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Manmohan Singh has economy advice for PM Modi — get rid of suspicion, trust Indians

Read full text of Manmohan Singh's Friday speech in which he criticises Modi govt for creating a climate of fear in society that is 'stifling economic activity'.

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New Delhi: Former Prime Minister Dr Manmohan Singh said Friday India’s economic development had come to halt on account of a “climate of fear” under the Modi government.

“There is profound fear and distrust among our various economic participants. Public trust in independent institutions such as the media, judiciary, regulatory authorities, and investigative agencies has been severely eroded. This toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society is stifling economic activity and hence economic growth,” the celebrated economist said as he delivered the valedictory address at the ‘Conclave on the Economy’ organised in New Delhi by Rajiv Gandhi Institute for Contemporary Studies and Samruddha Bharat Foundation.

His observations came on a day when government data showed India’s GDP growth slowing to 4.5 per cent in the July-September quarter — the slowest pace in six years.

Read his full, unedited, speech below:

I am indeed happy that the Rajiv Gandhi Institute of Contemporary Studies and Samruddha Bharat Foundation have taken this initiative to organise this conclave. It is particularly an appropriate time to have such discussions on the state of our economy. The state of our economy is deeply worrying. But today, I will argue how the state of our society is even more worrying and that is a fundamental reason for the precarious state of our economy. I will talk today largely as a concerned citizen and as an economist, so that we can keep politics out of this important discussion.

Of late, I have been remembering my days as a student of economics at Cambridge University in the 1950s. Universities foster an environment that encourages students to pursue the intellectual truth. The university teaches us to be intellectually fearless and honest, lucid in expressing our opinion, being open to argument and dissent.

Most importantly, it is a place to meet people of various beliefs and ideas and not be confined in an echo chamber. I was taught by renowned economists such as Joan Robinson, Nicholas Kaldor, Richard Kahn on how economic growth and development are shaped by the societies in which they operate. One cannot separate society from the economy in any nation.

The state of our economy categorised as industry, agriculture, trade, jobs, taxes, monetary policy and fiscal policy have already been discussed at length by experts in this conclave. There is no one today that can deny the sharp slowdown in India’s economy and its disastrous consequences, particularly for farmers, youth and the poor.

But it is my belief that mere changes in economic policy alone will not help revive the economy. We need to change the current climate in our society from one of fear to one of confidence for our economy to start growing robustly again.

A nation’s state of the economy is also a reflection of the state of its society. An economy is a function of the numerous exchanges and social interactions among the people and institutions. Mutual trust and self-confidence are the bedrock of societal transactions that foster economic growth. Our social fabric of trust and confidence is now torn and ruptured.

There is a palpable climate of fear in our society today. Many industrialists tell me they live in fear of harassment by government authorities. Bankers are reluctant to make new loans, for fear of retribution. Entrepreneurs are hesitant to put up fresh projects, for fear of failure attributed to ulterior motives. Technology start-ups that are an important new engine of economic growth and jobs, seem to live under a shadow of constant surveillance and deep suspicion.

Policymakers in government and other institutions are scared to speak the truth or engage in intellectually honest policy discussions. There is profound fear and distrust among our various economic participants. Public trust in independent institutions such as the media, judiciary, regulatory authorities, and investigative agencies has been severely eroded. This toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society is stifling economic activity and hence economic growth.

The root cause of this is the government’s policy doctrine that seems to suspect every industrialist, banker, policy maker, regulator, entrepreneur and citizen. This has halted economic development with bankers unable to lend, industrialists unable to invest and policymakers unable to act.

The Modi government seems to view everything and everyone through a tainted prism of suspicion and distrust, through which, every policy of previous governments was considered of bad intent, every loan sanctioned was undeserving, every new industrial project was crony in nature and so on. And the government has positioned itself as some saviour, resorting to foolhardy moral-policing policies such as demonetisation, that have proved to be disastrous.

For economic growth to revive, it is very important that the government enthuses trust and confidence. It is very important for businessmen, capital providers and workers to feel confident and exuberant rather than being fearful and nervous. This is possible only if the government sheds its current doctrine and begins to trust India’s farmers, India’s entrepreneurs and India’s citizens at large.

India is now a $3 trillion global economic powerhouse driven largely by private enterprise. It is not a tiny command and control economy that can be bullied and directed at will. Nor can it be managed through colourful headlines and noisy media commentary. Shooting down messengers of bad news or shutting off economic reports and data is juvenile and does not behove a rising global economic powerhouse. No amount of subterfuge can hide the performance and analysis of a $3 trillion market economy of 1.2 billion people. Economic participants respond to social and economic incentives, not diktats or coercions or public relations.

