Former Prime Minister Manmohan Singh on Sunday urged the government to “put aside vendetta politics” and consult with “all sane voices and thinking minds” to save the economy. He expressed concern at the latest economic growth data and blamed “all-round mismanagement” by the Narendra Modi government for the slowdown.
Data released on Friday showed that India’s economic growth rate had slipped to 5% in the April-June quarter, the lowest in over six years. This signals India is in the midst of a prolonged slowdown, Singh said, adding that the country has the potential to grow at a much faster rate. He said the slowdown was a “man-made crisis”.
The slowdown in the manufacturing sector, which grew just 0.6% during the quarter, “makes it very clear that our economy has not yet recovered from the man-made blunders of demonetisation and a hastily implemented” goods and services tax, the Congress leader said in a video statement.
Singh, who is also an economist often credited with historic economic reforms as finance minister in 1991, said that recent Budget announcements and rollbacks had “shaken the confidence of international investors”. The credibility of India’s economic statistics has been questioned under the Modi government, and institutions are “under attack” with their autonomy getting eroded, Singh claimed.
The former prime minister said the resilience of the Reserve Bank of India will be tested after its transfer of Rs. 1.76 lakh crore to the government.
Pointing out other problems with the economy, Singh said domestic demand was depressed, consumption growth was at an 18-month low, and government policies were leading to “massive jobless growth”. “More than 3.5 lakh jobs have been lost in the automobile sector alone,” he said. “There will similarly be large-scale job losses in the informal sector, hurting our most vulnerable workers.”
“There is a gaping hole in tax revenues,” Singh added. “Tax buoyancy remains elusive as businessmen, small and big, are hounded and tax terrorism continues unabated. Investor sentiments are in doldrums. These are not the foundations for economic recovery.”
Singh also spoke about rural distress. “Rural India is in terrible shape,” he said. “Farmers are not receiving adequate prices and rural incomes have declined. The low inflation rate that the Modi government likes to showcase comes at the cost of our farmers and their incomes, by inflicting misery on over 50% of India’s population.”
Singh concluded by saying: “India’s youth, farmers and farm workers, entrepreneurs and the marginalised sections deserve better. India cannot afford to continue down this path.”
Since last week, the government has announced a slew of measures to check the economic slowdown. On August 23, Finance Minister Nirmala Sitharaman announced a set of measures to prop up the economy, less than two months after presenting the Union Budget. The Reserve Bank of India announced that it would give the Centre Rs 1.76 lakh crore of its dividend and surplus reserves. On August 30, Sitharaman again addressed a press conference to announce that 10 public sector banks would be merged into four entities.
In the last few months, core sectors such as automobiles, manufacturing and real estate, have witnessed a progressive slowdown in growth due to weakened consumer demand and dearth of investments. Chief Economic Adviser KV Subramanian on Friday attributed the slowdown to domestic and global factors. He added that the government was taking steps to improve the situation.
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