State of The Indian Economy Deeply Worrying, Says Manmohan Singh

Former Prime Minister Manmohan Singh on Sunday said that the state of the Indian economy was "deeply worrying" and urged the government to put aside "vendetta politics" and reach out to sane voices and thinking minds to steer the economy out of this "man-made crisis".

"All-round mismanagement" by the Narendra Modi government is responsible for the slowdown in the Indian economy, the former prime minister said.

"The state of the economy today is deeply worrying. The last quarter's GDP growth rate of 5 percent signals that we are in the midst of a prolonged slowdown. India has the potential to grow at a much faster rate but all-round mismanagement by the Modi government has resulted in this slowdown," he said in a statement.

Targeting the government, Singh said the country's youth, farmers and farm workers, entrepreneurs and the marginalised sections deserve better.

India cannot afford to continue down this path, he said. "I urge the government to put aside vendetta politics, and reach out to all sane voices and thinking minds, to steer our economy out of this man-made crisis."

Singh said it is particularly distressing that India’s manufacturing sector's growth is tottering at 0.6 percent. "This makes it very clear that our economy has not yet recovered from...demonetisation and a hastily implemented GST," he said.

The former prime minister also alleged that institutions are under attack and their autonomy is being eroded. Speaking on the transfer of Rs 1.76 lakh crore from the Reserve Bank of India’s reserves to the government, Singh said that the resilience of RBI will be tested after this.

“...It (the government) does not have a plan on what it will do with this windfall", he said.

Noting that India’s domestic demand is depressed, consumption growth is at an 18-month low and nominal GDP growth is at a 15-year low, Singh said: "There is a gaping hole in tax revenues. Tax buoyancy remains elusive as businessmen, small and big, are hounded and tax terrorism continues unabated. Investor sentiments are in doldrums. These are not the foundations for economic recover".

Blaming the Modi government's policies for massive jobless growth, he said more than 3.5 lakh jobs have been lost in the automobile sector alone. There will similarly be large-scale job losses in the informal sector, hurting most vulnerable workers, he said.

Singh said rural India is in terrible shape as farmers are not receiving adequate prices and rural incomes have declined. The low inflation rate that the Modi government likes to showcase comes at the cost of our farmers and their incomes, by inflicting misery on over 50 percent of India's population, he alleged.

The former prime minister, a noted economist, said the credibility of India's data has come under question under this government.

"Budget announcements and rollbacks have shaken the confidence of international investors. India has not been able to increase exports to take advantage of opportunities that have arisen in global trade due to geopolitical realignments. Such is the state of economic management under the Modi government," he said.