 Hello and let's talk once again about the economy. The past few days, we've seen a lot of discussions about the GDP after those disastrous numbers came out. There's been no shortage of experts saying that the situation is really not so bad and that this is all due to the pandemic and is a flash in the pan. Others are of course, happier focusing on drug rates and CBI investigations. But we do know that there are deeper structural issues with the economy. The pandemic and the lockdown worsened what was already a crisis and this crisis was created by years of flawed government policies. Now it's no surprise that the government does not seem to have any answer to all these developments and this crisis because it caused it in the first place. In today's episode, we take a look at a sectoral breakdown of this crisis after the GDP numbers came out. Are any sectors doing better? There was a lot of celebration about agriculture having registered growth. What does this mean? We talked to journalist Orindya Chakravarty to find out. Orindya, thank you so much for joining us. So over the past few days, we have seen of course a lot of discussion around the GDP numbers, a lot of breakdowns. So let's maybe take a look at the sectoral breakdown in a bit in detail. And what do you think regarding, how do you analyze the kind of decline that has happened in the various sectors? Is there anything surprising in this or was it as expected? I think that we knew that certain sectors will be very badly hit. Obviously, manufacturing was going to be one of them because factories were closed during the lockdown. And that's down in terms of value added in manufacturing. That's down 40% compared to last year, the same quarter, last year. Construction is down, I think, about 50% or a little more than that. Mining is down quite sharply, again, around that 40% mark. There's several services which are down sharply. But the surprising part, or maybe not the surprising part, is that banking, the financial services, now they come clubbed in the GDP numbers. And I'm sure that maybe if one goes to the Ministry of Statistics, they'll probably give you a break up of that. But the data that is released and the press release, financial services comes clubbed together with real estate services, which is and also other professional services. I think those include things like lawyers and stuff like that, right? And regular professions that we have. Now, maybe doctors as well. I'm not very sure, but I think that's part of it. Now, if you look at it, that is down by just 4%, 4.3% in real term. There's an inconstant 2011-12 prices. And if one looks at it in today's prices and current prices again, around 5% or so. Now, the overall economy has declined by 24%. GV has gross value added and the economy is down by about 22-23%. But the financial services, real estate and other professional services is down by just 4%. Now, we know that real estate surely was down to what, 20% of what it could have been. No one was buying homes, no one was renting homes. So real estate services surely was down quite sharply. So if you account for that, I suspect that financial services have actually expanded, which again, shouldn't be surprising given that we've seen the kind of interest in the stock market. Stock markets have boomed in this period, right? So brokerages have gone up sharply and also another thing that everything that the government is doing is essentially a loan mailer. So the great stimulus is essentially a loan mailer. So it's being routed through banks. So again, banking services would have expanded as a whole. So we're essentially seeing a overall slowdown where agriculture has gone up because there was no, there was virtually no lockdown there. And agriculture has gone up in value added terms. And financial services would have definitely gone up, I suspect in this period, brokerages and banks specifically. Absolutely. So we'll come to the agriculture sector, of course. But to continue with the specific, the financial sector specifically. This is something we talked about earlier, of course, one aspect of the stock market. But in general, it also shows a shift in the economy, which has been definitely going on for some time across the world. But yet another instance that we see in India. Are there any risks or downsides to the shift? Well, the point is that there's been a financialization of the economy since the 80s of the global economy. It came to India maybe a little late. And we know that the completely deregularized, there was no regulatory oversight. That increased towards the late 90s in the US. And expanded under the Bush administration even more, right? George Bush, junior administration even more. The 2001 to 2007, eight period where there was virtually no regulatory oversight of the financial sector, finance capital had a free run across the world. And in 2008, the global financial collapse made us feel that maybe there will be some kind of regulation on them, they'll be reigning. But of course, none of that happened. We were back to the great CEOs and CFOs getting these million dollar deals and bonuses and going off in their parachutes, it was back by 2008, 11, we all know that. Now, the point is that the financialization of the global economy is one of the reasons why COVID-19 has hit us as bad, right? Because look at it, if capitalism of a different kind had existed. Then we might have had a very different response to COVID-19. And I'm not talking about socialism of any kind. I'm just saying capitalism of an industrial kind had been around. Yes, there would have been a lockdown. But I suspect we would have had better access to health. Things would have worked in a more