With an absolute majority in the Lok Sabha and low global oil prices, this is a once-in-a-generation economic opportunity to catapult India to the next phase of economic development and create new jobs for hundreds of millions of our youth. I urge the Prime Minister to set aside his deep-rooted suspicion of our society and nurse us back to a harmonious, confident and mutually trustworthy society that can revive the animal spirits and help our economy soar.

Also read: India’s GDP grows at 4.5% in Q2, lowest in more than 6 years


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  1. 1. My question to all opposition party leaders, and especially to former PM, is this: do they accept that NDA government led by PM Narendra Modi has a clear mandate of people of India? 2. Yes, economic slowdown is a fact but what is approach of opposition parties? They are just criticizing the government. They are not interested in an exercise which involves a close scrutiny of performance of economy after 2010, and of course of failure of the Congress led UPA government to implement much-needed reforms. 3. Opposition parties’ and particularly of Congress’ basic objective is very clear- to embarrass the NDA government and PM Narendra Modi in particular. How is it useful in dealing with the current economic slowdown? Therefore, I think that opposition parties and particularly economists like former PM Manmohan Singh, should, instead of merely criticizing the NDA government, discuss need for, and then demand, implementation of many reforms, especially in fields of labour, banking and agriculture. These parties have to offer a hand of cooperation so that implementation of reforms is smooth and effective.

    • Dear Mr. Apte. Your comment, like the mainstream media, only questions the opposition. In fact, your comment mentions the word opposition 5 times. But not one time does it question this government. Policy making is the responsibility of the government, not the opposition. The discussion should be initiated by the government. It is like going to the Supreme Court as the Amicus Curia uninvited and then being thrown out. Please learn to criticize and question the government you voted for.

  2. Dr. Singh is a respected economist. Even though, he is in the opposition, he is not a typical politician. PM Modi will do well to pay heed to Dr. Singh. And, please get rid of your incompetent FM.

  3. MMS was a golden zero in 10 years of UPA. A pathetic puppet dancing to 10 Janpath — making sure the ‘parcel’ of govt files were hand-delivered to the presiding goddess at 10 Janpath. UPA looteras made money hand over fist. in scam after scams. Thank god, Modi has banished these dalals, freebooters and buccaneers from all corridors of power.

    As if the scams were not enough, terrorists like Indian Mujaedin had a field day under MMS — bomb blasts wracked city after city with sickening regularity. Crowning glory was of course 26/11 and the seaborne invasion of Mumbai by Jehadis from Pakistan.

    (Thank you World Bank for putting a gun on MMS head in 1991 with barely 2 weeks of forex left and tonnes of gold airlifted to Bank of England by that other golden zero, Yashwant Sinha when he was FM. No way India would have done away with the Licence Permit Raj gift of Nehru unless it was staring at the wrong end of double-barred gun! )

  4. One fears it now goes beyond sentiment and emotion alone. That could be changed overnight by executive fiat. There has been colossal misdirection of resources. Consider the entire oil bonanza. The depletion of reserves accumulated by LIC ( actually premia ) , ONGC, RBI. A combined fiscal deficit of close to 10% of GDP each year. If those sums had been used productively, such an immense fiscal stimulus ought to have set off a virtuous cycle of growth. Railways and the road sector have been a sink. The pay commission, OROP, a million men in the CAPF. The government is absorbing too much of the barqat of the economy. To top it all, the incandescent economic team.

    • NDA is still absorbing losses created by so called economist PM, lot of NPA of Nationalized banks plus losses of PSU are coming to haunt India now. Remember corruption in central government and railway minister resigning due to bribe taken by his nephew. It takes more than decade to over come all fleas of bad policies of congress.

      • How long will you go on blaming the Congress? Another 1000 years? Stop the blame game and face the consequences of your actions. In short, stop being babies.

      • This nonsense wouldn’t do. Modi had five full years, which he had asked for to fix everything that the UPA government had done wrong! Instead the economy worsened during six years under his watch!

    • The deficits would’ve been lower if the economy had been growing well. Railways would’ve not suffered so much. Neither the road sector.

      People produce when they’re reasonably happy. And there Manmohan Singh is right.

      Now you have the real air-pollution, and you have the pollution of hate given by the BJP. The two combined are suffocating India.

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