India’s Economic Slide Under BJP Government

In the present scenario that has been created in the era of the Mdi government, the leader ship has lost the grip and its footing on the economy. If despite a very good monsoon, the subdued oil prices and the low inflation, the growth is slowing down as the economic survey indicates; it means that some thing is going on seriously wrong. The situation on the ground is often worse than what is officially acknowledged. The finance ministers and the various types of the functionaries of the government tend to exaggerate the various achievements and the down play under performance. They seldom admit to the failures. There is no culture of the open debate in the India. The honest stalk taking and the admission of the mistakes are avoided and this in turn helps in the prevention of the of the course of the action or in some of the cases delay the course of the action. The Demonetisation was a very bad idea and was ill timed, introduced with out the preparation and had serious consequences for the farmers and the poor. The survey admits to the job losses in the unorganised sector by the indirectly stating that the post demonetisation, there was a 30 percent increase in the demand for the work under the MGNAREGA. The demonetisation has hastened the decline of the economy.

This modi government headed by a strong leader seems to distrust the intellectuals. At least it does not listen to its own experts. Every economist, small or the big, has expressed opposition to the loan waivers which have a bearing on the economy since the various types of the resources get diverted from the work of the development. In the survey, he authored, the chief economic adviser Mr Arvind Subramanian has held out the Uttar Pradesh loan waiver, which the prime minister had promised as an example to point out that the capital expenditure in the Uttar Pradesh has got slashed by the 30 percent to accommodate the Rs 36000 crore burdens. An out spoken central banker like the Raghuram Rajan was denied an extension. Under him the reserve bank of India delayed the dynamism. It took a very strong position against the banks bad loans. Now tackling the non performing assets is a work that is in the progress. The reserve bank of India mishandling of the demonetisation and the interest rates and the miscalculation of the inflation are before every one. With the politics prevailing over the economics, the well fare taking the centre stage, the loan waivers becoming the common and the populism of all the sorts being played up to the state level, no wonder Mr Arvind Pangariya lost the interest in the job at the NITI Aayog. He probably did not want to be blamed for the various types of the things going wrong. The economy is sputtering. There is no regular, full time finance minister. No individual, no matter how competent can do the full justice to both the finance and the defence port folios since each one of them demands the time, the effort and also the under standing of the issues. The nation has also seen Mr Pahlaj Nihalani’s exit, joshi’s first loyalty should be to art. For once, Mr Pahlaj Nikhalani, the sacked CBFC chief, has hit the nail on the head. It’s not just his detractors, who have persistently voiced their opposition to his obtuse and the various ill logical ways, all the cine buffs have the reasons to rejoice. Rumours of his ouster have been doing the rounds for a while. His run INS with the film industry ever since he took over as the head in the year of the 2015 was long and also unedifying in the nature. In the eye of the controversy, all through his tenure, his objections to the films have ranged from the plain foolish to inexplicable cussed ness. In the era of the modi government, there have been a lot of the disruptions starting from the demonetisation and to the goods and the service tax and hence leading to the sliding down of the economy of the India. Up till now there have been only talks and hopes that the things will improve in the long run but up till now the things have not gone in the assumed ways and starting from the great increase in the inflation to the weakening of the economy. All these have given great set backs to the economy of the India. Steps have been and are being taken in this regard; special teams have been made to look in to various factors at the national as well as the international levels. So now is the time that every thing is to be kept on the right track to go in to the proper direction to grow and compete with the rest of the world.

