Now that the cataclysmic events of the last few days are behind us, we could turn our attention, once again, to the state of our economy, which had receded into the background.
In late September 2017, when the Indian economy was spluttering, I wrote a piece which was published by The Indian Express, drawing the attention of the powers-that-be to the problems of the economy in the hope that they will catch attention and some corrective measures would be taken. Instead, then finance minister Arun Jaitley lambasted me and accused me of being a job seeker at 80, to the mirth of his cronies. Prime Minister Narendra Modi accused me of behaving like Raja Shalya, the legendary charioteer of Karna in Mahabharat, who became famous for demoralising him in battle by incessantly running him down in front of his adversaries.
What is it that stung these worthies so much? In one word, it was ‘truth’. The bitter truth.
In that article I had said, among other things, “Private sector investment has shrunk as never before in two decades, industrial production has all but collapsed, agriculture is in distress, construction industry, a big employer of the work force, is in the doldrums, the rest of the service sector is also in the slow lane, exports have dwindled, sector after sector of the economy is in distress, demonetisation has proved to be an unmitigated economic disaster, a badly conceived and poorly implemented GST has played havoc with businesses and countless millions have lost their jobs.” I did not want to be a prophet of doom. I only wanted corrective steps to be initiated so that the economy could be put back on the rails. Today I say with deep anguish that every word I wrote in that article was not only true but in the absence of corrective steps, has become worse.
Everyone agrees today that the economy is facing an unprecedented crisis.
There is no demand in the economy, there is no liquidity in the market, there is no fresh investment and the government has no money to spend on growth. Its claim to fiscal rectitude has been blown apart in the latest statement from the Comptroller and Auditor General to the Finance Commission which has disclosed that in the year 2017-18, the government transferred its direct liability, which should have been included in the budget as off budget items, to its undertakings to the extent of Rs four lakh crore – otherwise the fiscal deficit in that year would have been 5.85% of the GDP. And this brings me to the issue of the statistics dished out by this government under its mistaken belief that it is possible to fool all the people all the time. See what it did to the back series of the GDP data? It dumped the figures compiled by the Sudipto Mundle committee and asked the NITI Aayog to manipulate the figures in such a manner that it showed during the time of the Modi government India grew at the fastest pace ever. It did the same with the jobs data compiled by the NSSO and endorsed by the National Statistical Commission. It damned the data as provisional, as an unauthorised leak and therefore unworthy of credence. The acting chairman and the only other member of the Commission promptly resigned because they could bear it no more; but not a tear was shed and the government got away with blue murder.
See how it has treated the latest theory of the former chief economic adviser, Arvind Subramanian, who carried out a detailed study to prove that India’s GDP growth figures were overestimated by 250 basis points. In my article of 2017, I had conservatively put the figure of overestimation at 200 basis points. But kudos to the Finance Minister, who has misled parliament and the people of India by including patently false figures in her budget. This was caught by no less than a member of the Prime Minister’s Economic Advisory Council, Rathin Roy. He has told the country that there is a hole of Rs 1,70,000 crore in the budget. The gap has emerged because the Finance Minister has taken the revised estimates in the interim budget presented by Piyush Goyal on February 1 rather than the actual figures of receipts compiled by the Controller General of Accounts, which were available when the budget was being prepared and which alone should have been included in the budget.
Fear stalks the land. Very few of us have the courage to speak the truth. The raids by the Income Tax department, the Enforcement Directorate, the CBI and the NIA (National Investigation Agency) are in full swing. A businessmen committed suicide. Scores of companies are in the queue to declare bankruptcy, whoever can is fleeing the country, import substitution and punishing the rich are the important threads of the new economic policy. One wayward Chief Minister alone is enough to prove to the world that India does not honour its solemn commitments, as the government of India looks helplessly on.
The global scenario is far from reassuring. With Donald Trump in the White House, anything can happen to the global economy. And any trigger can create a crisis in our economy. I have always had a pathological fear of the umbilical cord that joins the stock and the foreign exchange markets. The FPIs (Foreign Portfolio Investors), now under heavier tax burden here, can start selling the stocks they hold, proceed to the foreign exchange market to convert rupees into dollars, which would put the rupee under pressure with a whole lot of unintended consequences. This trend is already visible to some extent in our markets. True, we are sitting on large foreign exchange reserves, but let us not forget 1991.
The problem is, and I am convinced of this now, that nobody in this government understands economics. It is a case of the blind leading the blind. Winning elections is easy; delivering good governance to the people is quite another matter. It is true that the opposition is in disarray today and the government is taking the fullest advantage of it, in parliament and outside. I cannot understand why, if the opposition is being treated so shabbily in parliament, it cannot either disrupt it or boycott it. Let the government pass all the bills it wants passed, which is happening in any case.
If the opposition is so concerned about the manipulation of EVMs (Electronic Voting Machines) and its demand for replacing them with the ballot papers is not being conceded, will it have the courage to tell the Election Commission and the rest of the world it will not contest elections at all?
Socialist Ram Manohar Lohia had said, “Zinda kaume panch saal tak intezaar nahi karti (A people who are alive do not wait for five year)”. What are we waiting for?
Yashwant Sinha, former BJP leader, was Minister of Finance (1998-2002) and Minister of External Affairs (2002-2004)
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