Former Prime Minister Manmohan Singh has held demonetisation and faulty implementation of GST responsible for the economic slowdown in the country. According to Singh, the slowdown would be “prolonged” as it is both structural and cyclical in nature. Singh advised the Modi government to start engaging with experts and stakeholders to find a solution to the problem.
The former prime minister claimed that the Congress governments had successfully handled the 1991 economic crisis as well as the 2008 global slowdown despite lacking a clear majority in the parliament, unlike the Modi government. Launching a scathing attack on Modi government for its poor handling of the economy, Singh asked the central government to come out of its habit of “headline management”, adding the “first step in a crisis is to acknowledge that we are facing one.”
“We cannot deny that India is facing an economic crisis. Already, a lot of time has been lost. Instead of wasting its political capital by adopting a sector-wise piecemeal approach, or on monumental blunders like demonetisation, the time has now come for the government to carry out the next generation of structural reforms and promote sectors that can generate mass jobs,” Singh said in an interview to a leading Hindi newspaper.
“This is a government with an overwhelming mandate, a full majority, not once, but twice in a row. When I served as the Finance Minister, or even as the Prime Minister, we did not have such huge mandates. Despite that, we achieved a lot, and successfully navigated through both the 1991 crisis and the 2008 global financial crisis,” he added.
When he was asked to suggest structural reforms to revive the economy, Singh suggested the following five steps:
1. Rationalisation of GST, even if it leads to a loss in revenue in the short term.
2. Focus on increasing rural consumption and reviving the agriculture sector. He said the government can take clues from Congress manifesto, which lays down several measures to free up agriculture market.
3. Liquidity crisis needs to be addressed. He said that not only public sector banks but NBFCs are also suffering.
4. Revive major job-generating sectors such as textile, auto, electronics and subsidised housing. He said easy loans need to be provided for this purpose, especially to MSMEs.
5. The government needs to identify new export markets opening up due to the ongoing trade war between US and China.