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Thursday, Nov 21, 2019

Economy in prolonged slowdown: Manmohan Singh

The senior Congress leader was reacting to the 5% Gross Domestic Product (GDP) growth in the April-June quarter, the slowest in more than six years.

india Updated: Sep 01, 2019 23:36 IST
Rajeev Jayaswal and Kumar Uttam
Rajeev Jayaswal and Kumar Uttam
Hindustan Times, New Delhi
Former PM Manmohan Singh has sounded his concerns over the recent slowdown in growth.
Former PM Manmohan Singh has sounded his concerns over the recent slowdown in growth. (HT FILE)

Former prime minister Manmohan Singh said on Sunday the Indian economy is “in the midst of a prolonged slowdown” because of “all-round mismanagement by the Modi government” and it has not yet recovered from the “man-made blunders” of demonetisation and the “hastily implemented” Goods and Services Tax (GST).

The senior Congress leader was reacting to the 5% Gross Domestic Product (GDP) growth in the April-June quarter, the slowest in more than six years. Manufacturing, particularly the automobile sector, a weathervane of economic sentiment and also industrial health, has been hit hard, with passenger car sales in July falling 30% compared to a year ago.

“It is particularly distressing that the manufacturing sector’s growth is tottering at 0.6%. This makes it very clear that our economy has not yet recovered from the man-made blunders of demonetisation and a hastily implemented GST,” Singh said in a statement.

The former PM, who is also an economist, advised the government to involve experts irrespective of political affiliation to avert the crisis. “Our youth, farmers and farm workers, entrepreneurs and the marginalised sections deserve better. India cannot afford to continue down this path. Therefore, I urge the government to put aside vendetta politics, and reach out to all sane voices and thinking minds, to steer our economy out of this man-made crisis,” he said.

Finance minister Nirmala Sitharaman hit back at Singh’s remarks later in the day. “‘Instead of indulging in political vendetta, they should consult sane voices?’ Has he said that? All right, thank you, I will take his statement on it. That is my answer,” she said while talking to reporters after addressing tax officials in Chennai.

Referring to a slew of announcements made by Sitharaman on August 23 to achieve a “higher economic growth”, Singh said: “Budget announcements and roll-backs have shaken the confidence of international investors.” The announcements to boost consumption and uplift investor and consumer sentiment included rolling back of the surcharge on tax on foreign portfolio investors (FPIs) that was announced in the budget.

“Domestic demand is depressed and consumption growth is at an 18-month low. Nominal GDP growth is at a 15-year-low. There is a gaping hole in tax revenues. Tax buoyancy remains elusive as businessmen, small and big, are hounded and tax terrorism continues unabated. Investor sentiments are in doldrums. These are not the foundations for economic recovery,” Singh said.

Chief economic adviser KV Subramanian has ascribed the slowdown in GDP growth to a mix of domestic and global factors and said the economy will be on a high-growth path “very soon”.

Singh said that the government’s claim of keeping the inflation level under check is at the cost of dwindling income of farmers. “Rural India is in terrible shape. Farmers are not receiving adequate prices and rural incomes have declined. The low inflation rate that the Modi government likes to showcase comes at the cost of our farmers and their incomes, by inflicting misery on over 50 per cent of India’s population,” he said. The consumer price index-based inflation fell to 3.15% in July this year compared to 3.18% in the previous month and 4.17% in July 2018 because of moderation in food prices and fall in fuel prices.

Former union minister and spokesperson of the Bharatiya Janata Party (BJP) Syed Shahnawaz Hussain blamed the Singh-led United Progressive Alliance (UPA) government for “many problems” that the economy was currently facing. “The economy has still not recovered from the impact of the wrong economic policies of the Manmohan Singh government. India’s growth rate is much better than other countries despite a global slowdown. The Narendra Modi government is working tirelessly to give it a further impetus,” he said.

In his statement, Singh said the credibility of India’s official data has been questioned, and expressed concerns over attack on institutions such as the Reserve Bank of India (RBI), whose “autonomy is being eroded”. “The resilience of the RBI will be tested after its record transfer of Rs.1.76 lakh crore to the government, which claims that it does not have a plan on what it will do with this windfall,” he said.

“India has not been able to increase its exports to take advantage of opportunities that have arisen in global trade due to geopolitical realignments. Such is the state of economic management under the Modi government,” he said.

The former prime minister blamed the Narendra Modi-led government for the slowing economic growth. “India has the potential to grow at a much faster rate but all-round mismanagement by the Modi government has resulted in this slow down,” he said.

“The Modi government’s policies are resulting in massive job-less growth. More than 3.5 lakh jobs have been lost in the automobile sector alone. There will similarly be large scale job losses in the informal sector, hurting our most vulnerable workers,” he said.

Asked if the Centre acknowledges that there is an economic slowdown, Sitharaman said, “I am meeting industries and taking their inputs, suggestions on what they would want and expect from government, I am responding to them. I have already done this twice.I will do it more number of times.”

In response to the above statement by the minister, Congress general secretary Priyanka Gandhi Vadra said in a tweet, “Does the government accept that there is a slowdown or not? The FM needs to get over politicking about the state of our economy and come clean with the people of India. How do they plan to resolve the massive problem they have created if they aren’t even ready to acknowledge it?

Congress leader and Rajasthan chief minister Ashok Gehlot said that the former PM has been cautioning the government about “repercussions” of demonetisation and GST disasters. “He is reaching out to Govt again to listen to sane voices and make amends for sake of country’s economy & people, who are losing jobs....will Govt pay heed?,” Gehlot tweeted.

The official Twitter handle of the Communist Party of India (Marxist) also posted about the state of the economy. “Chickens are coming home to roost! Modi Govt’s disastrous policies such as #Demonetisation & #GST broke the back of the #Economy and then coverup & denial of the crisis we are in is driving the Economy to the brink of abyss.”