The Centre is engaged in unveiling economic stimulus packages one after another. But the government has not yet admitted that the country is entering a period of recession. For, that would amount to an admission that the first Modi government landed the economy in the doldrums. At the same time, statistics that have been coming in streams and finance minister Nirmala Sitharaman's series of declarations on stimulus packages only confirm that unpleasant truth.
Her wrods do echo a voice of panic, though outwardly she does not admit it. The fact lakhs of jobs have been lost that in auto manufacturing sector alone and the purchasing power of the people have affected most of the sectors convince us that the crisis cannot be hidden any longer. Now that the crisis has been identified, what is going to determine the future of the cuntry is the government's response to that. And that solution cannnot be mere panic or quick-fixes or temporary plugging of holes. A country will gain the strength to overcome severe financial crisis when it fulfils three conditions: administrative integrity, restoration of a social atmosphere conducive to regain growth and practice of financial discipline at all levels.
It is during times of crisis that goernments lose the courage to tell the truth to the people. And every body, with the exception of the government and its votaries, is now saying that the financil crunch did not emerge out of nothing and big follies were behind it. However, official statistics fall short of reflecting the reality. Even in June, Reserve Bank had forecast a growth rate of seven per cent. And in July, the Economic Survey also said the same thing. At the same time, as a matter of fact, growth had been nosediving for not one or two, but the last five quarters in a row. At the same time, when growth rate was falling first from eight per cent to seven, then to 6.6 and 5.8 and finally to five per cent, the rulers were getting enamoured of governing policies. In the intervening elections and even after that the government camp kept harping on the argument that the government was almost within reach of a USD 5 trillion economy. Even when the government grabbed Rs 1.75 lakh from the surplus reserve of the Reserve Bank of India, the government spokesmen had the naivete to boast about the 5 trillion economy. On all such occasions, what the statistics and the knowledgeable spoke failed to make an impact. The deputy CEO of Niti Ayog himself revealed that the country is in its worst crisis of the last 70 years. 36 per cent of the companies have closed shop, the rupee is steadily losing its value, banks have come down crashing and in scores of companies both in public and private sectors, financial stringency forced a situation of non-payment of salary. In spite of such symptoms coming to the fore, the finance ministry which could not diagnose recession or the factors that caused it, could not think - not surprisingly - beyond stimulant packages. Even the five per cent growth rate derived now, is said to be a 'gain' from the change introduced in the method of calculating Gross Domestic Product (GDP), the actual rate being still lower. Such jugglery with figures are aimed not at facing the problem, but at evading them.
Economic growth and social security are directly linked with each other. It is a basic premise that only in a social atmosphere with minimum conflicts will investments and economic growth materialise. Any government targeting growth, will make rule of law and social ambience stable on priority. During Modi's regime, the northern and eastern regions turned entirely disturbed. Kashmir, which had fairly stable economic levels buttressed by apple and tourism, has not become a problem zone sapping the resources of the country. When mob-rule rises as a threat to rule of law, foreign investors are desrting en bloc. When boasts about five-trillion economy go on in parallel with giving licence to anarchy, how can there be growth? The situation forces a conclusion that solving the economic crisis is not part of the agenda of the government, and those in power do not have the required grasp or determination for that. Probably it is to divert people's attention from an unsolvable tangle that controversial issues like 'one language' keep cropping up repeatedly.
The third desideratum for solving the crisis is financial discipline. Here again, the new practices are reactionary. The current government is one that scrapped Planning Commission, defanged Reserve Bank and breached the sanctity of the budget. How easily the government took away RBI's surplus reserve of Rs 1.75 lakh Crore! In the name of boosting economy, schemes running into tens of thousand of crores are being passed without the review of the budget of parliamewnt. Prioritisation in economy has long been overturned.
The thousands of crores that are spent on statues, are not being allocated to stop farmers' suicides. It is when only 0.6 per cent of GDP is earmarked for scientific research that huge funds are allocated for a special research institute for research on cow's urine and several related projects. It would be useful at last to recognise at least that cow urine treatment will not suffice for economic crisis.