Sinha broadside on economy bolsters government critics
NEW DELHI: The National Democratic Alliance (NDA) government’s management of the Indian economy, the subject of growing concern and criticism from various quarters, has come under attack once again, albeit friendly fire.
Senior Bharatiya Janata Party (BJP) leader and former finance minister Yashwant Sinha said in a column penned in The Indian Express on Wednesday that the economy is on a “downward spiral” and specifically blamed finance minister Arun Jaitley for the problem.
“The Prime Minister claims that he has seen poverty from close quarters. His finance minister is working overtime to make sure that all Indians also see it from equally close quarters,” Sinha wrote.
The NDA’s response was quick.
On Wednesday afternoon, home minister Rajnath Singh, who briefed the media after the day’s cabinet meeting, said that no one should forget that India remains the fastest growing economy in the world.
Later in the day, other ministers pointed out that the government had undertaken structural changes in the country through demonetisation and implementa- tion of the goods and service tax (GST), and added that the current situation was because of teething troubles as the country gets used to these changes.
“The government is taking some very important decisions. Difficulties and criticism will come but we are confident and we will stay the course,” railway minister Piyush Goyal said.
“Today, in reality, the global economy’s growth is dependent on India. The government under the leadership of Prime Minister Narendra Modi has taken decisions to strengthen the Indian economy,” he added.
“NDA is working with the objective of providing housing for all, toilets, power and education, which will help build a New India and there can be no compromise in our fight against corruption and black money. The idea of business as usual cannot continue,” the railway minister added.
In a reference to Sinha’s friendly fire, he said the Bharatiya Janata Party (BJP) is the only political party where everyone is entitled to their views. Still, Sinha’s stinging critique has lent fresh wind to the opposition charge that the NDA botched up the management of the economy—an argument that gained momentum after official data showed that the first quarter growth of the gross domestic product had slowed further to 5.7%.
Unfortunately for the government, this came soon after the Reserve Bank of India (RBI) said 99% of high-value currency in circulation had returned to the system, belying expectations that a significant proportion, held as black money, would not. The government does have data on all the money (and the people who deposited it) though, and is using data analytics to zero in on the people whose deposits do not match their known sources of income, finance minister Jaitley explained at the time.
“The Congress party has assiduously exposed the many weaknesses in the economy and the terrible mismanagement of the economy. We are happy that Yashwant Sinha has echoed our criticism,” former finance minister and senior Congress leader P. Chidambaram said in a statement. He added that Sinha was “spot on” with his views that “exports have dwindled” and that “demonetisation has proved to be an unmitigated disaster”.
Analysts say the temporary problems caused by demonetisation and the implementation of GST have been exacerbated by poor investment growth, with private investment remaining a non-starter largely on account of the so-called twin balance-sheet problem (debt on the books of companies and bad loans on those of banks). Public investment has kept the economy chugging along, but not everyone is convinced a fiscal stimulus is what is required. A political analyst said that Sinha’s comments should also be seen as coming from a senior leader who has been alienated and who is feeling emboldened by recent events. “Accommodation and expectation management doesn’t seem to have completely taken place with the transition to the current regime. But for his age, Yashwant Sinha is a very competent leader. If the BJP had not put an age limit to hold public office, Yashwant Sinha could have been accommodated,” said Jai Mrug, a Mumbai-based political analyst.