In a sharp rejoinder to “Western businesspeople”, who are said to be still inclined to “defend” Prime Minister Narendra Modi by claiming that Modi may be “bad for democracy his pro-business philosophy is good for the economy”, the powerful British periodical “The Economist” has declared, “But that argument no longer washes. India’s economy is incompetently managed and doing badly.”
According to “The Economist”, India’s growth falling from 8% in the middle of last year to 5% year-on-year in the most recent quarter “might not sound too bad”, as “other emerging economies are also suffering”. However, it warns, “The slowdown looks less like a dip than a prolonged cold shower.”
The top periodical says, “Some banks and many other lenders are in crisis, with a $200bn mountain of bad debts. In the six months ending in September, the total flow of financing to businesses fell by 88%.” It adds, “Five successive rate cuts by the Reserve Bank of India … have failed to pull down commercial lending rates, and in any case firms are not investing.”
“The Economist” continues, “Consumer demand has levelled off or fallen… Sales of cars and motorbikes have tumbled by 20% or more. And with the combined fiscal deficit of the federal government and the states already approaching 9% of GDP, and tax receipts falling well below expectations, there is little scope for stimulus.”
Admitting that in 2014 the Modi government inherited an economy “with plenty of problems”, it insists, “But it did too little about them. The latest downturn continues that disappointing pattern. With the exception of a steep cut in corporate taxes earlier this month, to 25%, which brings India into line with other countries in the region, the official response has been scattershot and timid.”
“The Economist” continues, “Consumer demand has levelled off or fallen… Sales of cars and motorbikes have tumbled by 20% or more. And with the combined fiscal deficit of the federal government and the states already approaching 9% of GDP, and tax receipts falling well below expectations, there is little scope for stimulus.”
Admitting that in 2014 the Modi government inherited an economy “with plenty of problems”, it insists, “But it did too little about them. The latest downturn continues that disappointing pattern. With the exception of a steep cut in corporate taxes earlier this month, to 25%, which brings India into line with other countries in the region, the official response has been scattershot and timid.”
Instead of getting to grips with the economy, Modi will stop posing as a reformer and fully embrace his alter ego, as a chest-thumping Hindu nationalistPointing towards “an unusual paucity of expertise” in the Modi government and “conflicting views in his circle”, at a time when “competing interest groups vie for his ear”, the periodical advises Modi to “recruit an economic team that is based on competence and experience rather than affinity for the Bharatiya Janata Party’s Hindu-nationalist ideology.”
Recommending privatization of state-owned banks as part of a “broader" privatisation programme that could give the government "the money it needs to succour demand”, even as making use of “levers such as the national rural-employment scheme to get money to the distressed hinterland”, “The Economist” sounds a worry: “The fear is that, instead of getting to grips with the economy, Modi will stop posing as a reformer and fully embrace his alter ego, as a chest-thumping Hindu nationalist.”
Recalling steps like abolition of special status to Jammu and Kashmir, “India’s only Muslim-majority state” and threat to “expand to the rest of the country his scheme to hunt down supposed foreign interlopers in Assam”, “The Economist” warns, ““In the face of India’s growing economic problems, focus on communal grievances seems even more reprehensible.”
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