Nothing seems to be going fine for the Union Government on the economic front, right from figures put out by international agencies and the Reserve Bank of India to the Finance Minister's husband turning critical and the newest Nobel laureate in economics finding the country's economic policies doing little to tide over a crisis.
Criticism seems to be stonewalled with bizarre arguments. While those at the top want to stay insulated and refuse to acknowledge the fact that an economic slowdown is taking its course and its toll, a Union Minister rubbishes off any crisis in the most filmy style, saying Rs 120 crore business done by three Bollywood movies on a single day suggests that the fundamentals of the country's economy are strong.
Early this week, the International Monetary Fund slashed India’s Gross Domestic Product rate from 7 per cent to 6.1 for this fiscal. This came close on the heels of the World Bank paring the growth rate to 6 per cent and stating, “India’s cyclical slowdown is severe.”
India is behind its neighbours Nepal, Pakistan and Bangladesh in a list of 117 countries on the hunger and malnutrition fronts. The Global Hunger Index (GHI) for the country fell to 102 in 2019 from 55 in 2014.
Solace is being found in the high population compared to the neighbours and the difference in country numbers which was 76 in 2014, 119 countries in 2017, same in 2018 when India ranked 103 and in 2019 the index was calculated with a sample of 117 countries. Also, the only relevant part is that the country succeeded in halving its poverty rate from the 1990s.
Exports and imports have been down during the first half of this fiscal as also domestic consumption.
The series of RBI surveys point to the damaging impact of economic slowdown on consumer confidence. The manufacturing sector too has taken the hit. In simpler terms, consumption and investment have slumped. It is here that the government should initiate steps to boost consumption which will automatically increase production and manufacturing. But unfortunately the focus has been on corporates when the majority, who are part of the farm and SME sectors, accounts for the chunk of consumption.
The central bank’s ‘consumer confidence survey’ pointed to drop in sentiments around income, employment and discretionary spending.
The current situation index (CSI) fell to 89.4 in September from 95.7 this July.
The RBI's 87th round of ‘Industrial Outlook Survey’ on the business climate for the second quarter and expectations of businessmen in the next quarter showed that the Business Assessment Index fell sharply to 92.5 in the second quarter against 108.5 in the previous quarter.
In the wake of growing concern over economic slowdown and the BJP government trying to create a facade of courage and claiming all is well, came the criticism from none other than Finance Minister Nirmala Sitharaman's husband Parakala Prabhakar, an economist himself. He wrote that BJP should follow the Narasimha Rao-Manmohan Singh economic model in the present situation. To him, the two former Congress Prime Ministers were "pillars of economic reforms" in modern India. As if to counter this, Sitharaman and her party have gone out to claim that the two were responsible for all the present ills.
The way the Government has been justifying its policies was best exemplified in Sitharaman's recent statement on the shoddily implemented Goods and Services Tax. GST, even if faulty, could not be damned as it had been passed by Parliament and all assemblies, she argued.
"It might have flaws, it might probably give you difficulties, but I am sorry, it's the 'kanoon' of the country now," was her remark, a justification that certainly defied logic.
Yet another Minister Ravi Shankar Prasad used weird logic to claim that there was no slowdown on the basis of three Bollywood films making huge box office collections on a single day.
It is no indication that there is no slowdown, but a sheer phenomenon during bad times when consumers spend on smaller indulgences as they do not have cash for bigger spends.
It could be sheer coincidence that a staunch critic of the Modi Government's economic policies won this year's Nobel Prize for economics. Abhijit Banerjee, who shared the prize with two others for studies on poverty alleviation, was among the first to speak out against demonetisation. He recently said the economy was in a tailspin. In the backdrop of slowing growth, the Government needed to stop worrying about monetary stability and focus on increasing demand.
Yet another Minister Piyush Goyal dubbed Abhijit as 'Left-leaning'. Criticising the economist for his poverty alleviation scheme of NYAY that Congress had as one of its main election campaign programmes, Goyal said this was rejected by voters and so there was "no need to accept what he thinks".