GDP slowdown due to 'all-round mismanagement' by Modi govt: Manmohan Singh

NEW DELHI: Former PM Manmohan Singh blamed India’s growth slump on “all-round mismanagement” by the government in a critique of its economic performance. He urged the Modi administration to set aside its “vendetta politics” and reach out to all “sane voices and thinking minds” to find ways of steering the economy out of “this man-made crisis”.

Singh alleged that government policies had led to a massive loss of jobs, rural distress and “unabated tax terrorism”, in a statement issued on Sunday in the wake of GDP growth having slowed the most in six years in the June quarter. He questioned the rationale behind the transfer of Rs 1.76 lakh crore from RBI’s surplus and said the “man-made blunders of demonetisation and a hastily implemented GST (goods and services tax)” had crippled the economy, especially the crucial manufacturing sector, which “is tottering at 0.6%” growth.

“The last quarter’s GDP rate of 5% signals that we are in the midst of a prolonged slowdown,” said Singh, who has also been finance minister and RBI governor.


‘Gaping Hole in Tax Revenues’
“India has the potential to grow at a much faster rate. But all-round mismanagement by the Modi government has resulted in this slowdown,” Singh said.

The government has announced a series of measures aimed at turning the economy around in the past week or so. These include the rollback of a tax surcharge on overseas investors, relaxations in foreign direct investment (FDI) norms, incentives for the auto industry and an extensive consolidation of state-owned banks.

Singh said there “is a gaping hole in tax revenues” and that “tax buoyancy remains elusive” as businessmen, small and big, “are hounded and tax terrorism continues unabated and investor sentiments are in doldrums”. He went on to say, “These are not the foundations for economic recovery.”

The government’s policies “are resulting in massive jobless growth”, Singh said. “More than 3.5 lakh jobs have been lost in the automobile sector alone. There will similarly be large-scale job losses in the informal sector, hurting our most vulnerable workers.”

Referring to rural and agrarian distress, Singh said, “The low inflation rate that the Modi government likes to showcase comes at the cost of our farmers and their incomes, by inflicting misery on over 50% of India’s population.”

Singh said the surplus transfer would challenge the strength of the central bank.

“The resilience of the RBI will be tested after its record transfer of Rs 1.76 lakh crore to the government,” he said. He also said the government “claims that it does not have a plan on what it will do with this windfall”.

Singh also cited reports questioning the quality of the economic data issued by the government. India has also not been able to take advantage of global trade tensions between the US and China, he said.

“The credibility of India’s data has come under question under this government,” he said. “Budget announcements and rollbacks have shaken the confidence of global investors. India has not been able to increase its exports to take advantage of opportunities that have arisen in global trade due to geopolitical realignments. Such is the state of economic management under the Modi government.”