Skip to main content

To India's FM, informal sector, contributing 54% to GDP, isn't 'real' wealth creator

By Joe Athialy*
The press conference addressed by Finance Minister Nirmala Sitharaman on August 23 is an indication that, finally, the government acknowledges that the economy is crumbling and nearly hitting the rock bottom. That a 5 trillion dollar bubble can burst within two months of announcing it in the Union budget would be a record set for a long time to come!
So many reports of joblessness and a slowing down economy, retrenchment in many industries and concerns by economists did not stir up the government as much as the comments from some corporate sector leaders, ending with the Niti Aayog Vice Chairman Rajiv Kumar’s comments that the “ongoing stress in financial stress is unprecedented in the last 70 years”. One can only hope that these leaders will start speaking early enough next time and do not wait until we hit the bottom.
But the Minister started the press conference, explaining through a graph, that India’s growth is way far ahead of rest of the world. Apart from the fallacy of comparing the 2.6% growth of a 20 trillion dollar economy and 7% growth of a 2.7 trillion economy, one wonders if the economy is so rosy and “comfortably positioned” why did the Minister hold a press conference in a panicky mode and announced slew of measures aiming to revive the economy.
The Minister repeated time and again that the government “respects and honours wealth creators”. Sounds good. But who are the wealth creators as identified by the Minister? The corporations. Nobody else.
What about the informal sector, whose back was broken by demonetisation, where this crumble began? The sector contributes over 54% to the GDP and employs over 80% of India’s workforce.
Or agriculture, which has the potential to revive the economy, which contributes 15% to the GDP and around 600 million people directly or indirectly dependent on farming. There was nothing in Minister’s kitty for the sector.
Instead, pinning hope only in the corporate sector, the Minister reassured the Ease of Doing Business measures to continue, including self-certification and faster environmental clearance to projects.
With tax concessions and sops to the corporate sector and super rich – like withdrawal of angel tax for start-ups, withdrawal of enhanced surcharge levied on short-term and long-term capital gains and additional liquidity in non-banking financial companies (NBFCs) for sale of houses, vehicles and consumption goods (which is otherwise stagnant now) – the Minister expects a miracle from the sector to spin-out a magic to revive economy.
When the government is pushing so much for the corporate sector and its welfare, once cannot but recall the Oxfam inequality report released earlier this year. It said:
“Billionaire fortunes in India increased by 35 percent last year – Rs 2200 crore a day – while 13.6 crore Indians who make up the poorest 10 percent of the country continued to remain in debt since 2004.”
It also said:
“Last year, the wealth of top 1 percent in India increased by 39 percent whereas the wealth of bottom 50 percent increased at a dismal 3 percent. Getting the richest one percent in India to pay just 0.5 percent extra tax on their wealth could raise enough money to increase government spending on health by 50 percent.”
It takes a lot of insensitivity and miscalculation to believe that by helping the already wealthy 1%, some of them known to stack-up their profits in tax heavens, the economy can be revived and there is not even a pretention that the government is concerned about the “bottom 50%”.
Comical: The Minister thinks auto industry can be revived by lifting government ban to buy vehicles for its departments
Interestingly, after her predecessor claiming to crack a whip on tax evaders, probably because of the criticism her government received after the suicide of Siddhartha of Café Coffee Day, the Minister was singing a different tone, pacifying tax evaders. Any life lost is tragic, but one cannot forget that despite over 120 people dying because of demonetisation, there wasn’t even a whimper from the government, but a complete denial of it.
It’s a bit comical that the prescription the Minister had to boost demand and by which to revive the auto industry was to lift the government ban to buy vehicles for their departments. Seriously? If that’s a solution, maybe increasing consumption of vegetables by government officials may help the agriculture sector, more meat dishes may help meat industry and a glass of extra milk per day will help the dairy sector!
The banks are assured of a capital infusion to a tune of Rs. 5 lakh crore, which “will benefit all corporates, retail borrowers, micro, small and medium enterprises (MSMEs) and small traders” as the Minister said. The Minister was silent on the whopping Rs 10 lakh crore non-performing assets (NPAs) accumulated the past nearly 8-10 years because of excessive and unbridled lending.
Over 70% of the NPAs are caused by corporations and top 12 corporate NPAs cost exchequer twice as much as farm loan waivers. Without any measures to check the slide of NPAs, pouring in more money into banks to augment the lending will only deepen the pit where we are already.
Besides, there was nothing in what the Minister said, indicating recovery of bad loans from defaulters. By ensuring more lending and no commitment to recover bad loans, the Minister was sending a wrong signal, which will further choke the banking sector, and compelling to pump in more public money to help them survive.
Minister, the diagnosis of what is ailing the economy was wrong and hence it was the wrong steroids you injected on August 23.
---
*Source: Centre for Financial Accountability

Comments

Balveer Arora said…
Thé ‘réal’ ones are those who buy electoral bonds!
Kamal Chenoy said…
Demonetisation was a cruel lesson. The economy has yet not fully recovered. Electoral bonds, denied promises by the leadership to the rural areas are still under poor economic conditions. GST is no panacea. The leadership doesn’t realise that “wealth creation” among the poor and lower middle class is a myth.

