Politics over state of economy

Author Published: 29th Sep 2017   12:00 am Updated: 28th Sep 2017   7:39 pm

When the going gets tough, the dissent gets going unhindered. At a time when the economy is groaning under the impact of a slowdown, the rumblings within the BJP are growing louder and the discordant voices getting shriller by the day. After the likes of Subramanian Swamy, Arun Shourie and S Gurumurthy, it is now the turn of former Union Finance Minister Yashwant Sinha to raise the red flag on the economy and make a grim prognosis. Sinha’s attack on the NDA government’s economic policies, particularly the hurried implementation of GST and demonetisation, has come as music to the ears of the Congress-led opposition. The political storm, triggered by Sinha’s assessment that the economy on a downward spiral was poised for a hard landing and the messy situation was unlikely to recover before the 2019 general elections, is only expected to intensify in the days ahead. While the issues raised by the veteran BJP leader deserve serious consideration for any possible mid-course correction, the debate on the state of economy should not be allowed to degenerate into political polemics and a perverse blame game. Instead of gleeful celebration over BJP’s perceived internal troubles and discomfiture, the Congress leadership must put forward a constructive agenda to revive the economy and desist from trying to extract political capital out of a distress situation. There is a need for parties to rise above narrow political considerations when it comes to debating economic issues and demonstrative a collective will and commitment to steer the country out of the economic turbulence.

There is no doubt that the signs of slowdown are all too visible to ignore: growth rate plummeting to a three-year low, stagnating exports, slowdown in manufacturing sector and consumption, dwindling private sector investments, agriculture in distress and shrinking labour market. However, the critics must desist from predicting an alarmingly pessimistic scenario, given the country’s inherent resilience to absorb the disruptive policy moves and then bounce back with renewed vigour. Any transformative policy will result in disrupting the system in the short-term and what India undergoing now is a major structural change aimed at improving transparency in the economic management. Any attempt to draw sweeping conclusions based on the growth rate figures in a couple of quarters would mean missing out on a larger picture of how the ongoing structural reforms are transforming the country’s economy. It is argued that the new economic system being created will be much more transparent and equitable, globally cost-competitive and innovation driven. Despite causing initial pain, the note ban, GST and digital payments all have the potential to be the game-changers to formalise India’s economy. This would mean widening of the tax base, increased tax collections and transparency in the system.