Coming months will determine if high-decibel political stridency will suffice to trigger a reversal of the downward trend in which virtually all economic indices are presently heading.
Though the Prime Minister has admitted that things are not hunky-dory and assured remedial measures, he was more “forceful” when blasting the “pessimists” who he said only got a good night’s sleep after painting a dismal picture of the economic scenario.
That lashing-out followed the finance minister’s distasteful personal comments on his predecessors, and when attempting to “sell” the argument that the growth rate had also declined under a government headed by an eminent economist (which he had never claimed to be), Narendra Modi advanced the argument that “my mess is less painful than yours was”. Such counter-attacks only testify to the NDA government conceding that the economy is proving its Achilles’ heel.
Though criticism of inept implementation of the GST regime has overtaken demonetisation as the critics’ pet-whipping boy, the government has yet to come up with “evidence” that the slamming of the economy is only politically-oriented.
For among those who have expressed their reservations are the leadership of the government’s mentor, the RSS, and reports from the research wing of the State Bank. Surely neither of those entities can be faulted for being anti-BJP?
The roll-back of Central excise on petrol and diesel is one indication of Raisina Hill recognising that things are “slipping”, another is the revival of the Economic Advisory Council that will act independently of the finance ministry.
The “neutral” position on interest rates taken by the Reserve Bank of India is, perhaps, the most authentic assertion of the need to revitalise the economy. It not only predicts a decline in the growth rate to 6.7 per cent when the previous estimate was 7.3 per cent for FY 2017-18, it also apprehends that inflation would rise to the higher end of the “band” the government had set for itself. The report also casts a shadow over the impact of GST since it has led to sort-term uncertainty in the manufacturing sector.
The RBI Governor was candid and spoke of “early setbacks that impart a downslide to the outlook”. The Prime Minister took a slightly different tack, “I want to assure all, even our critics, that we don’t feel everything is wrong. But there is a need to guard against spreading of negativity”. Fair enough, even if “spreading negativity” is the staple diet of the political class when sitting in the Opposition ~ either at the Centre or in the states.
And there is precious little “positivity” to electoral rhetoric. The economy, like the RBI’s interest-rate, is neutral and exhorts politicians to “put their money where their mouth is” ~ lest their version of the stock-exchange “crashes”.