organized fashion. The entire idea of government completely getting out of the economy. This is a very financial sector driven notion. And that has kind of affected the globe in terms of COVID as well. A different society would have approached it differently. Now, another thing is that when the COVID-19 has only improved the situation of the financial sector, in my opinion. Because just when global central banks are thinking that, okay, we need to rein these guys in, again, that's heating up, there's a bubble. COVID-19 has come. So once again, you're seeing a free flow of money. The governments and states only look at interest rates. They only look at the stock market. If the stock market fluctuates a little bit, they immediately enter and try to, you know, assuage their fears. So the way in which money, the fact that the financial sector in India must have grown. As I'm saying, the data is clubbed together, real estate is, I'm certain has gone down. So the only answer is the financial sector has gone. Suggest that there is a transfer of income flows even further towards the financial sector, towards finance. Now Prashant, you know, there's corroborating data coming from the employment side. Now, if you look at the data collected by CMI and compiled by Mahesh Vaz. In one of his articles, which are about 20 days old, I'm sure that he's going to update that data. And these are the relatively earlier days of corporate results. Now, for our viewers, let me just explain that all companies which are listed in the stock market, which sell their shares, they have to give their results, their financial results every three months, every quarter they have to declare it. So it coincides with the data that we're getting from GDP. And in this first quarter, the overall wage bill of the manufacturing sector has gone down by 7%. So that is a combination of two things. One is people have been sacked, right? They've been downsized and also they've been pay cuts. This is an overall manufacturing space. And we know in textiles it's down by, I think, 30%. And across the board, there is a decline of about 20% to 30%. And even in services, there's been a large decline. Auto, mobile, the wage bill has gone down by 19%. Auto ancillary is by 21%. So across the board, we've seen wage bill cuts. Wage bill cuts are a combination of downsizing. Fewer number of people and wage cuts, salary cuts. Look at what has happened in brokerages and banks. Banks and brokerages have actually seen an expansion of the wage bill in the middle of COVID-19. So the wage bill of banks has gone up by 16.6% and now brokerage is by 13.5%. This can only mean that as this has expanded, people might have actually got hired in the financial sector or been given big bonuses again. Or the salaries have been increased because the financial sector is doing well. So I'm saying that the fact that, again, we're seeing the transfer of wages, even the balance of overall wages, we're seeing the transfer taking place towards the finance sector. So we can say that whatever happens, finance capital's rule continues. And what is, what in my mind is dangerous is that this leads to a bigger political control of finance capital. And push for deregulation. Push for deregulation, move against fiscal spending, interest rate focus, inflation targeting. I mean, what is the RBI today? The RBI's job appears to be only to keep inflation in check, nothing else. No worry about where credit should flow, is there certain sector where, which needs more money, which needs more credit, RBI virtually does nothing of that. It constantly says our only concern is to ensure that inflation doesn't go. This kind of a mindset is essentially a financial sector mindset. And that is only going to increase as we know that when a sector becomes economically powerful, it becomes politically powerful. So that is a big danger that we're going to see. Prashant. Absolutely right. So on the moving on to agriculture, there's been quite a bit of discussion about how the agriculture sector has not declined this in a small growth and how this is the one right spot amidst all the gloom that is the GDP numbers. So has there been any concrete benefit to farmers as this just numbers again? You know, let me pardon my French, but this is actually rubbish and poppycock. It's just that. You've seen growth, of course, you can say there's been overall contraction in the economy. So if agriculture has grown by 3.4%, then that's very good. But the truth is there was virtually no lockdown in the agriculture sector. The government also said that you can, because this is the harvesting season, so you have to allow harvesting. And we know that there's been a record and a bumper crop. The question that did farmers get the prices that they deserve for it. Now, the way to look at it is to my mind too. One is let's look at the nominal GDP growth in money terms in today's term. And we see that that has gone up by just 5.7%. 