BJPs last FM on the Economy
I shall be failing in my national duty if I did not speak up even now against the mess the finance minister has made of the economy. I am also convinced that what I am going to say reflects the sentiments of a large number of people in the BJP and elsewhere who are not speaking up out of fear.
Arun Jaitley is considered to be the best and the brightest in this government. It was a foregone conclusion before the 2014 elections that he would be the finance minister in the new government. His losing his Lok Sabha election from Amritsar was not allowed to come in the way of this appointment. One may recall that in similar circumstances Atal Bihari Vajpayee had refused to appoint Jaswant Singh and Pramod Mahajan, two of his closest colleagues in the party, to his cabinet in 1998. His indispensability was established further when the prime minister rewarded him not only by giving him the finance ministry including the department of disinvestment, but also the ministries of defence and corporate affairs. Four ministries in one go out of which he still retains three. I have handled the ministry of finance and know how much hard work there is in that ministry alone. Finance ministry, in the best of times, calls for the undivided attention of its boss if the job has to be properly done. In challenging times it becomes more than a 24/7 job. Naturally, even a superman like Jaitley could not do justice to the task.
Jaitley was, to begin with, a lucky finance minister, luckier than any in the post-liberalisation era. Depressed global crude oil prices placed at his disposal lakhs of crores of rupees. This unprecedented bonanza was waiting to be used imaginatively. The legacy problems like stalled projects and bank NPAs were no doubt there and should have been managed better like the crude oil bonanza. But the oil bonanza has been wasted and the legacy problems have not only been allowed to persist, they have become worse.
So, what is the picture of the Indian economy today? Private 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 sunk many of them and countless millions have lost their jobs with hardly any new opportunities coming the way of the new entrants to the labour market. For quarter after quarter, the growth rate of the economy has been declining until it reached the low of 5.7 per cent in the first quarter of the current fiscal, the lowest in three years. The spokespersons of the government say that demonetisation is not responsible for this deceleration. They are right. The deceleration had started much earlier. Demonetisation only added fuel to fire.
And please note that the methodology for calculation of the GDP was changed by the present government in 2015 as a result of which the growth rate recorded earlier increased statistically by over 200 basis points on an annual basis. So, according to the old method of calculation, the growth rate of 5.7 per cent is actually 3.7 per cent or less.
Even the SBI, the largest public sector bank of the country, has stated with unusual frankness that the slowdown is not transient or “technical”, it is here to stay and the slowdown in demand has only aggravated the situation. It has openly contradicted what the BJP president said just a few days ago that the slowdown in the last quarter was on account of “technical” reasons and will be corrected soon. According to the SBI chairman, the telecom sector is the latest entrant to the long list of stressed sectors.
The reasons for this decline are not far to seek nor have they appeared suddenly. They have been allowed to accumulate over time to cause the present crisis. It was not difficult to anticipate them and take counter measures to deal with them. But that called for devoting time to the task, serious application of mind, understanding of the issues and then working out a game plan to tackle them. It was perhaps too much to expect from a person who was carrying the heavy burden of so many extra responsibilities. The results are there for all of us to see.
The prime minister is worried. A meeting convened by the prime minister with the finance minister and his officials appears to have been postponed indefinitely. The finance minister has promised a package to revive growth. We are all waiting with bated breath for this package. It has not come so far. The only new thing is the reconstituted Economic Advisory Council of the prime minister. Like the five Pandavas they are expected to win the new Mahabharat war for us.
The performance of the monsoon this year has not been flattering. This will further intensify rural distress. The farmers have received “massive” loan waivers from some state governments varying from one paise to a few rupees in some cases. Forty leading companies of the country are already facing bankruptcy proceedings. Many more are likely to follow suit. The SME sector is suffering from an unprecedented existential crisis. The input tax credit demand under the GST is a whopping Rs 65,000 crore against a collection of Rs 95,000 crore. The government has asked the income tax department to chase those who have made large claims. Cash flow problems have already arisen for many companies specially in the SME sector. But this is the style of functioning of the finance ministry now. We protested against raid raj when we were in opposition. Today it has become the order of the day. Post demonetisation, the income tax department has been charged with the responsibility of investigating lakhs of cases involving the fate of millions of people. The Enforcement Directorate and the CBI also have their plates full. Instilling fear in the minds of the people is the name of the new game.
Economies are destroyed more easily than they are built. It took almost four years of painstaking and hard work in the late nineties and early 2000 to revive a sagging economy we had inherited in 1998. Nobody has a magic wand to revive the economy overnight. Steps taken now will take their own time to produce results. So, a revival by the time of the next Lok Sabha election appears highly unlikely. A hard landing appears inevitable. Bluff and bluster is fine for the hustings, it evaporates in the face of reality.
