Yashwant Sinha lashes out at Modi govt; says demonetisation, GST have shoved economy into shambles

Former finance minister Yashwant Sinha has opened his heart out to the ever-increasing economic problems that engulf the country at present, saying that he shall be failing in his national duty if he did not speak up even now against the deteriorating condition of the economy, largely attributed to the finance minister Arun Jaitley.

Yashwant added that his opinion reflects the sentiments of a large number of people in the BJP and elsewhere who are not speaking up out of fear.

In his column written in the Indian Express,  the former Union Cabinet minister scathed criticism on how the Modi-led government made a blunder by assigning Arun Jaitley responsibilities one too many. He added that his former colleague Jaitley's pedigree in finance was unquestionable but he was overburdened with critical portfolio's like defense, finance, and corporate affairs at the same time.

He brought to fore that the finance ministry is a humongous task by itself and demands full-fledged attention if needs to be handled in an effective manner. Naturally, even a superman like Jaitley could not do justice to the task.

Yashwant dint shy away from calling Jaitley one of the luckiest finance ministers in the post-liberalization era, given the financial corpus he had at his disposal in addition to the depressed global crude prices to his advantage. Jaitley was coupled with legacy economic problems like stalled projects and bank NPAs but he had a golden opportunity to bring the economy back on track.

His indispensability was established further when the prime minister rewarded him not only by giving him the finance ministry including the department of disinvestment, but also the ministries of defence and corporate affairs. 

Yashwant came out with hard-hitting facts about the dismal condition of the Indian economy at present. He said that Private investment has shrunk to its lowest level, industrial production has all but collapsed, agriculture is in distress, construction industry, a big employer of the work force, is in the doldrums, the rest of the service sector is also in the slow lane, exports have dwindled, sector after sector of the economy is in distress, demonetisation has proved to be an unmitigated economic disaster, a badly conceived and poorly implemented GST has played havoc with businesses and sunk many of them and countless millions have lost their jobs with hardly any new opportunities coming the way of the new entrants to the labour market. 

For quarter after quarter, the growth rate of the economy has been declining until it reached the low of 5.7 per cent in the first quarter of the current fiscal, the lowest in three years. The spokespersons of the government say that demonetisation is not responsible for this deceleration. They are right. The deceleration had started much earlier. Demonetisation only added fuel to fire.

And please note that the methodology for calculation of the GDP was changed by the present government in 2015 as a result of which the growth rate recorded earlier increased statistically by over 200 basis points on an annual basis. So, according to the old method of calculation, the growth rate of 5.7 per cent is actually 3.7 per cent or less.

The prime minister is worried. A meeting convened by the prime minister with the finance minister and his officials appears to have been postponed indefinitely. The finance minister has promised a stimulus package to revive growth. We are all waiting with bated breath for this package. It has not come so far. The only new thing is the reconstituted Economic Advisory Council of the prime minister. Like the five Pandavas they are expected to win the new Mahabharat war for us.

The government has asked the income tax department to chase those who have made large claims. Cash flow problems have already arisen for many companies especially in the SME sector. But this is the style of functioning of the finance ministry now. We protested against raid raj when we were in opposition. Today it has become the order of the day. Post demonetisation, the income tax department has been charged with the responsibility of investigating lakhs of cases involving the fate of millions of people. The Enforcement Directorate and the CBI also have their plates full. Instilling fear in the minds of the people is the name of the new game.

Economies are destroyed more easily than they are built. It took almost four years of painstaking and hard work in the late nineties and early 2000 to revive a sagging economy we had inherited in 1998. Nobody has a magic wand to revive the economy overnight. Steps taken now will take their own time to produce results. So, a revival by the time of the next Lok Sabha election appears highly unlikely. A hard landing appears inevitable. Bluff and bluster is fine for the hustings, it evaporates in the face of reality.

Yashwant rounded off by saying that the prime minister claims that he has seen poverty from close quarters. His finance minister is working over-time to make sure that all Indians also see it from equally close quarters.