5.7%, real growth 3.4%. So 5.7% means that the price deflator, the amount, the money that has in, I mean, there have been two kinds of growth. One is output, the other is increase in price. Prices have gone up by just 2.3%. Now let's think of an average farmer, Prashant. Let's say that they spent 10,000 rupees, they earned 10,000 rupees in the same quarter last year and they spent all of it. We know that farmers actually spend more than they earn. But let's assume that they spent exactly the same amount. Earned 10,000, spent 10,000. Now, their earning would have on an average gone up by 5.7%, which is the nominal GDP growth in rupee terms in today's prices. So their earning would have gone up to 10,570. The problem here is that inflation, consumer price inflation faced by farmers, by agricultural workers and rural workers is somewhere close to 7.5%, 8% or even more. So effectively, they would have spent 10,800 rupees and earned 10,500 rupees, right? Or 10,600 rupees. So effectively, they would have this year spent more than they earned if they had to keep their consumption level exactly where it was last year, right? So there's been a drop in the average farmer's real income. This is one. Secondly, let's look at the data from CMI in terms of number of farmers who are actively working. We know that agriculture is full of disguise, right? There's a people say we are working, but they're not really needed there because they don't add anything to productivity or to income. We know that the reverse migration actually resulted in a big jump in the number of farmers. People who either hold some land or are working on share copying. This is what CMI calls farmer. Then there are agricultural workers, which data is still not available. I think it'll come out sometime towards the end of September when they collate it. But the farmer data we see has actually gone up sharply this year compared to last year, the same quarter last year when again we would have seen harvesting and the beginnings of sowing. It has gone up sharply. So on an average, again, on an average, this is again a rough calculation. Gross value added has dropped in farming, right? If I just take the total gross value added and divide it by the number of active farmers, right? This is an inaccurate number because there are agricultural workers out there and that number has to come in. But yet I think the number of agricultural workers would have obviously gone up because we know that in May, June and June, the number of agricultural workers at rural employment went up, which is again declined in August, which is the latest data that we are seeing. So given that even agricultural workers would have not just farmers who have land or sharecropping, the number of landless agricultural laborers would have also gone up. So if we take the average GVA per farmer and compare it to the average gross value added in per farmer this year, it has gone down between four to five percent. This is obviously not an accurate number. This is a false accuracy, spurious accuracy, but it is a trend. It tells you that on an average, farmers earn less or produced less, added less value in the agriculture sector even when it expanded in this quarter. Right. And finally, the usual question we often keep coming back to again and again. Any, do you see any kind of changes in the way that the government is looking at this issue after these announcements policy-wise in terms of steps to be done or is it just the same? I think it is just the same because there is no consensus even amongst economists. You look at the way in which some of the frontline economists have tried to literally lie about these GDP numbers. And you'll see that many of them were associated with the UPA, right? They were either assisting, supporting or they were writing things at that time, more or less in support of the UPA government's policies at that time. Many of them were closely associated with the finance ministry and the PMO, the entire structure and system of advisors and so on. They're all blatantly telling you lies about comparisons between the US and India in terms of they're telling you that India's situation is not that bad because US GDP declines 33 percent, which is a blatant lie. Comparatively, if you look at the way in which GDP growth is calculated in the US, India's GDP decline is actually 65 percent and not 24 percent. We know that even the IMF has now confirmed that India's contraction is the most. So the government is responding by saying that, you know, we are contracted the most because we dealt with COVID the best because our death rate is the lowest, right? Now, we know that we are now the number one in terms of every additional day, the number of new cases that are coming. We are number three, I think in the number of total cases, three number three in the case of total deaths. And people say, well, you know, that's meaningless because our population is four, five times that of, I mean, four times that of the US, 10, 11 times that of the other countries which are affected badly. That's all true. But the point is, let's look at the number of tests being done per million. Do you know what our rank is there, Prashant? As I said, that we are number one in terms of new cases, number three in number of, what is our rank in terms of tests per million? We are number 120, number 120. So it's very easy to control COVID-19 if you're not testing. We know in terms of registration of deaths in India, the 2017 data, even if it has improved, it tells us that only about 80% of deaths are actually registered on an active basis. Census figures ultimately catch up and maybe some surveys catch up, but on an active basis, only about 80% are registered. Cause of death, only 20% of the, less than 20% of the registered deaths actually have a cause of death out there. So it tells us that even if people are dying because of COVID, there's no way for us to have accurate numbers. Even if people are getting infected, we have no accurate number. So on every front, this government has not only failed, it also appears to have no idea how to deal with it. So I don't hold out any hope, Prashant, that if things get back to whatever they are, then it is going to be just by chance, not because of any design. Thank you so much, Anandya, for speaking to us. Thank you. That's all we have time for today. We'll be back on Monday with more news from the country and the world. Until then, keep watching NewsClick.