Demonetisation, Faulty GST Reasons Behind Economic Crisis: Former PM Manmohan Singh

The Narendra Modi government’s "monumental blunders" like demonetisation and faulty Goods and Services Tax (GST) are the reasons behind the country’s ongoing economic crisis, said former prime minister Manmohan Singh, also credited for bringing India out of 1991 and 2008 slowdown.

In an interview with the BusinessLine, Manmohan Singh said that the Modi government needs to come out of its habit of headline management and address the unprecedented slump India’s economy is facing today.

"I believe that we are entering a different kind of crisis now, a prolonged economic slowdown that is both structural and cyclical. The first step in a crisis is to acknowledge that we are facing one," he said.

Singh, hailed as one of India’s most prominent economists, said that the government needs to address the issue in a transparent manner and called for next generation of structural reforms to come out of the crisis.

"We cannot afford to deny that India is facing an economic crisis. Already, a lot of time has been lost. Instead of wasting its political capital by adopting a sector-wise piecemeal approach, or on monumental blunders like demonetisation, the time has now come for the government to carry out the next generation of structural reforms," he said.

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Singh said that India achieved a lot and successfully navigated through the 1991 crisis and 2008 global recession even though the governments, one led by PV Narsimha Rao and the other by he himself, at the time didn’t have a full majority like the current one.

"It is important to remember that this is a government with an overwhelming mandate, a full majority, not once, but twice in a row. When I served as the Finance Minister, or even as the Prime Minister, we did not have such huge mandates. Despite that, we achieved a lot, and successfully navigated through both the 1991 crisis and the 2008 global financial crisis," the Congress leader said.

The Centre has cited reasons like "millennial mindset" and global factors behind the economic crisis, even as the Opposition blames the policies and decisions of the Modi government in last five years for the country’s poor economic health.

Speaking about the economic crisis, Finance Minister Nirmala Sitharaman had Tuesday said, "The automobile and components industry has been affected by BS6 and the mindsets of millennial, who now prefer to have Ola and Uber rather than committing to buying an automobile."

HIGHLIGHTS

• Manmohan Singh said demonetisation and GST are behind the economic crisis.
• Singh called for next generation of structural reforms to address the issue.
• He also slammed Modi government's habbit of headline management.