What ever our Prime Minister Mr Narendra Modi said on the 70th independence day of the India is being termed as a little less aggressive. A significant departure Prime Minister Mr Narendra Modi made this time from his previous speeches delivered from the red fort relates to the welcome toning down of his foreign policy eloquence. He restricted him self to the general observation that the India is getting the global support in the fight against the terror. A surprise was that there was no Pakistan bashing nor even a reference of the balochistan as before. On the republic of the china also he exercised certain type of the restraint. The speech lasting less than an hour has been Mr Modi’s shortest so far but it was not at all with out the quota of the election time rhetoric. The faith full would likely to believe every claim or the promise the Prime Minister made, while sceptics would put every thing to scrutiny. Talking of building a new India by the year 2022, the Prime Minister Modi listed the government’s key achievements, the emphasis this time being on the supposed fight against the corruption and also the black money. The address was apparently aimed at the year 2019 test for the mandate. Critics will question the claimed success of the demonetisation, given the country wide disruption it caused, apart from the deaths, the various losses of the job and the economic slow down. While the Modi government has renamed and also marketed as its own some of the UPA programmes like the make in India, swachh bharat abhiyan, the digital India, the start up India, the jan dhan yojna, what impact these make on the lives of the people will determine the choice of the voters in the elections of the year 2019. A programme’s success depends on how far it has moved from the paper to the ground. No where is the gap between the rhetoric and the reality as the glaring as in the case of the generation of the employment. The challenge of the job less growth has remained unaddressed so far and the government spokes people are not prepared even to acknowledge it. There has been little recognition of the concern expressed in the economic survey 2 about the growth deceleration. Unless it shifts from the windy rhetoric to the action, the NDA could witness a replay of the elections of the year 2004 shining India campaign which indisputably was its worst poll strategy. Being out of the touch with the reality has its consequences and no one should know it better than the NDA. The question here arises that is the nation of the India is missing a point over the status over the substance. United States of America president Mr Donald Trump’s telephone conversation with the prime minister of the India Mr Narendra Modi on the August 15, 2017 went beyond a protocol gesture. Such of the conversations by the statesmen are very care fully scripted and trump came very well prepared. The white house read out highlighted that the leaders resolved in order to enhance the peace and the stability across the indo pacific region by the establishment of a new 2 by 2 ministerial dialogue that will help in taking the steps towards the elevation of the strategic consultations. The elevation of the United States and the India strategic dialogue to a one of its kind of the format involving the foreign and the defence ministers is very significant both for the timing as well as the focus on a specific hot spot in the contemporary world politics. It signifies a leap forward from the United States – India joint vision statement on the Asia pacific, issued in the month of the January 2015 during the visit of the former United States president Barrack Obama to the nation of the India. The leitmotif, once again is the china’s rise, lurking behind the code word peace and the stability across the indo – pacific as India has no solid role to play in the problem of the North Korea. For the trump administration, the proposed two plus two enterprise with the India makes a great sense at a juncture when it is steadily losing the influence in the Asia pacific region. China has not only replaced the United States as the number one trading partner of the ASEAN countries but is also the principal driver of the growth in that region. The ASEAN countries have signed on with the china’s belt and the road initiative. Singapore has already put its hat in the ring aspiring to be a regional hub linking up the belt and also the road.

The 50th anniversary meeting of the ASEAN foreign ministers in the manila recently made it a point to warmly welcome the improving cooperation between the grouping and the china, specially the adoption of the frame work of the code of the conduct in the South China Sea. Significantly, its communiqué neatly ignored the permanent court of the arbitration award on the south china in the month of the July 2016. What emerges is a trend of the stability in the interactions between the ASEAN and the china over the South China Sea issues. Philippine defence minister Delfin Lorenz Ana since disclosed in the manila last week that the republic of the china had assured that it would not occupy the new types of the features or the territory in the South China Sea, under a new status quo brokered by the both of the sides in order to strengthen the relations. Along side, Philippine foreign minister Alan Peter Cayetano said manila was working on a commercial deal with the republic of the china in order to find out the need and also to exploit the oil and the gas resources in the disputes areas of the South China Sea with an aim to begin the drilling with in a year. ASEAN is gently jettisoning American member ship in the geo politics of the South China Sea, which significantly diminishes the role of the United States, the Japan and also of the Australia in the regional politics. The Japan and the Australia in the whole of the Asia are the only two Asian countries with which the United States have existing two plus two formats of this type of the working. The three musketeers had to issue a separate joint statement in the manila in order to articulate their stance on the South China Sea on the side lines of the recent ASEAN meet. Sourabh Gupta, a senior fellow at the institute of the china America studies in the Washington, wrote last week, the current easing cycle in the ASEAN china relations, will lend it self to a period of the strategic calm in this critically important water way. With out an agitated local claimant on whose behalf it can claim to be intervening in order to up hold the stability of the South China Sea, the United States has few other tools at its disposal to assert its relevance and the authority in this body of water other than to endlessly navigate its length and the breath. Simply put, the United States of America needs the company and it explains the overture to the India. How the new found two plus two format would translate on the practical plane will be the big question. Will India join the United States led joint patrols to poke at the republic of the china, which the US pacific command has eagerly sought? The US overture coincides with the two month old India china stand off at doklam. Will the optics of the tighter Us Indian strategic embrace inspire the other regional states to get on the board in a renewed US led containment strategy against the china? Interestingly the India intends to host the heads of the government or the state of the all ASEAN countries as the chief guests at the next year’s republic day celebrations. How ever in a very curious type of the situation, even Mr Trump telephoned Mr Modi, the chair man of the US joint chiefs of the staff committee, Gen Joseph Dun ford was setting out on a three day visit to the china in order to strengthen the military ties. Again, the US treasury department released in the Washington the data that the republic of the china has reclaimed its position as the world’s largest holder of the US treasury securities, with the total holdings touching a whopping $1.1465 trillion as of the June. The Chinese foreign ministry took note of the US treasury report as another reflection that the china and the US have formed a pattern of the deeply converging interests and the mutual dependence. Isn’t the Modi government missing some thing in all this? While receiving the dun ford in the great hall of the people in the Beijing, the Chinese president XI Jin ping expressed satisfaction over the trajectory of the Sino American ties in the trump area by quoting a saying; a rain bow appears after the winds and the tides. The worrying question must be asked what India gets out of the wading in to the South China Sea disputes. Hasn’t the enough damage been inflicted by the Modi obama joint vision statement, which arguably marks the turning point when the India china relation ship that the government of the UPA bequeathed on a stable and a predictable track, began a free fall in order to descend to the chumbi valley where we are now hearing the war drums?

