India's economic growth rate is giving cause for concern, says former Reserve Bank Governor and well-known economist Raghuraman Rajan. India's growth rate during 2018-19 was just 6.8 per cent, marking the lowest rate since 2014-15. The government estimates this year's GDP (Gross Domestic Product) growth rate at 7 per cent, but according to Raghuram Rajan that is an overestimation. Also, in the opinion of current RBI governor Shaktikanta Das, there is no dispute that there are challenges in the economy and 'sectoral issues'. He suggests that the potential of the economy has to be identified and ways found to meet the challenges.
The RBI governor also reminds that there are several external headwinds. One of the global areas of concern in the mind of RBI governor may be the experts' warning that the US economy will be gripped by a severe economic recession in the next two years. It is also to be noted that, as Congress leader Priyanka Gandhi accuses, the government's indifference when companies shut down under recession and employees become jobless is dangerous. Figures from the auto industry show that the vehicle market has been affected by the worst slump in the last 20 years, and sales in July have gone down by a third.
Since work days of a week have been cut down by major vehicle manufacturers like Hero, Tata, Ashok Leyland and TVS, three lakh jobs have been lost by now. Maruti Suzuki has also been hit by unprecedented fall in demand. Another sector affected is real estate, with sales transactdions in land and house showing a big decline. About 4 lakh apartment units each costing below Rs 45 lakhs - the range purchased by middle-class - remain unsold across nine cities. No different is the home appliances market. Manufacturers of TV, refrigerator and other household apparatus have met finance minister Nirmala Sitharaman to discuss the crisis faced by them due to stockpiling of inventory. They have apprised the minister of the situation that will get worse in the absence of expeditious stimulation package from the government.
The downturn in the market naturally affects tax mobilization. If during the quarter of April-June 2019 the increase in tax collection was a mere 1.5 per cent, in the corresponding period last year it was 22.4 per cent. To be clubbed together with this is the other side that no effective steps are being taken by Modi government to curtail spending in view of the gravity of the economic crisis. In the financial year 2017-18, expenditure recorded an increase by 19 per cent. And in 2018-19, this went up by another 13 per cent which was the highest since 2008.
In summary, the current crisis faced by the country is a result of the Modi government's measures like the currency ban and unrealistic implementation of GST, as also its stance of declaring policy critics as outcastes and taking only its sycophants into confidence. Those like Amartya Sen and Raghuram Rajan are out of the government's good books now. What more, even Subramanian Swamy of the ruling camp is now a staunch critic of the government. Swamy puts the blame of worsening the problem on the policy errors of Arun Jaitley who was the finance minister in the previous Modi government. Although the Modi-Amit Shah team that came to power declaring achche din, could not achieve the promised lakhs of jobs or the recovery of black money or checking price rise at the end of its first five-year term, it was able to romp home for a second term by raising purely emotional racist agenda.
It doesn't take super intelligence to understand that legislations quick-baked in the very first budget session of the new parliament, like the triple talaq bill, the abrogation of special status of the state of Jammu-Kashmir, and the human rights-denying amendments declaring individuals terrorist, would not at all contribute anything to solving the basic issues of 130 crore people. The extreme right-wing government has so far shown its adeptness only in implementing the divisive agenda of RSS in the name of national security and patriotism, parallel to pampering corporates out of the way. It is high time that every citizen started asking whither this move and for how long.