In times of crisis – and that word certainly applies to the Indian economy right now – clarity is extremely important. Businesspeople and other citizens need to know that the people with their hands on the levers have a clear sense of what they’re attempting to achieve and how to get there.
Which is why this interview should terrify you.
On Monday, Times Now broadcast an interview with Finance Minister Nirmala Sitharaman in which she was asked how her government intends to ensure India will be a $5-trillion economy by 2024, the only definitively stated economic goal of this administration. This would require the economy to grow at 14.5% over the next four years (compared to less than 5% this year).
“I am not going to be engaging in numbers, not because I want to escape giving an answer but clearly this time, I am positioning India in the background of challenges which are being felt. I need to attend to the challenges and re-address any difficulties. I am looking at it in that way rather than looking at what would it be for the next year.
Coming specifically to your question, I am not going to place our numbers today as opposed to what it should be. I have to keep focussing my attention to moving towards achieving the target.”
It might be pertinent to point out that right before this, she was asked what the government is going to do about its avowed target of becoming a $5-trillion economy. In reply to that she said, “I expect we will be on track for the $5-trillion economy.”
So, we are on track for $5 trillion but the finance minister will not engage with numbers, not because she’s refusing to answer but because, um, she need to focus her attention towards achieving the target... of $5 trillion?
Einstein’s unnecessary maths
This sounds like something right out of Yes, Minister but it is not without precedent. After all, Piyush Goyal, who runs the Commerce Ministry, also dismissed any talk of growth-rate mathematics in September, saying, “Don’t get into those maths. Those maths never helped Einstein discover gravity.”
The response comes just as Sitharaman is sitting with her bureaucrats, meeting advisers and engaging with industry over what ought to go into her Budget speech less than two months from now. It also coincides with even more dire news from the economy, where food inflation has continued to rise even as demand remains low, raising the spectre of “stagflation”.
On Wednesday, the finance ministers of India’s states will sit down with Sitharaman for the Goods and Services Tax Council meeting, with some suggestions that tax rate will be considered. Why? Because, as a result of the slowdown, tax collections have been woeful, so the government wants to squeeze more out of the economy – potentially making it even harder to climb out of this slide.
This comes after, in the face of what most economists made clear was a slump in demand, the government introduced corporate tax cuts – a supply-side intervention – despite little expectation that it will resolve anything. Meanwhile, battles over just how bad things are in the Indian economy, and whether our data is right or not continue to rage.
A month ago, at the start of Scroll.in’s Hard Times series explaining the Great Indian Slowdown, we asked: Does the Modi government even understand what is going on with the Indian economy?
As it stands, the answer seems to still be no, not even giving us the chance to ask the follow up: Does the Modi government understand what needs to be done about the economy? And with much of the top leadership now focused on defusing the social and cultural fires that it chose to spark, it seems likely that those answers are not forthcoming anytime soon.