Ever since the Narendra Modi government assumed office in May 2014, India’s economic policies have been mostly driven by whims and fancies, and not by detailed preparation, prior consultations and serious thinking. Coupled with the masterly art of ‘recycling’ earlier policies, many public welfare programmes were distorted, re-named and re-launched. People were left wondering when the Economic Survey 2019-20 asserted that India was insulated from the ‘policy uncertainty’ that continued to haunt the rest of the world. Coronavirus had already raised its ugly head by then and the Indian economy was in the throes of a crisis, besieged with multiple problems.
The draft of the Economic Survey was prepared by the Chief Economic Adviser in the ministry of finance and the world also looks at it as such. It is taken as a statement of his outlook on the economy. But surely the finance minister reads it carefully, makes changes wherever considered necessary and presents it to Parliament. If it has a series of erroneous calculations and projections, the finance minister is equally responsible for them. Even at the beginning of February, India was staring at a number of uncertainties in the economy, which were confirmed by later events.
By the third week of March 2020, the country had only about 500 Covid-19 cases, but a complete lockdown was announced by Prime Minister Narendra Modi in a well-articulated prime-time televised address. He assured fellow citizens in this speech of getting rid of this pandemic in 21 days as without it, he said, the country would go back 21 years in the growth trajectory. Sadly, with over five lakh cases now, India ranks number 4 among nations worst hit by the global pandemic. Moreover, it is common wisdom now that the lockdown has resulted in the near-collapse of the economy and destroyed livelihoods on a large scale.
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Adding to the confusion
As the situation became alarming due to the surge in Covid-19 cases, the Modi government announced a confusing decision to reopen various sectors during, what in effect is, the fifth lockdown but has been described as ‘Unlock 1’. The states have contributed to this confusion. ‘Unlock 1’ is claimed to have an ‘economic focus’. In fact, the unlocking decision followed the latest GDP numbers that showed the slowest growth in 11 years, and a CMIE survey said that about 12 crore people had lost their jobs during the lockdown. As a wisecrack said in a social media post, the blame really lies with India’s first Prime Minister Jawaharlal Nehru, because if he had not built the airports, there would be no travelers by air, and therefore no Covid.
The latest figures for economic growth convey a sad picture. The growth rate of the last quarter of the financial year 2019-20 has fallen to 3.1 per cent. For the whole financial year, the growth rate has come down to 4.2 per cent, though initially, it was pegged at 8.5 per cent. Even until a month before the close of the last financial year, the government was bullish on achieving a minimum 5 per cent growth rate. In no measure can this be attributed to the pandemic or the consequent lockdown as only a week of the last fiscal was wasted in the lockdown.
The economy, which was already in a bad shape throughout the last fiscal, was made worse by the policy adventurism and misplaced priorities of the Modi government. The growth figures for the previous quarters in FY 19-20 have been revised sharply downwards: the first quarter from 5.6 per cent to 5.2 per cent, the second quarter from 5.1 per cent to 4.4 per cent and the third quarter from 4.7 per cent to 4.1 per cent. Surprisingly, the upward revision from the first advance estimates to the second was done in less than two months and the second downward revision also in less than two months.
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Unprofessional handling of economy
Instead of giving the economy the necessary dose of revival, it was handled in an unprofessional manner. The figures were manipulated at will and euphoria was sought to be created to hide the dark picture that was prevailing in the economy. It is noteworthy how the upward revision on 28 February enabled the government to sustain the claim that the economy would grow by 5 per cent. The downward revision on 29 May has enabled the Modi government to claim that the fourth quarter’s growth is 3.1 per cent, while Soumya Kanti Ghosh, Chief Economic Advisor, State Bank of India observes that the growth rate in the last quarter would have been only 1.2 per cent if the earlier figures had not been revised downward so sharply.
We are aware that in January 2015 the government changed the base year and the formula for calculating the GDP, which raised the growth rate for FY15 to 6.4 per cent in place of 5 per cent estimated earlier. One of the authors of this piece (Yashwant Sinha) had estimated in 2017 that the growth figures were over calculated by at least 200 basis points or by 2 per cent. Arvind Subramaniam, the former Chief Economic Adviser later claimed, based on research, that it was over-estimated by 250 basis points or by 2.5 per cent.
The arrangement had its ethical dimensions. It helped the government to claim, especially through a captive media, that the Modi government’s economic achievements were impressive while in reality it was just fiction. If 2.5 per cent is deducted from the new GDP calculation formula, last year’s growth would not be more than 1.70 per cent. Even this figure can be contested.
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Sincerity not shrewdness
PM Modi’s call for being ‘self-reliant’ or ‘Atma Nirbhar’ is supposed to have a wider meaning. It is a forward-looking concept, informed with moral values. Governance is not for occupying posts in the government, it is for public service. M.K. Gandhi’s version of ‘self-reliance’ was influenced by John Ruskin’s Unto this Last. It was an article of faith for him where the means were as important as the end, a far cry from the tenets followed by today’s rulers. Jawaharlal Nehru’s scientific socialism prompted him to take India on the path of planned economic development to achieve the same end.
