It was on 23 August that NITI Ayog Vice Chairman Rajiv Kumar made a comment that the country was going through the worst economic recession in its 70-year history. His words during his speech on the 'Mindmine' conference organized by Hero Group ran thus: "This is an unprecedented situation for the government. In the last 70 years, we have not faced this sort of liquidity situation where the entire financial sector is in a churn, and nobody is trusting anybody else. Within the private sector, nobody wants to lend to anybody else. Everyone is sitting on cash".
Although many experts and opposition parties had pointed at the economic stagnation, the Centre's response was one of outright denial. NITI Ayog head's shocker came in the middle of that like a thunderbolt. The Centre which was stumped for answers, came out with a stimulus package that was announced by the Finance Minister herself at a press meet. The minister's predicament then of not being able to answer several questions raised at the presser, had hit news headlines. The fact is that the government has not been able even to gauge the unprecedented economic crisis as what it is. Insitead it is sitting cosy with the confidence that by playing the communal card and whipping up frenzied nationalism, it can tide over the predicament. Of course, it may be possible to throw dust into people's eyes with emotional themes, but then the underlying fundamental problem will get aggravated in the process.
Different numbers related to the economy are coming out. The most recently discussed report is on consumer spending released by the National Sample Survey Organisation, under the Central Ministry of Statistics and Programme Implementation. It was a financial magazine that unravelled the survey report – which the government had suppressed – wih focus on the spending power of Indian consumers during the period from July 2017 to June 2018. According to the report, the purchasing power of Indians slipped by 3.7 per cent and reached the lowest in the last 46 years. The finding is that the consumer is cutting down on the amount spent even for daily requirements and food items. The impact of the fall in spending power on the economy is beyond imagination. But curiously enough, the solution found by the Central government to get over this situation is to hide the report.
It is not only that the consumer capacity has reached the lowest in four and a half decades; Narendra Modi government has created several other records too. The most striking ones among them are: the lowest rate of GDP growth in the last 15 years, the lowest power generation in 15 years and non-performing assets at the highest level in history. Companies with mass production have responded to the slump by retrenching staff en masse and by closing down production units. As far as the companies are concerned, survival is their main concern. When spending power reduces, that will in turn affect production and sales. Thus, Indian economy is swirling in the mutually interlinked circle of problems.
Till recently, Indian economy was considered as having the best development potential. Ours is the country with the largest youth population, meaning the country rich with the most productive population – a condition blessed with every potential for growth. Even in times when the whole world was battling with economic recession, we had the experience of having survived that. Then, if things have gone topsy-turvey all of a sudden, the reasons for need to be probed.
Two reasons cited by NITI Ayog Vice Chairman as having caused the biggest damage to the economy are the note-ban and roll-out of GST. This is something everybody with a basic familiarity with the econmic scene has been saying. But the government has all along been showing the propensity to portray anyone opposing the note-ban as anti-national. However, the current recession has other factors also as reasons than GST and demonetisation. As Rajiv Kumar pointed out, an atmosphere has emerged in which people do not have the courage to invest. The underlying reason for this is the weakening of the social structure and mutual trust to a level not seen in history so far. If the currency in force ceases to exist in a day, a whole state also ceases to exist overnight. Millions of people lose their citizenship all of a sudden. Even in this whirlpool of setbacks, central ministers keep talking about National Register of Citizens (NRC) and uniform civil code. Our country has become a land in which foreigners as well as nationals shudder to invest their money. As such, the current recession is not one that can be overcome through financial quick fixes. Correction is needed in the basic policy perspectives of the Centre.