In the eager ness to gain the status, the Indian diplomacy over looks the substance. What signal does the creation of the US Indian axis to enhance the peace and the stability across the indo pacific region would surely convey at this juncture in the Asian power dynamic? Yet trump won’t militarily intervene in a war between the china and the India. He is doing brilliantly well. Trump hopes mitigate the US marginalisation on the South China Sea theatre while on the other hand keeps strengthening the economic interdependency between the US and the china and the aligning it with the needs and the requirements of his America first doctrine, apart from taking the help of the XI’s help to resolve the north Korea problem. Trump informed Mr Modi on the 70th independence day of the India that the first shipment of the American crude oil is leaving Texas for the India this month and that he eyes the India as a long term buyer. The white house also read out has always under scored that trump, being single minded, pursues a transactional partner ship with the India, self centred and also very self serving. On Modi’s part, its about the time to ask the trump what he could do for the nation of the India other than selling Texas oil at the asking price it self. The intelligent thing to do in the diplomacy is to look beyond the status and the seek substance.

The down side risks to the growth and the fiscal out look as the economic survey shows that the appreciation of the rupee and the transition affects of the G S T also likely impediments. The down side risks to the growth and the fiscal out look of the Indian economy are piling up in the form of the deflationary impulses like the farm loan waivers, stressed farm revenues, as the non cereal food prices have declined and hence also declining the profitability in the power and the telecommunication sectors, further the exacerbating the twin balance sheet problem, according to the second part of the economic survey tabled in the parliament today. Besides the appreciation of the rupee and the transition effects of the G S T are also likely to impact the growth in the current year. The survey warned of the fiscal slippages as a series of the deflationary impulses are weighing on an economy yet to gather its full momentum. The survey has warned that the farm loan waivers could cut the demand in the economy by up to 0.7 percent of the G D P and if this is implemented across the country the quantum of the waivers could touch Rs 2.7 lakh crore. The survey pointed out the example of the Uttar Pradesh which has cut the capital expenditure in order to accommodate the waiver. The chief economic adviser Mr Arvind Subramanian said that due to these factors the likely growth this fiscal will be towards the lower end of the 6.75 percent to the 7.5 percent band suggested in the time period from the January end. There are very favourable medium term developments. The real challenge now is the short term growth and how we need to respond to that. We need to bring all the policy tools we have to revive the short term growth, said Mr Subramanian while making a presentation on the survey of the economic. The favourable developments are just the introduction to the path of the G S T, the positive impacts of the demonetisation, the decision in the principle in order to privatise the Air India, further the rationalisation of the energy subsidies and the various actions in order to address the twin balance sheet challenge with the help of the in solvency laws. Mr Subramanian said that the demonetisation has led to the lower usage of the cash with about a 20 percent reduction in the equilibrium cash holding which means that the cash G D P ratio has come down by about 1.6 percent points. He further said 5.4 lakh additional tax payers were added during the post demonetisation period with a reported income of Rs 10587 crore. The chief economic adviser also flagged the issue of the agriculture puzzle which is witnessing the reducing of the revenues of the farms in the non cereal crops despite the good monsoon. The economic survey has certainly called for the major reforms in the agriculture given that the year of the 2017 will also be a year of the surplus rather than the scarcity and to the extent that the firming up the prices will be very essential in order to boost the agricultural incomes, it is very imperative to learn the lessons from the experience of the 2016.

