Economy

Modi government’s policies led to current economic slowdown, says Manmohan Singh

Updated : November 18, 2019 03:06 PM IST

Singh, in a piece he wrote for The Hindu, said that the current economic crisis is a result of 'profound fear and distrust' among people who had acted as the agents of growth in the country.

Singh alleged that the mutual trust and self-confidence that are the bedrock for social transactions and economic growth have been torn down and ruptured.

Modi government’s policies led to current economic slowdown, says Manmohan Singh

The Modi government's doctrine of governance is the main reason behind India's economic slowdown, alleged former Prime Minister Manmohan Singh.

Singh, in a piece he wrote for The Hindu, said that the current economic crisis is a result of 'profound fear and distrust' among people who had acted as the agents of growth in the country.

Here are the key highlights from Singh's piece for The Hindu:

On economic slowdown: With GDP growth has falling to a 15 year low, unemployment at a record high level, a significant rise in bad loans, growth in electricity generation at a 15-year low and household consumption falling to a four-decade low, the country is facing a slump across sectors.

On what caused the economic slowdown: The reason behind the slump is the deeper underlying malaise that plagues the nation’s economy today. The mutual trust and self-confidence that are the bedrock for social transactions and economic growth have been torn down and ruptured. This is due to Modi government’s ‘mala fide unless proven otherwise’ doctrine of governance.

On the environment of suspicion: The government suspects that every banker, policymaker, industrialist, entrepreneur and citizen is out to defraud the government. "Every loan sanctioned is considered undeserving and every new industrial project deemed to be crony," added Singh.

On government policies: Policies like demonetisation "ill-thought-out and catastrophic".

On inflation numbers: Retail inflation, particularly food inflation, is on the rise.

On stagflation: Inflation, when combined with stagnant demand and high unemployment, will lead to ‘stagflation’, a dangerous territory from which it becomes very hard for large economies to recover.

On solution to the crisis: Singh said that India’s fragile economic situation calls for the twin policy actions of boosting demand and reviving private investment.

On boosting demand: Demand can be boosted through fiscal policies whereas the revival of private investment can be achieved through ‘social policy’ by inspiring trust and confidence in the economic participants, added Singh.

On current opportunities: India should make the best out of the current slowing down of China by fostering a climate of confidence and economic dynamism to get the lion share of export opportunity, he said.

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