The prime minister claims that he has seen poverty from close quarters. His finance minister is working over-time to make sure that all Indians also see it from equally close quarters.
The writer, a member of the BJP, is a former Union finance minister more
Arun Jaitley is considered to be the best and the brightest in this government. It was a foregone conclusion before the 2014 elections that he would be the finance minister in the new government. His losing his Lok Sabha election from Amritsar was not allowed to come in the way of this appointment. One may recall that in similar circumstances Atal Bihari Vajpayee had refused to appoint Jaswant Singh and Pramod Mahajan, two of his closest colleagues in the party, to his cabinet in 1998. His indispensability was established further when the prime minister rewarded him not only by giving him the finance ministry including the department of disinvestment, but also the ministries of defence and corporate affairs. Four ministries in one go out of which he still retains three. I have handled the ministry of finance and know how much hard work there is in that ministry alone. Finance ministry, in the best of times, calls for the undivided attention of its boss if the job has to be properly done. In challenging times it becomes more than a 24/7 job. Naturally, even a superman like Jaitley could not do justice to the task.
Jaitley was, to begin with, a lucky finance minister, luckier than any in the post-liberalisation era. Depressed global crude oil prices placed at his disposal lakhs of crores of rupees. This unprecedented bonanza was waiting to be used imaginatively. The legacy problems like stalled projects and bank NPAs were no doubt there and should have been managed better like the crude oil bonanza. But the oil bonanza has been wasted and the legacy problems have not only been allowed to persist, they have become worse.
So, what is the picture of the Indian economy today? Private 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 sunk many of them and countless millions have lost their jobs with hardly any new opportunities coming the way of the new entrants to the labour market. For quarter after quarter, the growth rate of the economy has been declining until it reached the low of 5.7 per cent in the first quarter of the current fiscal, the lowest in three years. The spokespersons of the government say that demonetisation is not responsible for this deceleration. They are right. The deceleration had started much earlier. Demonetisation only added fuel to fire.
And please note that the methodology for calculation of the GDP was changed by the present government in 2015 as a result of which the growth rate recorded earlier increased statistically by over 200 basis points on an annual basis. So, according to the old method of calculation, the growth rate of 5.7 per cent is actually 3.7 per cent or less.
Even the SBI, the largest public sector bank of the country, has stated with unusual frankness that the slowdown is not transient or “technical”, it is here to stay and the slowdown in demand has only aggravated the situation. It has openly contradicted what the BJP president said just a few days ago that the slowdown in the last quarter was on account of “technical” reasons and will be corrected soon. According to the SBI chairman, the telecom sector is the latest entrant to the long list of stressed sectors.
The reasons for this decline are not far to seek nor have they appeared suddenly. They have been allowed to accumulate over time to cause the present crisis. It was not difficult to anticipate them and take counter measures to deal with them. But that called for devoting time to the task, serious application of mind, understanding of the issues and then working out a game plan to tackle them. It was perhaps too much to expect from a person who was carrying the heavy burden of so many extra responsibilities. The results are there for all of us to see.
The prime minister is worried. A meeting convened by the prime minister with the finance minister and his officials appears to have been postponed indefinitely. The finance minister has promised a package to revive growth. We are all waiting with bated breath for this package. It has not come so far. The only new thing is the reconstituted Economic Advisory Council of the prime minister. Like the five Pandavas they are expected to win the new Mahabharat war for us.
The performance of the monsoon this year has not been flattering. This will further intensify rural distress. The farmers have received “massive” loan waivers from some state governments varying from one paise to a few rupees in some cases. Forty leading companies of the country are already facing bankruptcy proceedings. Many more are likely to follow suit. The SME sector is suffering from an unprecedented existential crisis. The input tax credit demand under the GST is a whopping Rs 65,000 crore against a collection of Rs 95,000 crore. The government has asked the income tax department to chase those who have made large claims. Cash flow problems have already arisen for many companies specially in the SME sector. But this is the style of functioning of the finance ministry now. We protested against raid raj when we were in opposition. Today it has become the order of the day. Post demonetisation, the income tax department has been charged with the responsibility of investigating lakhs of cases involving the fate of millions of people. The Enforcement Directorate and the CBI also have their plates full. Instilling fear in the minds of the people is the name of the new game.
Economies are destroyed more easily than they are built. It took almost four years of painstaking and hard work in the late nineties and early 2000 to revive a sagging economy we had inherited in 1998. Nobody has a magic wand to revive the economy overnight. Steps taken now will take their own time to produce results. So, a revival by the time of the next Lok Sabha election appears highly unlikely. A hard landing appears inevitable. Bluff and bluster is fine for the hustings, it evaporates in the face of reality.
