Former prime minister Manmohan Singh on Friday said the fundamental reason for the “precarious state of” the Indian economy was the “even more worrisome” state of India’s society.
Speaking at an ‘economic conclave’ organised by think tanks associated with the Congress, Singh urged Prime Minister Narendra Modi to “set aside his deep rooted suspicion” of India’s society and “nurse” it back to a “harmonious, confident and mutually trustworthy society that can revive the animal spirits and help our economy soar.”
Singh said, the GDP figures released earlier today point the growth rate of our economy in the second quarter of current fiscal year, is as low as 4.5 per cent. This is clearly unacceptable and the aspirations of our people want that this country should grow at 8-9 per cent per annum and therefore the sharp decline in growth rate from 5 per cent in the first quarter to 4.5 per cent in the second quarter is indeed worrisome. It is my belief that mere changes in economic policy will not help revive the economy. We need to change the current climate in our society from one of fear to one of confidence for our economy to start growing robustly again at 8 per cent per annum.
The former PM delivered his speech barely an hour after the government released the latest economic data of the last quarter, which leaders of opposition parties pointed to as evidence of the Modi government having abdicated its responsibility towards ensuring economic growth to indulge in diversionary politics.
“Lowest GDP growth in 26 quarters! No answers from the Finance Minister. No wonder full opposition walked out of the Rajya Sabha 40 minutes into the FM’s speech this week. And ministers dozed off in their seats,” Trinamool Congress Rajya Sabha leader Derek O’Brien tweeted, alluding the discussion in the Rajya Sabha on Wednesday.
“Sixth consecutive quarter of falling GDP growth. Lowest quarterly GDP growth since Jan-Mar 2013. Manufacturing sector has contracted! What will it take for our government to acknowledge this crisis? The slowdown is real and deep. Wait for new distractions to be conjured up by the duo,” Congress leader Jairam Ramesh said.
Both O’Brien and Ramesh had participated in the Rajya Sabha discussion. “4.5% (GDP)! Some people who made a career by mocking Dr Manmohan Singh ji are now struggling to oversee the economy,” Congress leader Ahmed Patel said.
Singh said India was now a $3 trillion global economic powerhouse driven largely by private enterprise. “It is not a tiny command and control economy that can be bullied and directed at will. Nor can it be managed through colourful headlines and noisy media commentary,” he said.
Bemoaning the discrediting of government data, Singh said that “shooting down messengers of bad news or shutting off economic reports and data is juvenile and does not behoove a rising global economic powerhouse.”
“No amount of subterfuge can hide the performance and analysis of a $3 trillion market economy of 1.2 billion people. Economic participants respond to social and economic incentives, not diktats or coercions or public relations,” he said.
The former PM said the Modi government “with an absolute majority in the Lok Sabha and low global oil prices” has a “once-in-a-generation economic opportunity to catapult India to the next phase of economic development and create new jobs for hundreds of millions of our youth.”
Possibly alluding to student protests, Singh reminisced about his days as a student of economics at Cambridge University in the 1950s. He said universities foster an environment that encourages students to pursue the intellectual truth, to be intellectually fearless and honest, lucid in expressing our opinion, being open to argument and dissent. He said universities were a place to meet people of various beliefs and ideas and not be confined in an echo chamber.
Singh said his teachers taught him how economic growth and development are shaped by the societies in which they operate. “One cannot separate society from the economy in any nation,” he said. The former PM said, “There is no one today that can deny the sharp slowdown in India’s economy and its disastrous consequences, particularly for farmers, youth and the poor.”
He said it was his belief that mere changes in economic policy alone will not help revive the economy. “We need to change the current climate in our society from one of fear to one of confidence for our economy to start growing robustly again,” he said.
Singh said India’s social fabric of trust and confidence is now torn and ruptured. “There is a palpable climate of fear in our society today,” he said. The former PM said many industrialists have told him that they live in fear of harassment by government authorities.
He said there is profound fear and distrust among India’s various economic participants. “This toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society is stifling economic activity and hence economic growth,” Singh said.
“The root cause of this is the government’s policy doctrine that seems suspect every industrialist, banker, policy maker, regulator, entrepreneur and citizen. This has halted economic development with bankers unable to lend, industrialists unable to invest and policymakers unable to act.”
“The Modi government seems to view everything and everyone through a tainted prism of suspicion and distrust through which, every policy of previous governments was considered of bad intent, every loan sanctioned was undeserving, every new industrial project was crony in nature and so on,” he said.
Singh said the government has positioned itself as some saviour, resorting to foolhardy moral-policing policies such as demonetisation, that have proved to be disastrous. “For economic growth to revive, it is very important that the government enthuses trust and confidence,” he said.
Singh said this was possible only if the government sheds its current doctrine and begin to trust India’s farmers, India’s entrepreneurs and India’s citizens at large.