Hence all the impediments that comes in the way of the realising the better prices for the farmers, the stock limits imposed under the essential commodities act, the export restrictions, the impediments to the implementation of the e – N A M, need to be removed, the survey said. A part from the growth, the survey said the fiscal out look for this year is uncertain with the down side risks, beyond those expected at the time of the budget, including the reduced tax revenue from the slower growth, the reduced G S T collection on the account of the lower G S T rates as compared to the pre – G S T taxes and the transitional challenges, the reduced spectrum receipts and the higher expenditures from the 7th pay commission estimated at Rs 30000 crore. The mid year survey of the economy said there was considerable scope for the further easing in the monetary policy as the repo rate was 25 – 75 bases above the neutral rate. The high lights of the economic survey 2016-17 part 2 involved the difficulty to achieve the upper end of the 6.75 – 7.5 percent real G D P growth that was predicted in the month of the January of the year 2017. The fiscal deficit expected to decline to 3.2 percent of the G D P in the year 2017-18, compared with the 3.5 percent in the year of the 2016-17. The retail inflation is likely to remain below the 4 percent by the month of the March of the year 2017. The fiscal out look for the year 2017-18 is very uncertain in the nature. The considerable scope for the easing of the monetary policy as the repo rate has gone 25 – 75 bases points above the neutral rate. The structural reform agenda includes the implementing of the G S T, the privatisation of the Air India, the rationalising of the energy subsidies and then addressing the twin balance sheet challenge that is being faced by the banks. The early signs of the tax base expanding post the implementation of the goods and the service tax. The quarter 1 net profit has jumped the five fold to the Rs 2006 crore for the India’s largest bank, the state bank of the India. The country’s largest lender the state bank of the India has reported over five fold jump in the consolidated net profit to Rs 2006 crore for the June quarter of the current fiscal even as the non performing assets or the various bad loans spiked very sharply. The posting first quarterly earnings after the merger with its five associate banks and the Bhartiya Mahila Bank Ltd (BMBL), the state owned bank said its net profit in the April – June quarter of the last fiscal, 2016 – 2017, was Rs 374 crore. It said the figures, the ratios and the other type of the information are surely based on the merged audited numbers. The asset quality of the bank slipped substantially because of the higher accruals of the bad loans from the books of the associates, it added. There were slippages with the gross N P A’s rising to 9.97 percent of the gross advances as on the June 30, 2017 from 7.40 percent as at the end, June 2016. net N P A’s or the bad loans too soared to the 5.97 percent of the net advances by the June end of this fiscal, up from 4.36 percent in the year ago period. The operating income of the bank fell by all most 5.17 percent to the Rs 25.612 crore during the April, June quarter of the 2017-2018, as against Rs 27007 crore in the same period a year ago. The deposits as on the June 2017 rose by the 13.28 percent to the Rs 2602534 crore from the Rs 2297426 crore. The steel major S A I L, this time saw its stand alone net loss widen to Rs 801.38 crore for the June quarter owing to the higher expenses. The steel maker had clocked a net loss after the tax of the Rs 535.52 crore in the corresponding quarter of the 2016-17, the company said in a B S E filing. The Total income of the Maharatna firm raised by the 25.39 percent to the Rs 13072.77 crore in the April – June this fiscal from Rs 10424.95 crore during the same quarter in the year of the 2016-17. The aluminium maker Hindalco reported a marginal fall of the 1.5 percent in the stand alone net profit to Rs 289.60 crore for the first quarter ended June 30. Its total income rose to Rs 10663.37 crore in the April – June quarter of the current fiscal from the Rs 8385.55 crore during the same quarter in the year of the 2016 – 2017. The industrial out put entered the negative territory in the month of the June, 2017 contracting by 0.1 percent mainly due to the decline in the sectors of the manufacturing and the capital goods. Besides the segments like the mining, the power generation, the infra structure, the construction goods and the consumer durables recorder the very poor type of the performance. On a quarterly basis, the growth of the factory out put during the phase of the April – June 2017 slowed down to the 2 percent from the 7.1 percent in the corresponding period, the last year. This is the first time in the current fiscal; the industrial out put has shown a decline. The I I P grew up by the 3.4 percent in the month of the April 2017 and the 2.8 percent in the month of the May 2017 as per the revised estimates that were released recently. The Union Finance Minister Mr Arun Jaitley today asserted that not even a single rupee of the loan taken by the corporate has been written off by the government of the India and also asked the opposition to first get the facts before talking about it. The Lok Sabha was told by the finance minister Mr Arun Jaitley that writing off the loan was a commercial decision of the banks and added that there has been no scheme of the farm loan waiver by the centre since the year of the 2014. not even one rupee of the corporate has been written off by the government, he said during the question hour. Those making such comments should first get the facts and then talk, he said while responding to a supplementary question by the congress member Mr Deepinder Singh Hooda alleging that the government has written off the loans of the corporate but not at all any thing of the farmers. At the end of the month of the March 2017, the total out standing gross non performing assets of the agriculture and the allied activities stood at the Rs 62.307 crore, as per data given by the data given by the minister in his written mode of the reply. The amount was Rs 51964 crore at the end of the month of the March 2017.