Dr. Manmohan Singh might have earned the distinction of being a ‘maun’ (silent) Prime Minister. But ,when he talks, it is difficult for others to remain silent.
I saw his remarks in ‘Business Standard’ on bank frauds, on ‘national losses’ and on ‘economic mismanagment’. It is hard to take criticism on economic mismanagement coming from him. Sorry, Sir. He presided over economic mismanagement for ten years.
Yes, like him, I am also choosing my words carefully. I deliberately said that he presided over it for ten years, not restricting myself to his second term. The consequences of whatever his government did in the first term showed up in the second term because, during his first term, the global economic boom helped hide weaknesses. Rising global economic tide lifted many leaky economic boats. India was one of them.
Quite what governments can do about bank frauds? It is the job of the bank managements to avoid or to detect them in time. The government could privatise the public sector banks. His government did not do that. If his government did that, he could not have announced a massive waiver of farm loans one year before the elections of 2009. The NDA government too is not thinking about it. If it did, will his party support it?
He is regretting that the NDA government had not passed on the benefits of lower crude oil prices to Indian consumers. Quite correct. This government did not do it and should have done it. But, he should know why and he should be embarrassed about it.
This government chose to make good a hollow fiscal deficit target that his government had bequeathed. The fiscal deficit target of 4.9% that his government achieved in 2013-14 was a myth and its target of 4.1% was hence, massively overambitious.
Taking advantage of the dramatic drop in the price of crude oil, the NDA government chose to mobillise tax revenues to legitimise a bogus fiscal deficit target. It was a mistake. The NDA government should have made haste more slowly and should have taken the nation and the world into confidence about the economic mess, including the fiscal mess, it had inherited.
He is talking about massive losses to the country. Quite how does he measure lossses for the nation? Over what time frame? If anything, the 2008 global crisis and the fiscal deficit + current account deficit + double digit inflation record of his government had lowered India’s potential growth rate to a range of 6.0% to 6.5%. So, how exactly does he measure ‘losses’?
Perhaps, he has demonetisation in mind. But, just this week, the usually critical (of Modi, NDA, BJP and Hindu-Nationalists) FT wrote that both demonetisation and the introduction of GST would go down as Modi’s greatest economic legacy:
The numbers are so stark that some say it will go down as Mr Modi’s greatest economic legacy, while others are offering India as a model for other developing countries looking to tackle widespread tax evasion. (Source: https://goo.gl/ejqCg4)
The numbers that the journalist is referring to is the increase in the number of people filing tax return.
In short, the NDA government is guilty of many acts of omission on the economic policy front. Chief among them is its failure to understand the gravity of the economic situation it was inheriting from Dr. Singh’s government.
It is not guilty of many acts of commission. That honour belongs to the government he led for a decade. However, one of the errors of commission of this government is the perpetuation and deepening of ‘tax terrrorism’ initiated by his government.
But, set against that could be its many structural reforms that might help future governments and elevate the future growth rate of the country.