The current Government of India has kept no stones unturned that would make India one of the most respected country in the world. The achievements of Government like Low Inflation rates, reduced rate of interest for Educational and Home loans, increased Foreign Direct Investment, ease of doing business, Swachh Bharat –a forward looking initiative and many more commendable things are undeniable.
However, when we critically view the current state of the government with respect to the economy and the macro-economic factors that run the economy as a whole, many things can be seen in the second tenure of the current Prime Minister which are not working in the favour of $5 trillion economy. Few facts from a different perspective to analyse the economic condition.
Corporate Investments’ fell by 60% (a report by The Hindu). Foreign investments are withdrawn after the announcement of the annual budget. Falling markets creating a forfeiture of approximately 475 crore.
Value of Bank frauds increases to 74% that is approximately INR 71,543 crore in FY’19 as per an RBI report. Loans worth INR 2.4 lakh crore of public sector banks which apparently ‘turned bad’ have been written off in last 5 years in parliament.
Resignations by economic counsellors:
• Jan’19 – Two Members from National Statistical Council resign due to Jobs Data Manipulation.
• Aug’17 – Niti Aayog VC Arvind Panagariya resigns.
• June’16 – RBI Governor Raghuram Rajan resigns.
• June’19 – RBI Deputy Governor Viral Acharya resigns.
• Dec’18 – RBI Governor Urjit Patel resigns.
• June’18 – Chief Economic Advisor to Modi Govt Arvind Subramanian resigns.
ONGC – once one of the ‘most profitable’ public sector entities of India reported a loss after interferences from the Government of India in last 5 years as per reports. It shows a loss of approximately 4000 crore FY’19. Similar situation is faced by HAL & BSNL in last few years. Ultimately Government of India borrows 1.76 lakh crore from RBI Reserve Fund.
- Rural wage growth FY’14 – 14.6% to merely 1.1% in FY’19.
- India’s dollar growth rate is currently 2.8 %( acc. To TOI)
- With a per capita GDP of $2,036, India ranks 119 out of 192.
- Unemployment rates touches 6.1% (BBC report)
Major Reasons for Economy Slowdown
One wouldn’t disagree that ineffective implementation of the major reforms in the economy that is Goods and Service Tax and Demonetization are the main reasons for the great slump in the GDP , There is a rising mistrust among the wealth creators of the country. The consumption of the economy has slashed prominently showing the real phase of the economy.
All these facts clearly states that Modi Government is lacking in the Economic field. A $5 trillion economy is a faraway reality.
The government now needs to work towards building the economy through structural improvements.
Economy does not lie in sparing money, but spending it wisely.
The amount taken by Government from Central Bank should be used to boost the consumption of economy. The action has to inspire confidence among consumers to spend and for industry to invest. There has to be an improvisation in the credit flow. Stimulus should drive investment, upskilling for displaced employees. Market reforms such as bringing the cost of land down should be taken into consideration.
Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
AN ARTICLE BY – SHIVANGI SHAH
Co-written by – Rony Saha