Editor : Satish Ohri    Edition : Jan - Feb 2019

The verdict in retrospect and a fact sheet of the Economy

As the New Year 2019 has set in, the bygone year brought cheers for the Indian democracy as the outcome of the five assembly elections in the crucial Hindi heartland and one in the down South and another in the North-East demonstrated so conclusively and eloquently. Again, It is the electorates in the Bharat that manifest themselves in rural areas who trounced the ruling dispensation at the Centre being governed by the Bharatiya Janata Party (BJP) led by the seemingly unshakeable and apparently unconquerable Narendra Modi. Tired of his permanently electoral mode of governance during the last four and a half years when he made unconcealed use of every opportunity to traduce Opposition parties in general and the Congress in particular to reduce them as if they matter little in a vibrant democracy like ours, the people of the five States which went to the polls in the run-up to the General Election in the summer of 2019 reacted in their own inscrutable but all the more decisive way by displaying their exceptional bright and buoyant spirit to show that for them action and implementation on the ground of promises of acche din matter more than the optics, diversionary attacks on imagined enemies and other theatrical gestures that do not help alleviate their mundane miseries in no small measure. For the BJP which latched on its fortunes and fate in a single leader who took pleasure and pride in denigrating dynastic politics and promoting first family culture and political idolatry, the last of which he himself was promoting while many an important leader in his own party merrily believed and practiced in dynastic politics, the people have woken up at last they have been treated the same recipe with no difference from the earlier dispensations. So in the absence of any other political outfit of major and pan- India presence to help them lead a normal life without being subject to disruptive decisions like abrupt policy shifts a la demonetization, they chose for the known and suffered ones to the new and strange one! To be fair to the Prime Minister Modi, he did proclaim a slew of sound policies to cleanse the nation by launching Swachh Bharat campaign, incentive to manufacturing through Make in India programme and steps to improve ease of doing business, concrete measures for transport sector including spurs for regional connectivity and power sector through schemes like Ujjwal Discom Assurance Yojana (UDAY). But the implementation level the monitoring and follow-up action remained indifferent with no penal provision to discipline errant elements who did not execute well-meaning schemes meant for the economy with enthusiasm. Besides, a major claim of the demonetization and the advent of the GST, viz., higher public revenues from formalization, has not come about, thereby contributing to miseries of all the stakeholders in the real sectors of the economy over and above the dent in revenue yields such adventurous economic measures spawned sans resolute prior plans in place. Though reform measure initiated by earlier dispensation like the Goods and Services Tax (GST) got implemented in the BJP tenure, there were a lot of technical glitches and grouses from disgruntled States which were not getting compensation for loss of revenue on time. As a result, there were shortfalls in yields upsetting fiscal calculations, while the exporting community cried hoarse over the exceptional delay in getting refund for the levies they disbursed. The former IMF Economic Counsellor and Director of Research Maurice Obstfeld credited the Modi Sarkar for carrying out “some really fundamental reforms including the GST and the Insolvency and Bankruptcy Code”. But he also said by way of capturing the dilemma and difficulty of running a continental economy of India’s size and immensity when he observed “there are important vulnerabilities though and it is important for the for the reform momentum, even as an election comes up for the path of fiscal adjustment to be maintained in these circumstances”.

Interestingly, despite the hullabaloo surrounding farm-friendly supportive measures belatedly put in by the government at the Centre such as a marked hike in the minimum support prices (MSPs) for all kharif and rabi crops for 2018-19 seasons, massive loan waiver schemes by state after state and other interest subsidy schemes and input extension services, the distress and stress experienced by the peasantry remained acute as was shown in a massive rally farmers from across the country staged in the capital in the last days of November, 2018 to highlight the growing difficulty of continuing with their avocation sans helpful measures from the authorities. The outgoing year also saw the country’s central bank in turmoil as the fraught relationship between the RBI Governor and the Finance Ministry over several contentious proposals the government lined up for the apex bank to perform against its grains came to the fore. The RBI Governor Urjit Patel, exasperated by his futile efforts to make the authorities see reason, at last gave up the fight citing personal reason to call it quits just ahead of a crucial December 14 Central Board meeting of the RBI. As usual, the government opted to install a bureaucrat instead of a technocrat with sound knowledge in the domain of theoretical economics and practical exposure to fill the vacancy left by Urjit Patel. With the country’s financial stability being at stake, one hopefully expects the new incumbent to discharge his duties as the banking industry’s arbiter and regulator without resorting to any adverse steps that would roil the markets, the economy and the people at large. The year 2018 also saw the authorities revising the base year for calculating the gross domestic product (GDP) and back-casting data to put the past growth rates a shade lower than the present regime’s performance. Impartial policy wonks wonder that if most important parameters of the Indian economy were better in 2004-2014 (the UPA dispensation), how is the GDP growth rate higher in estimates released recently by the Niti Aayog, i.e., 7.4 per cent per annum since 2014 and only 6.7 per cent in 2005-2014? These are all quite quibbling conundrums the answers of which need to be known but given the stark reality that the nation is preparing for yet another mega election, no one in power and least of all the bureaucrats would dare to respond at this jittery juncture!

*The author is a Delhi-based senior economic journalist

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