Demonetisation is real culprit behind slowdown, Modi govt is guilty of crippling rural economy

FM Nirmala Sitharaman had to take back most of the recommendation made in the budget particularly about taxing super rich and financial transaction

Photo courtesy: social media
Photo courtesy: social media

Dr. B K Kango/IPA

After presenting a budget of newly elected government, Finance Minister Smt. Nirmala Sitharaman had to take back most of the recommendation made in the budget particularly about taxing super rich and financial transaction. All the tall claim made during budget presentation with bravado – had to be forgotten as there is massive economic slowdown.

UPA II was described as government with ‘policy paralysis’. The present government can similarly be described as ‘Confused government’. Vice-President of NITI Aayog makes a bold statement claiming an unprecedented crisis in economy not seen in last 70 years and also adds that there is an atmosphere of distrust amongst all. He bats for new and bold solutions to rectify the situation.

However the economic adviser Singia different tune and says that helping private sector during lean period is a moral hazard. This soon results in depressing share market.

Many in the government go on claiming that economy is on sound footing and will soon become number third in the world when reality shows that we have gone down to number seven from number four. However one cannot hide from reality for long and that is what is evident from Finance Minister recent press conference announcing many steps to assure investors mainly super rich and foreign capital along with auto makers.

It is claimed that international depression along with wrong policies of previous Congress government are responsible for this mess. However in the same breath it is added that India still remains a resilient fastest growing economy. Seems to be a strange logic.

However one is expecting this government to admit the fact that when international slow down was clear. The wrong decision of demonetization which removed liquidity from market further added fuel to fire, resulting in present men.

It would be right to compare the decision of demonetization to the famous or infamous decision of Muhammad bin Tughlaq to do away with silver and gold currency and introduce copper currency. Tughlaq is considered as an eccentric King. On that background it is pertinent to note that most economist have criticized the demonetisation decision.

It is also a fact that Prime Minister himself hardly mention the decision in his speeches. Recently the Income Tax department came out with a report on improving and simplifying tax structure. This report clearly mention that capital formation in the year of demonetisation was lowest and quotes that it went down by 60 per cent.

Thus in 2017-18 the capital formation was hit, so how can you claim to have robust economy after that. Hence Rahul Gandhi has demanded that heavy dosage of monetization to revive economy is needed. Industrialist who met Prime Minister and Finance Minister demanded Rupees one lakh crore of additional investment dosage to come out of crisis.

Even in Parliament, government is on record of closures and job losses after demonetisation. Hence as Finance Minister has come forward to acknowledge ‘slow down’, we expect government to ‘own’ the historic blunder of demonetisation.

It is time to demand that people who died in queue while changing notes in the banks be compensated along with MSME adversely affected and workers who lost jobs. It is important to note that Finance Minister openly said that tax authorities have been advised not to be over active in pursuing ‘tax evasion matters’.

Now this is necessary to note that as ‘Notebandi’ failed to bring out black money around which the whole ‘Notebandi Halo’ was created, government had to direct tax authorities to be overactive and which they gladly did.

Now this is to be reversed. This is U turn and an admission that Notebandi failed to bring out black money and adversely affected the economy.

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Published: 31 Aug 2019, 11:02 AM