TRENDING

Mallika Sarabhai releases speech she was 'not allowed' to give at NID Convocation on Feb 7

Counterview Desk
The National Institute of Design (NID) in Ahmedabad, a Ministry of Commerce and Industry body, landed itself in controversy following its decision to put off its 40th convocation ceremony, where noted danseuse Mallika Sarabhai was invited as chief guest. The ceremony was scheduled to be held on February 7.

Modi, Shah 'forget': Gandhi’s first Satyagraha was against citizenship law of South Africa

By Nachiketa Desai*
Hindu fanatic Nathuram Godse assassinated Mahatma Gandhi once on January 30, 1948 but his followers raising the war cry of ‘Jai Sriram’ are killing the Mahatma every day. In his home state of Gujarat, Gandhiji was killed a thousand times in 2002 when over 2,000 Muslims were butchered, their women raped, homes and shops plundered and set on fire and even unborn babies ripped out of the wombs of their mothers.

As corona virus 'travels' to rural areas, NGO begins training tribals, marginalised women

By Souparno Chatterjee*
The World Health Organization (WHO) has declared corona virus a pandemic. Originating from Wuhan in China, it has traversed the entire globe, almost, and claimed more than 16,000 lives already. That’s largely the urban population. In India, despite all the preparedness and war-like promptness to safeguard against the pandemic, several lives have been lost , and hundreds of individuals have tested positive.

Rani Laxmi Bai, Tatya Tope 'martyred' by East India Company, Scindia's forefathers

By Our Representative
In an email alert to Counterview, well-known political scientist Shamsul Islam has said that was “shameful for any political party in democratic India to keep children of Sindhias in their flock” given their role during the First War of Indian Independence (1857). In a direct commentary on Madhya Pradesh Congress leader Jyotiraditya Scindia moving over to BJP, Prof Islam has quote from a British gazetteer to prove his point.

COVID-19: Dalit rights bodies regret, no relief plan yet for SCs, STs, marginalized

By Our Representative
In a letter to Prime Minister Narendra Modi, the National Dalit Watch-National Campaign on Dalit Human Rights, endorsed* by several other Dalit rights organizations, have insisted, the Government of India should particular care of the scheduled castes and tribes, trans folks, persons with disabilities and the women and children from these communities, while fighting against COVID-19 pandemic.

Big 'danger' of NPR: A babu can tag anyone as doubtful citizen, Jharkhand meet told

' By Our Representative
People in large numbers from across Jharkhand gathered at the Raj Bhawan in Ranchi to demand that the Hemant Soren government reject National Population Register (NPR) and stop all NPR-related activities. The people’s organisations which participated in the dharna under the banner of the Jharkhand Janadhikar Mahasabha (JMM) resolved to intensify their struggle, insisting, NPR is not a Hindu-Muslim issue but is essentially anti-poor.

Coronavirus scare ‘pushing’ people from Northeast India into more hardship

By Rishiraj Sinha, Biswanath Sinha*
“No one is born hating another person because of the colour of his skin, or his background or his religion. People learn to hate, and if they can learn to hate, they can be taught to love, for love comes more naturally to the human heart than its opposite.” – Nelson Mandela
***

Gujarat govt plan to 'banish' Gandhian activist anti-democratic, unconstitutional

By Rohit Prajapati*
The current Central and Gujarat governments, and their bureaucracy, have been and are still unable to answer and address the concerns raised, with facts, figures, and constitutional provisions, regarding the terror of tourism in the name of the Statue of Unity and tourism projects surrounding it.

Haridwar Swamis lead Khudai Khidmatgar peace march in Delhi 'riot affected' areas

By Our Representative
A Khudai Kidmatgar team, which visited the riot-affected regions along with Swami Shivanand Saraswati and Swami Punyanand, has insisted that India's true heritage is the lesson of ‘vasudhaiv kutumbakam', and it is the responsibility of all to carry froward this legacy. Originally founded by Khan Abdul Ghaffar Khan in 1930, also known as Frontier Gandhi, Khudai Khidmatgar is claimed to have been revived by young Gandhian activist Faisal Khan in 2011.