At a time when the economic scenario is one of gloom, and there is a visible trust deficit in the government's ability to stop the free fall of the GDP, Finance Minister, Nirmala Sitharaman's press conference on Friday was intended to disclose the impact of steps taken to boost consumption and uplift growth from a six year low.
But, far from injecting a dose of confidence that this government can bring about a turnaround within a year or more, Sitharaman's responses, as well as the statements by her team, confirmed that nothing is likely to improve—not even in the medium term. The pessimists won the day.
The only thing that may happen the way the finance minister said is an eventual drop in onion prices. “I think the crop has also started replenishing,” she said. That it will, and not on account of anything that the government did. Days after they decided to import onions, the retail price of onion continues to be over a 100 rupees a kilo in the national capital.
The notion that the ruling party’s perception does not reflect reality was not changed by Sitharaman’s presser. When Chief Economic Advisor Krishnamurthy Subramanian, Revenue Secretary Ajay Bhushan Pandey and others spoke, it became clear there was something amiss with the government's perception of its own figures.
There was a stubborn assertion that they were on course. “The government has been working for the economy where it is needed”. "Till now, sectors that have demanded some kind of intervention, we have responded to them. I'll be keen to see whether these steps are meeting the expectations of the sectors. If not, I may want to see if I need to do more. As of now, there is no other sector that has approached me as yet," says the FM.
How will this government boost consumption? By making expeditious tax refunds!
In what seems to be an oversimplification of the job scenario, the CEA referred to figures showing that the number of casual workers had gone down by 5 per cent and that of regular salaried workers had gone up by 5 per cent—to infer that 2.3 crore casual workers had become salaried workers, that too, in rural areas. How is it that so many people, who would have found joy in attaining regular employment, are nowhere to be seen or heard about anywhere in the country?
The government has also put more money into people's hand for consumption by reducing their contribution to the Employees State Insurance Corporation from 6.5 per cent to 4 per cent. It will not be long before the ESIC's own health will be impaired to the extent that it will be unable to run the contributory welfare scheme. Millions of people depend on this social security scheme for employees in the organised sector.
So far, the finance minister's efforts at stimulating the economy—the corporate tax cut, consolidation in banking sector, sector specific boosters—have not shown any impact.
The government is pinning its hopes on the Rs 25,000-crore realty fund, with the CEA confident that its impact will be “many, many times that”. Equally, it appears to be looking at disinvestment to help it prevent a freefall of GDP growth that has been the lowest in 26 quarters.
The Bharat Bond ETF will enable private participation and a wider pool of financing for CPSEs and disinvestment in non-priority areas—where a competitive market has come of age—will enable private buyers to bring capital, technology and better management as well as enhance productivity and thereby economic growth. But the question that went unanswered is: Will private sectors want to take the chance?
It was not many days ago that a captain of industry spoke about the atmosphere of fear, a mood that former prime minister Dr. Manmohan Singh has also been speaking about. And it is not many hours ago that the double-digit food price inflation and rising WPI inflation has added to the overall gloom.
Neither simplistic interpretations nor an arrogant show of confidence will work. People want results.
