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How are the private companies making profits despite the recession?

India is currently reeling under the Corona virus recession. But in spite of all this, private companies in India are making record breaking profits.

This is the first time in India since 1990 when the country is experiencing recession. But the profits of private companies are still growing record-breaking. If we look at the Sensex, the stock market has reached its all time high. The Sensex is currently trading around 46 thousand.

Private companies listed in Sensex are making 119% profits so far. Which has broken all previous records. Whenever there is a downturn in a country, the private sector is also affected there. But why are the profits of private companies so much? There is some fundamental reason behind this, which is important to understand.

Private companies are increasing profits due to economic package

Many economic packages have been announced by the Government of India to once again lift the Corona virus-affected economy. Whether the economy of India has benefited from these economic packages or not. But this is definitely the case that private companies have benefited from the economic package. Due to this, the profits of private companies are continuously increasing.

Recently, the Government of India has also given tax exemption to private companies. This exemption has been around 3 lakh crores. Private companies have also benefited from this. Whereas in the face of this economic suit, private companies have not given employment to the people of India.

Because of this, their expenses have not increased. On the contrary, profits are constantly increasing. Instead private companies are excluding people from employment by making an excuse of economic downturn and continuously reducing their expenses.

Economists say that while announcing the economic package, the government should have told the private companies that if you want to take advantage of the economic package then you cannot remove people from employment. But the government did not put any such condition. Private companies are taking advantage of this.

Profits are increasing, not increasing production

According to economic data released by the government recently, the uniforms of GDP in India can remain around -7.5%. It has reached its lowest level before. But in spite of all this, private companies are making strong profits.

Companies have been given extra time by the government to repay the bank’s debt. Private companies have also benefited from this. Even before the coronavirus, the Government of India, not the private companies, had given tax exemption of Rs. 150000 crores. After this, when the companies were given a separate tax exemption of an additional three lakh crores rupees. But the companies did not give its benefit to the customers. Due to this, the profits of private companies reached a record high.

According to a report released by the government, about 2 crore people have lost their jobs in the last six months in India. This shows that despite the government’s financial support from private companies, a large number of people have left work. On the other hand, the salaries of people who were hired were also reduced by 25 to 30%. Due to this also the profits of private companies kept increasing.

Profits of companies based on agricultural products are increasing continuously. The profits of companies based on agricultural products are breaking records.

Individuals who had invested in agro-based companies have gained the biggest so far. This includes companies ranging from tractor manufacturing companies to fertilizers and other agricultural produce companies. Let us tell you for information that despite the economic slowdown in India, agriculture was an area where the economic growth rate in India was positive. The growth rate of agriculture in India during this period was around 3.5%.

Despite this, the condition of farmers of India continued to deteriorate and they could not get the right price for their products. All this happened due to constantly decreasing purchasing power in India.

The result of this is that today the farmers of India are constantly seen on the streets against the government. Farmers say that when large companies in India can be given economic discounts, then why is the government not giving them the right price for their crops? The farmers feel that the government is doing everything for the corporates. But the farmers have been left on their feet.

Where are companies using their increased profits?

We have understood that the profits of big companies in India are constantly increasing. But the question arises that if the profit of big companies is increasing continuously, then where are the big companies using this money?

Currently, demand for products in India has gone down to its lowest level. In such a situation, big companies will not use this money to further their business. Also, these companies are not going to spend money to give employment to the people of India.

Experts say that in the coming years, big companies like Reliance and Infosys may acquire other smaller brands. Recently, it has been seen that Reliance has acquired small companies like Big Bazaar and Urban Ladder. In the coming time, this acquisition may increase even more. Acquiring smaller brands has become easier this time. Because there is no demand in the market, the existence of small brands seems to be in danger.

In such a situation, when the demand in the Indian market will increase once again after four to five years, big companies can use these small companies to further their business. Simultaneously it will be easier to create Monopoly in the market. No competitor will exist in the market for them. In such a situation, if you are hoping that the profitability of big companies will increase, then employment opportunities will increase for you, it is not going to happen.

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