places and private homes are bearing the brunt of communal outbursts of violence.
  • Institutions of law and order have abandoned their dharma to protect citizens. Institutions of justice and the fourth pillar of democracy, the media, have also failed us.

Impact of social disharmony on the economy

  • Exacerbating the economy: At a time when our economy is floundering, the impact of such social unrest will only exacerbate the economic slowdown.
  • Lack of investment by the private sector: It is now well accepted that the scourge of India’s economy currently is the lack of new investment by the private sector.
    • Investors, industrialists and entrepreneurs are unwilling to undertake new projects and have lost their risk appetite.
    • Increase in fears and risk aversion: Social disruptions and communal tensions only compound investors’ fears and risk aversion.
    • Social harmony, the bedrock of economic development, is now under peril.
  • When policy tweaks stop to matter: No amount of tweaking of tax rates, showering of corporate incentives or goading will propel Indian or foreign businesses to invest, when the risk of eruption of sudden violence in one’s neighbourhood looms large.
  • How the vicious cycle works: Lack of investment means a lack of jobs and incomes, which, in turn, means a lack of consumption and demand in the economy.
    • A lack of demand will only further suppress private investments. This is the vicious cycle that our economy is stuck in.

Impact of COVID-19 on the economy

  • Global reactions: Nations across the world have sprung into action to contain the impact of this epidemic. China is walling off major cities and public places. Italy is shutting down schools. America has embarked aggressively both to quarantine people as well as hasten research efforts to find a cure.
    • Many other nations have announced various measures to address this issue.
  • What India can learn? India too must act swiftly and announce a mission-critical team that will be tasked with addressing the issue. There could be some best practices we can adopt from other nations.

Bringing in reforms to address the problems

  • The government must quickly embark on a three-point plan.
    • First, it should focus all energies and efforts on containing the COVID-19 threat and prepare adequately.
    • Two, it should withdraw or amend the Citizenship Act, end the toxic social climate and foster national unity.
    • Three, it should put together a detailed and meticulous fiscal stimulus plan to boost consumption demand and revive the economy.

Turning a moment of deep crisis into a moment of great opportunity

  • The past instance of turning crisis into an opportunity: In 1991, India and the world faced a similar grave economic crisis, with a balance of payments crisis in India and a global recession caused by rising oil prices due to the Gulf War.
    • But India was able to successfully turn this into an opportunity to reinvigorate the economy through drastic reforms.
  • Turning the present crisis into an opportunity: Similarly, the virus contagion and the slowing down of China can potentially open up an opportunity for India to unleash second-generation reforms to become a larger player in the global economy and vastly improve prosperity levels for hundreds of millions of Indians.
    • To achieve that, we must first rise above divisive ideology, petty politics and respect institutional salience.


The India that we know and cherish is slipping away fast. Wilfully stoked communal tensions, gross economic mismanagement and an external health shock are threatening to derail India’s progress and standing. It is time to confront the harsh reality of the grave risks we face as a nation and address them squarely and sufficiently.






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