The prime minister claims that he has seen poverty from close quarters. His finance minister is working over-time to make sure that all Indians also see it from equally close quarters.
The writer, a member of the BJP, is a former Union finance minister more
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Present FM has made the situation worst, Petrol, Disel, CNG & PNG price is getting hiked in everyday. No one is ready to address the issue rather makes initiative to defend. No one has the idea where we really desire to reach or what we have to achieve after taking such harsh decisions continuously? Now no scope of constructive critisism. Perhaps Govt. is not in position to clarify the issue. Hope there will be someone new to take the control. more
Oct 03
I have been getting flak from Andha Bhakths for more than three years for criticizing Jaitley-Modi Finance and Economics. From taxing EPF, to Aadhar, to GST, to Geo Tagging to demonetization. The Struthos buries it's head in the sands. Andha Bhakths lack that classic education. They simply shut their eyes. The momentum of an India where the Judiciary, the Bureaucracy, the Police, and the Political Ruling Class have been constructed, from seventy years of corruption and non accountability and draconian dysfunctional laws and procedures that foment extortion while placing the levers of power in the hands of the Constitutionally Certified Congenitally Unfit as dictated by Social Engineering laws, cannot be turned without dismantling the British and British stooge made colonial Constitution, Structures and Systems designed to "Divide to Rule", and "Shake the Pagoda Tree", flavoured with a liberal doze of Totalitarian Communism. Above all, corruption in India is a "grass root", "bare foot" matter. It is the dominant "culture" of Governance at all levels. It is carried on by Lower Division Clerks, the Police Inspector, the PWD Engineer, the Subedhar Major, the Ordinance or Commissariat Officer, .the Judge, the Magistrate, the "Gazetted Officers", the Doctors, the Lawyers, the Managers and clerks of Public Sector "enterprises". Corruption is truly the sole National enterprise and glue of Governance. The daily collection of mickles will make a daily muckle to beggar the size of any egregious scam, that brought down the Sonia-Manmohan run "Family that loots together to stay together". Potential demand is entirely in the hands of Government and Government employees (the most unproductive and corrupt segment of society) now. This has created unproductive inflation and a very narrow consumption base. This will be accentuated as real income for productive activities such as the labour arbitrage business collapse. India's problem is that most of the expenditure is NON PRODUCTIVE. Forget fruition lag. Everything from reservations to subsidies to the 7th Pay Commission is CONSUMPTION. I have been screaming this from the roof tops since UPA 1, now Modi Sarkar has done more UPA than UPA at a time when genuine income in foreign exchange from labour arbitrage is on a down swing. This is an excellent opportunity to create a new economic model for India. A welfare society that hinges on Herzberg’s two factor theory where consumption is broad based to satisfice the hygiene factors of citizens, leaving them free to excel and be economically productive to the best of their ability, earning or otherwise, along the motivational factors. To fully unleash India's potential, How about Rs 10, 000 per month to ALL citizens over 16, Rs 15,000 p.m.to ALL citizens over 21, Rs 20,000 p.m.to ALL citizens over 30 and Rs 25,000 per month to ALL citizens over 60. Treated as Taxable Income and paid direct to Bank account and simultaneous abolition of ALL labour protective laws,subsidies, reservatons and special privileges whether on the basis of poverty, caste, tribe, religion or whatever, and payable only in States where all subsidies and reservations have been withdrawn? Caveat: Most of India's legacy totalitarian laws would have to be junked along side this initiative. The lack of a meaningful opposition is dangerous for India as we see on a daily basis reflected in comical and expensive BJP gimmicks that side step real issues such as (1) eradicating inequality under law (e.g. Constitutional preferences and entitlements for certain religions, castes, tribes etc) (2) eradicating extortion aka corruption, (3) protecting the religious rights of the many native religions and cultures (dismissed, collectively as Hinduism) from attack under the skewed Constitution and corrupt, incompetent judiciary and alien surrogate political parties and (4) enabling a meritocracy that can address India’s overwhelming Political, Economic, Sociological and Technological problems more
Sep 29
Exactly Modi-Jaitly Finance Policy is in requisites to addressing 2011 Citizen poverty Status & IS WISE . more
Oct 04
Genuine constructive criticism is always welcome. We are suggested to make a thorough review of the current situation. Government should not hesitate. It must where it is and what goals have been achieved, and what is it people desire to boost economic growth. Jaganmohanrao K more
Sep 29
Govt to lay down monetary policies road map for the next 5-10 years & just only tweak them on yearly basis. more
Sep 29
