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Jagan Mohan Reddy plays a safe bet to avert Demand Crisis

by Staff
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The YSRCP government’s welfare schemes might be meagre and mired with an even longer list of problems. They seem to be the best temporary respite for the AP economy and the looming demand crisis it is about to suffer.

Demand crisis is an unavoidable, commonly agreed economic consequence of the current coronavirus pandemic. With infections on the rise, and the disease unlikely to go away for the next year or year and a half, people are likely to shift to limited consumption behaviour. Such consumption behaviour would adversely impact demand in regions not limited to Andhra Pradesh.

Y.S. Jagan Mohan Reddy’s style of governance has been widely criticised but what might be a boon for Andhra’s citizens is the welfare schemes. A significant part of these welfare schemes is allocated to pensions.

Pensions have been a standard policy solution to develop spending capacity among consumers of various types. By creating spending capacity and giving power to the end consumers to buy commodities even if just the essential ones, governments in the past have been successful in averting demand crises to a great extent.

In the current circumstances, however, cash redistribution and pensions scheme might have an unintended outcome. This outcome is what if these people even limit their consumption and start to save up for the future. It is worth noting the governmental measures to curtail apprehension around the post-COVID times.

For now, the direct cash transfers under Amma Vodi, Rythu Bharosa, Vahana Mitra among a host of other schemes might be meagre and mired with an even longer list of problems. They seem to be the best temporary respite for the AP economy and the looming demand crisis it is about to suffer. To predict consumer behaviour, it is likely that unintended outcomes might appear. But experience from past suggests that such cases would be limited in number as the beneficiaries mostly come from the underprivileged sections of Andhra’s population.

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