How 'death of demand' affects Indian economy

The makers of Parle-G biscuits possibly saw the death of demand when the sale of their biscuits was hit The makers of Parle-G biscuits possibly saw the death of demand when the sale of their biscuits was hit

“A large population and rising urban and rural incomes are driving the demand, while external demand is driving the increase in agriculture exports from India. Demand for agricultural inputs and allied services like warehousing and cold storages is increasing in India at a fast pace. Schemes like Paramparat Krishi Vikas Yojana helps in developing organic clusters and make available chemical free inputs to farmers. Government of India is also aiming to double farmers' income by 2022. High proportion of agricultural land, diverse agro-climatic conditions encourage cultivation of different crops”

The above are stated under the heads of robust demand, attractive opportunities, policy support and competitive advantage that India has in agriculture industry.

And how is the manufacturing sector? 

“'Huge domestic market with a rapidly increasing middle class and overall population' makes for robust demand, while investments in the Indian manufacturing sector have been on the rise, both domestic and foreign. With increasing share of young working population, India can achieve its full manufacturing potential as it looks to benefit from its demographic dividend and a large workforce over the next two to three decades”.

That is how “India Brand Equity Foundation” under the Commerce Ministry is projecting the demand, investment, policy support and competitive advantage the country has in practically every sphere of the economy. 

The reality, however, is what former finance minister Yashwant Sinha described as the “death of demand”. 

“There is no demand in the economy and that is the starting point of the crisis. The government is least bothered about what is happening to our farmers, people living in rural areas, now that is where the death of demand started from,” the senior leader said at a Lit Fest recently, tracing the order in which demand dried up—agriculture and rural sector, informal and organised sector and ultimately the corporate sector. 

Though the opposition leader can rightly say “I have been saying so for a long time”, the  autonomous Reserve Bank of India 's Consumer Confidence Suvey released early October portrayed a picture of demand that substantiated Sinha's statements. Consumer confidence was at a six-year low, discretionary spending declined, with people saying they would spend only on essentials. The study averred that the slowdown in consumption demand was on account of the slowing economy, lack of confidence in getting jobs, incomes, price stability or fall. In general—the economic situation.

Another former finance minister P. Chidambaram, hours after he came out of Tihar, tore into the way the economy was being mishandled by the government, and said the slowdown was a “manmade catastrophe”.

Former prime minister and economist Dr Manmohan Singh has over the last few months maintained that the “state of the society is even more worrisome and that is a fundamental reason for the precarious state of our economy”.

Finance Minister Nirmala Sitharaman's moves to address the slowdown have had little effect so far, possibly because these do nothing to address the state of the society. In these circumstances, the doles to farmers and other sections packaged as welfare measures are not leading to consumption that can lead to demand. The makers of Parle-G biscuits possibly saw the death of demand when the sale of their biscuits—the packet retails for 76grams for 5 rupees, and has been very popular among the poorest in the countryside—was hit.

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