By Barun Das Gupta
The Indian economy has been witnessing a slowing down of growth for a long time – to be frank, since the second UPA rule. With the coming to power of the BJP six years ago, the economy started decelerating, first slowly, then it gathered speed. When Arun Jaitley was Finance Minister, he tried his level best to show that the economy was in the pink of health. He would have us believe that there might be problems here and there, but the “basics” of our economy were sound; they were in good health. To achieve this, he started fudging figures, to lull us into a false sense of security that there was nothing to worry about our economy .He forced the Central Statistical Organization (CSO) to play a complicit role. The result was that the CSO lost a good deal of the credibility and reputation that it earlier enjoyed.
Things turned for the worse under the second Modi rule. The negative legacy left by Jaitley had to be inherited by his successor who does not even know how to fudge figures and infuse a false sense of economic security in the people who do not understand the esoterics of economics. The GDP growth rate target has been lowered again and again, severe recession hit the economy, demand fell, savings fell and employment generation came to a halt. And because of lack of demand, production also fell, investment fell, new FDI flow came to a trickle. Our exports fell but our imports did not As the rupee steadily declined against the dollar, our exports became cheaper while our imports became costlier. The result was a steady rise in our CAD (current account deficit).
Eminent economic experts who were in important positions in the NDA Government, left one by one. It began with the exit of the then Governor of the RBI Raghuram Rajan whose contract was not renewed. It was the run-of-the-mill bureaucrats who were deciding day-to-day economic policy because the Union ministers understood and promoted only divisive politics. They had little knowledge of and far less interest in economic matters and their impact on society.
Then the corona novella virus endemic burst in upon us. And a three-week long lockdown that was imposed brought production in our factories virtually to a standstill. Nobody knows whether the lockdown will be further extended, exempting certain industries on a selective basis. But the economy has gone into a tailspin. Some foreign economists think our GDP growth rate next year (2021) may be as low as 1.5 to 2 per cent. The Prime Minister’s fond dream of making India a five trillion dollar economy by 2024, has evaporated like a midday mirage.
The endemic has made further demands on the already limited resources of the Centre. The States are crying for funds. But their cry seems to be a cry in the wilderness. Not to speak of allocating fresh funds, the Centre is unable to pay even their dues on different heads. The Centre cannot even pay the States their share of the GST.
The Prime Minister has announced a pay cut of 30 per cent of the President and all Union Ministers including himself. The Members of Parliament will also forgo 30 per cent of their salary. The situation is so desperate that the Union Cabinet had to take the unprecedented step of passing an ordinance suspending the MPs’ Local Area Development (LAD) fund for two years, till 2022. The Rs. 7900 crores saved from this will go the Consolidated Fund of India. Indeed, every paisa that can be saved for meeting the emergency situation created by the endemic has to be saved.
This is one side of the picture. On the other side, our proximity to and intertwining of interests with the United States (and its protégé Israel) is fast growing. Nehru’s Non-Alignment Policy was thrown out of the window a long time ago. So was the policy of Mixed Economy. Planning Commission has been abolished. The national economy, every sector of it, has been handed over to the private investors, both indigenous and foreign, on a platter. (That the response of the investors to such a tempting offer is disappointingly poor is another matter.) The most favoured of the Government today are not even the common run of capitalists but the crony capitalists.
In such a grim economic situation, the Government has decided to acquire from the United States 10 Harpoon air-launched missiles at a cost of $92 million and 16 Mark 54 lightweight torpedoes for $63 million, the total coming to a neat $155 million. A very pertinent question that arises is, cannot this deal be kept in abeyance for the present when we are in a tight corner? Neither of our two potential adversaries – one in the west and the other in the north – seems to be itching for an immediate fight with us. In fact both these countries have suffered from the corona virus endemic as much as we have. Indeed, judging by death figures, China has suffered far more than India.
Nobody is asking to lower our defences. The simple question is: if this expenditure can be held up for the present, they why not do it? And why should we go on importing military hardware all the time? The money spent on this count should be spent on developing indigenous technology and expertise in pursuance of the Prime Minister’s policy of Make in India. It may take time to develop indigenous technology, but in the long run it will lessen our dependence on a country which wants our friendship only on its own terms.