Sincerity not shrewdness should drive public policy, especially economic policies that have a direct impact on people’s well-being. Packaging can only go a little far. Ultimately, artificially created public opinion can be misleading, even for the rulers. What matters is the future of the country and its people. World over, rulers are facing the most difficult test of their careers. Their fate does not matter in the long run, what matters is the well-being of the people and their future, which must be safeguarded at all cost. As of now, India is facing deep policy uncertainties, its toll is heavy and reflects on the state of affairs.
Sinha is a former Union Minister of Finance and External Affairs. Thakur is a Delhi-based policy professional and columnist. Views are personal.
And you see Modi supporters indulging in whataboutery, sadly worst days are yet to come..
Moreover what we are really missing is that our domestic market and industry is still not connected with the global supply chains. In economies like Bangladesh and Vietnam almost 80% of the exports are made by large corporations, whereas in India almost 80% is still made by small MNC’s and MSME. This again show the policy paralysis of the government. And after this disastrous management of economy by government we will again loose incoming FDI.
Instead of reducing trade barriers and integrating our economy more with the global economy. The government is trying to close the doors for businesses and traders. This will reduce the efficiency of Indian companies and make their products more expansive further damaging the exports and all this will again go in loop.
When Dr. Manmohan Singh brought the reforms and reduce trade barriers there was same fears but it all went good and we are still reaping the benefits of it and all this he did was in complete silence and with sharp focus unlike today’s government which believes in making tall claims with no results.
Kudos to ThePrint for providing a web platforms to all known anti-Modi disgruntled politicians, journalists of the bygone dynasty era . The man who as the Finance Minister of India safely transported and delivered tones of Gold to treasuries of The Great Britain for securing a paltry sum of loan of $ 405 Millions. (The RBI had to ship 47 tonnes of gold to the Bank of England to raise $405 million in 1991 when honourable Sinha was honourable Finance Minister of India . ) This was done to tide over short term liquidity foreign exchange problem . According to this gentleman When India is having in excess of $ 500 billions .(note, not Millions ) of foreign Exchange in its kitty ,, IS A FAILURE . More over this is too at a time when economy IS beset with the problems originating from world wide slow down, lockdowns and trade wars and ongoing pandemic covid -19 , amassing of enemies troops on our northern borders . He is blaming Modi government of not having anticipated the problems of lock-down, when even big economies of USA, Britain, E.U- France , Italy, Germany, or of Brazil are in mess created by Wuhan originated virus. He talks about Migrant workers with out realising how many type of or groups of migrants workers are. How and why they leave hometowns and home-villages and when they return every year since the time our great dynasts started development of India in early fifties of the last century and that development dream remained un-accomlished even after six-seven decades of Family rule by Nehruvian dynasty. ?
The man is living in past decades and is bent on criticizing the Modi government as criticizing is the only trait in which he seems to be master-mind. But providing valuable web-space by the ThePrint to prophate of doom is not in the interest of nation. The Chief editor of thePrint should himself pay attention to this job. Please do not delegate this responsibility to your junior editors.
Not too sure why these politicians in India can’t gracefully retire and enjoy their twilight years? This 82 year young politician is still salivating at the prospect of bouncing back with the support of a Mickey Mouse set up in Bihar. The gangs of Modipur and Shah-land are no great, but surely India do have talented young guns who could take the country forward..
Timely article! But who is going to wake up MODI Ji from deep self hypnotising ego deep slumber. I just noticed BJP is bypassing IAS, IPS recruitment by lateral placing that surely will be filled by their cronies . GOD SAVE INDIA. as opposition is no where in picture. Jaswant Ji1 give up on Rahul and bring some new younger faces committed to serve not command.
Dear Gentleman, You are the one who pledged the nation’s gold. Had not your govt. not been pulled down, we would have been banana republic by now. For God’s sake, please keep your advises on economy to yourself
Just another example of the great Indian political circus. LK Advani cracked the ringmaster’s whip in 2002 so that Modi could keep his seat after the Gujarat riots just to show PM Vajpayee who is the real boss in the BJP. Worthies like Mr Sinha and Mr Shourie held their silences, perhaps believing that they were destined to win another term as high ministers. Years later, Modi himself won a mandate to occupy Vajpayee’s chair and squeezed all these worthies out and hung them to dry. So now they are squealing and hope that someone will take pity and grant them a few votes. Not going to happen, Mr Sinha. You are either with Mr Modi or with Mr Rahul Gandhi – there isn’t a third alternative available in present circumstances. If you are alive, you will see some other worthies getting squeezed out by Mr Modi’s replacement when his own time is up. The great Indian political circus of good men maintaining silence to keep their own jobs as clowns will move to another era. The great Indian nation is perpetually condemned to keep watching this grotesque show.
A father must know when to stop otherwise people will start calling him a senile old man. But them grace has never been the virtue.