In the summer of 2014, prime ministerial candidate Narendra Modi lambasted the Congress party, more convincingly than any other BJP leader, in a way only he could. He exposed the scams of UPA-2 in simple language that everyone understood. But the best came after that. He promised the moon. He said he would bring down prices, slash taxes, reduce petrol and diesel prices, bring back black money that would enable him to deposit Rs 15 lakhs into the account of every Indian, he would provide millions of jobs every year and the list went on. In an economic sense, all the promises were about abundance and opportunities, prosperity and progress.
All of those have now come to haunt him. All that has been done in the name 'reforms' so far, failed to touch lives in a positive or a transformative way. With the initial euphoria – the honeymoon time which Prime Minister Modi claimed he never had – over, people who had silently suffered in queues as he unleashed a notebandi with the Nov 8, 2016 demonetisation, are now admitting a sense of gloom and an air of despondency. Then came the Goods and Services Tax, which was rolled out very ceremonially with the promise that it would bring down prices. The promise wasn't fulfilled as thousands of entrepreneurs, traders and MSMEs still finding it difficult to deal with the situation, even after three months of its implementation.
The gloominess soon got reflected in the GDP figures as the growth rate slipped to 5.7 per cent in the April-June quarter. That was when BJP veteran and former Finance Minister Yashwant Sinha lashed out at the government's mismanagement of the economy. Sinha's opinion is widely seen as a view point that many seniors and contemporaries, of Prime Minister Modi, share. Since then many others close to the BJP, have been expressing their concerns over what some describe as the “tail spin” in which the economy is in now.
Disruption as a mantra for regenerating the economy may seem a good concept, but not for a country like India. It will affect people adversely unless it is a positive disruption - as some economists have advocated to reduce income tax drastically, if not slash it altogether or give a universal basic income.
“Show the guts, shown in the act of demonetisation, in dealing with the NPA issue. Just like the demonetisation broadcast, he has to tell people at 8pm one day that he is closing down 100 government departments and passing on the benefits to the people through direct and indirect taxes. Government's money should be used for investment purposes and not to pay salaries to babus. Today ease of doing business is not improving and that has added to the situation of lack of job opportunities,” said M.R. Venkatesh, a right winger aligned with the Swadesh Jagran Manch.
After stubbornly denying that the economy was slowing down, and then failing to fix it in any manner, the government's response in the last few weeks has been just a communication spin. Finance Minister Arun Jaitley first hinted at a stiumulus package aimed at MSMEs, exporters and farmers, but within no time, Transport Minister Nithin Gadkari said all will be well in six months! That is a stand other ministers notably Railway Minister Piyush Goyal, have taken. While no move to fix things has been taken or discussed, Prime Minister Modi too waived off the sagging economic growth – a contradiction as it is - as the handiwork of pessimists! But he also added that they will reverse the situation in six months.
The government may manage to change the numbers but the people always tend to 'feel' the impact of growth or slowdown in the economy. If jobs are not created, no double digit growth figures which the government may toss around, can help. And the jobs creation rest upon a dynamic industrial activity, which depends on the credit offtake, which in turn depends on low interest rates. The banks also have to deal with the rising NPAs in order to woo the private sector to invest.
More promises by Modi and Co, about big results in the next six months, will only make the BJP and the prime minister even more vulnerable. Modi & Co should come out with a conclusive economic battle plan, so as to bring tangible improvements to an ailing economy. Instead of becoming the victim of his own waxed eloquent, Prime Minister Modi should fix the economy, maybe starting with the NPAs issue.
