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CONNECTING DISTANT DOTS

The first signs of the Great Depression started when the Wall Street Exchange crashed in October 1929, and stocks
worth millions of US dollars were traded like pieces of paper. This event was called ‘Black Tuesday’. However, it was
just the start of a chain of disasters that was to plague the rest of the world for about the next ten years.

Coronavirus, or COVID-19, first showed its existence in December 2020, in the Hubei province of China. Since then, it
has devastated economies, livelihoods and international markets alike.
These two catastrophic events differ by a timeline of almost 90 years. However, the trail of destruction they leave in
their wake can be connected through various dots.

During the Depression, there was an excess supply of food grains within the markets. This coupled with poor methods
of public distribution and falling quality of the produce, led to disruptions in supply to the consumers, despite a excess
supply within the markets. Tens of thousands of farmers had to sell their lands as their produce was not being sold at
optimum prices. There was migration of masses of labour in search of better employment all throughout the world.

In America, hundreds of towns called “Hoovervilles” came up, named after the then President, Mr. Herbert Hoover.
These towns were makeshift villages to house the homeless. People living here were refugees, victims of a cruel fate
which had left them begging for food at soup-kitchens and sleeping under leaky roofs.

In 2020, due to Coronavirus, India has witnessed a large incoming number of migrant labour especially in the already
densely populated regions of Uttar Pradesh, Bihar, Madhya Pradesh, Odisha, Jharkhand and a few others. These
labourers are returning to their rural homes as scope of employment in the urban areas has fallen greatly for the
unskilled, manual worker. The unemployment rates in India reached an all time high of 23.25% in April 2020. The
export levels of India are expected to fall by 20% within the current fiscal year only, the Federation of Indian Export
Organization’s estimates.

During the Great Depression as well, worldwide exports fell to about 40-50% of their original levels. As India was
mainly an agricultural economy exporting it’s products during colonial rule, this was a great setback to the agricultural
community. As farmers struggled to pay rent, the British increased taxes, which ultimately resulted in revolts
throughout the country. The Reserve Bank of India was thus established on April 1, 1935, to accede to some demand of
the Indian population.

In modern times as well, the current government has just released a recovery package worth 22 billion Indian rupees.
However, the amount has been criticised by many, as it measures less than 1% of the entire country’s GDP, whereas
European and American relief packages measure about 4-5% of their GDP.

During the 1920s, America had seen a rise in consumption of various consumer goods including automobiles, furniture
and other luxury goods. However, all this prosperity and demand was wiped out as soon as the Depression hit. Not only
did incomes decline and unemployment rates rise, but consumption decreased due to stingy spending by people. Over
110,000 companies are said to have been shut down.

A parallel can be seen in India as well. The lockdown imposed because of the Virus has adversely impacted the
production capacity of the country. The automobile sector, which had already been struggling before the lockdown, has
been struggling to keep its head above water, and has shrunk by a record 38.1%. Same goes for the sale of non
essentials, demand for which has declined by more than 80%, according to India’s Retail Association.

The Great Depression left a scar on the face of the world, the impact of which is still visible. Even after social justices
were restored, economic recovery was a long and painful path. It included mutual cooperation within the international
markets, strategic financial choices and relief funds.

Through connecting these seemingly ambiguous dots, we now turn our attention to the current crisis at hand. Not only
should we learn from past mistakes, but we should also emulate past achievements. Let us strive to learn and grow, as a
country, an international superpower, and an economy.

Vishakha Singla

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