Dr Singh, considered the architect of the neo-liberal Indian economy, said the state of the economy was deeply worrying.
Abdul Bari Masoud | Caravan Daily
NEW DELHI — As the GDP growth plunged to a historic low of 4.5 per cent in the second quarter of the current financial year, former prime minister and senior Congress leader Dr Manmohan Singh on Friday strongly criticised the Modi government’s handling of the economy. He blamed the sharp downturn in GDP growth on the “palpable climate of fear in our society today” that has been created by the government.
Delivering the valedictory speech at the National Conclave on the Economy at Jawahar Bhawan here, Dr Singh, considered the architect of the neo- liberal Indian economy, said the state of the economy was deeply worrying.
He said the GDP figures released earlier today pointed out that the growth rate of the economy in the second quarter of current fiscal was as low as 4.5 per cent. “This is clearly unacceptable and the aspirations of our people are that this country should grow at 8-9 per cent per annum. Therefore the sharp decline in growth rate from 5% in the first quarter to 4.5 per cent in the second quarter is indeed worrisome.”
“The state of our society is even more worrying and that is a fundamental reason for the precarious state of our economy,” he said, while referring to the climate of fear in the society at large.
The former Congress PM said many industrialists have told him they were “living in fear of harassment by government authorities” and added that bankers are afraid to give out loans “for fear of retribution”.
“There is a palpable climate of fear in our society today. Many industrialists tell me they live in fear of harassment by government authorities. Bankers are reluctant to make new loans, for fear of retribution. Entrepreneurs are hesitant to put up fresh projects, for fear of failure attributed to ulterior motives. Technology start-ups that are an important new engine of economic growth and jobs seem to live under a shadow of constant surveillance and deep suspicion.”
The former PM also pointed that policy makers in government and other institutions were scared to speak the truth or engage in intellectually honest policy discussions. “There is profound fear and distrust among various economic participants. Public trust in independent institutions such as the media, judiciary, regulatory authorities, and investigative agencies has been severely eroded,” he added.
As an economist, he said there was no one today who can deny the sharp slowdown in India’s economy and its disastrous consequences, particularly to farmers, the youth and the poor. Lashing out at the Modi government, he said the root cause of this was the government’s policy doctrine that seemed to suspect every industrialist, banker, policy maker, regulator, entrepreneur and citizen. “This has halted economic development with bankers unable to lend, industrialists unable to invest and policymakers unable to act,” he said.
“The Modi government seems to view everything and everyone through a tainted prism of suspicion and distrust through which, every policy of previous governments was considered to be of bad intent, every loan sanctioned was seen undeserving, every new industrial project was seen as crony in nature and so on.”
He said “a nation’s state of the economy is also a reflection of the state of its society.”
Referring to the highly vitiated communal atmosphere in the country, Dr Singh said, “An economy is a function of the numerous exchanges and social interactions among the people and institutions. Mutual trust and self-confidence are the bedrock of societal transactions that fosters economic growth. But our social fabric of trust and confidence is now torn and ruptured.” This toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society are stifling economic activity and hence economic growth, he warned.
He also lambasted the attitude of the government in suppressing data with a view to hiding its economic failures. “No amount of subterfuge can hide the performance and analysis of a $3 trillion market economy of 1.2 billion people. Economic participants respond to social and economic incentives, not diktats or coercions or public relations.”
Dr Singh further said that India was now a $3 trillion global economic powerhouse driven largely by private enterprise and “it is not a tiny command and control economy that can be bullied and directed at will.” He added: “Nor can it be managed through colourful headlines and noisy media commentary. Shooting down messengers of bad news or shutting off economic reports and data is juvenile and does not behave a rising global economic powerhouse.”
Criticizing the demonetization decision, he said it proved a disaster to the economy. “The government has positioned itself as some saviour, resorting to foolhardy moral-policing policies such as demonetisation that have proved to be disastrous.”
For economic revival, Dr Singh emphasized that mere changes in economic policy will not help revive the economy. “We need to change the current climate in our society from one of fear to one of confidence for our economy to start growing robustly again at 8 per cent per annum.”
Dr Singh said it was very important that the government encouraged trust and confidence. “It is very important for businessmen, capital providers and workers to feel confident and exuberant rather than being fearful and nervous. This is possible only if the government sheds its current doctrine and begins to trust India’s farmers, India’s entrepreneurs and India’s citizens at large.”
He also urged PM Modi to set aside his deep-rooted suspicion of the society and nurse it back to a harmonious, confident and mutually trustworthy entity that would help revive the animal spirits and help the economy soar. “With an absolute majority in the Lok Sabha and low global oil prices, this is a once-in-a-generation economic opportunity to catapult India to the next phase of economic development and create new jobs for hundreds of millions of our youth,” he said.
Earlier, in the day’s proceedings, five sessions were held on topics such as State of India’s Economy, Agrarian Crisis, State of Industry and Finance in India, Resorting Fiscal Federalism and India’s Job Crisis.
Prominent leaders of Opposition like Sitram Yechury, D Raja, TKS Elangovan, Vijya Mahajan, Manjo Jha, Dr Ashok Dhawale, and economists Haseeb Drabu, Yamni Aiyar, Montek Ahluwalia, Amirullah Khan, Siraj Hussain and others put forth their views on the deepening economic crisis.
Peasant leader Dr Ashok Dhawale said since 1995 to 2015, 3.10 lakh framers committed suicide as before that nobody heard farmer’s commits suicide due to bank loan. Blaming this for neo liberal policies, he said that, during this period, thousand of children died because of starvation and malnourishment and most of the deaths occurred in tribal communities.
While slamming the “insensitivity” of the government towards the people’s woes, Yechury said that its main agenda appeared to be to turn the secular democracy into a“Hindu Rashtra” and for this “it has been destroying the federal structure” of the country. Former Jammu and Kashmir finance minister Haseeb Drabu said the revocation of Article 370 has greater and far reaching consequence on the federal structure of the country.
The conclave was jointly organised by the Rajiv Gandhi Institute of Contemporary Studies and the Samrudha Bharat Foundation.