An analysis by the Congress — days after the Narendra Modi government completed four years — on whether the management of the economy has helped the people of the country.
On behalf of the Congress Party, I wish to address you, and through you the people, on the state of the economy.
Since May 26, when the BJP-led NDA government completed 4 years, thousands of words have been spoken and written about the economy. What matters to the overwhelming majority of the people is not those words, but how the management of the economy has affected their lives: are their lives worse or better?
Without making a long opening statement, let me list a few incontrovertible facts about the economy:
1. The RBI’s Consumer Confidence Survey (May 2018) found that 48 per cent of those surveyed felt that economic conditions had worsened in the last 12 months. The survey is unlikely to have covered the most backward parts of the country or the most deprived sections of the people. Therefore, the number of 48 per cent will be actually higher.
2. Farmers’ despondency has turned into anger and farmers have come to the streets to protest. The principal reasons are uneconomic prices for farm produce and stagnant wages of farm labour. For the few crops that have an MSP, the MSP is not adequate and the annual increases have been niggardly. Every farmer knows that the promise of MSP = Cost + 50 per cent is a jumla.
3. There is widespread anger about the artificially fixed prices of petrol, diesel and LPG. There is absolutely no reason why the prices should be higher today than what they were in May-June 2014. It is nothing but a case of fleecing the helpless consumer.
4. Joblessness is rampant. The only reliable data is the quarterly survey of the Labour Bureau. Those numbers reveal that a few thousand jobs are created — or added — every quarter. That is a far cry from the 2 crore jobs a year that was promised as part of achhe din. And I would like to ask, why has the Labour Bureau Survey for Oct-Dec 2017 not been released?
There is great ferment in campuses across the country because young men and women know that there will be no jobs when they graduate. So far, nobody has bought the innovative idea that ‘frying pakoras is also a job’.
5. The tyres on three of the four wheels on which the economy rides are punctured.
– Firstly exports: the growth rate in the last four years has been negative.
– Secondly, private investment: it is in the doldrums, if not dead. Gross Fixed
Capital Formation (GFCF) is stuck at 28.5 per cent for three years.
– Thirdly, private consumption: it was limping until a few months ago, there is a
mild uptick, and we keep our fingers crossed.
The only tyre that seems to be inflated is government expenditure, but here too the government’s options are getting limited because of the pressure on the current account deficit (CAD) and the fiscal deficit (FD).
6. The adverse effects of demonetisation have been established beyond doubt. The growth rate has declined from 8.2 per cent in 2015-16 to 6.7 per cent in 2017-18 —exactly 1.5 per cent as I had predicted and endorsed by Dr Manmohan Singh.
The Tamil Nadu government has officially acknowledged that 50,000 SME units were shut down in the State in 2017-18; 5,00,000 jobs were lost; and capital investment in the SME sector declined by Rs 11,000 crore. Exports from Tiruppur declined from Rs 50,000 crore to Rs 36,000 crore in 2017-18. Multiply that several times for the whole country, and you will get an idea of the devastation wrought by demonetisation.
7. A flawed GST continues to haunt trade and business. GSTR Form 2 (for input tax credit) and GSTR Form 3 (for net tax liability) have not been notified so far. Tax liability is being calculated on the temporary GSTR Form 3B, which is illegal. Refunds of thousands of crore rupees have been held up putting businesses, especially exporters, in jeopardy.
8. Gross NPAs have risen in the last four years from Rs 2,63,000 crore to Rs 10,30,000 crore and will rise more. No bank is willing to lend a big-ticket loan. Credit growth to industry in the last four years was 5.6, 2.7, -1.9 and 0.7 per cent. The Banks Board Bureau (BBB) is an utter failure. Government cannot find the additional money to recapitalise banks.
9. Inflation is on the rise. Inflation expectations are high. No more proof is necessary than the hike in the repo rate a few days ago. Interest rates will rise throwing more burden on consumers and producers.
10. Social security laws and programmes have been neglected. The Food Security Act has not been implemented. MGNREGA is no longer demand-driven, wage arrears have mounted. Crop Insurance covers barely 30 per cent of farmers, it is a windfall for insurers. Health Protection Scheme is another jumla. – PIB
loans were given by upa and now they are turning npa ; who is responsible.
Ha! There is only one reason – Chidambaram is not the finance minister!
In as much as the criticism has come from Mr.Chidambaram,though some of them are vague,Govt must reply with facts and figures.