Former finance minister Yashwant Sinha cut the clutter of jargon to offer a lucid overview of the current state of the Indian economy. We present his Ramakrishna Hegde Memorial Lecture, in Bangalore, on Wednesday, in thirteen elaborate, but easy points. This blistering attack on the ‘disastrous’ policies of the Modi government in the last four years, which, he says, has pushed the economy to the brink, was expectedly under-reported in the mainstream press. Here’s what he said:
1) I KNOW EVERYTHING: When the Janata Dal was formed (in 1988), Ramakrishna Hegde constituted a ‘Group of Five’ under his watch to take major decisions on behalf of the party. That group included Ajith Singh, Arun Nehru, Sharad Yadav, and myself. The group was a success because it functioned on the basis of consensus. Once the group took a decision even senior leaders like VP Singh and Devi Lal would fall in line. Hegde believed in democratic consensus. In today’s time consensus is no more the preferred objective. We rather believe in steam-rolling. We rather believe in being omniscient. ‘I know everything, therefore what I say, what I do is the ultimate truth, whether it is the truth or not,’ is the approach. At this juncture in our history, we should work for a democracy based on consensus. If we do this, we’ll be doing a great service to our country and our society.
2) PLAYING WITH DATA: Starting from 1947, and also during the British days, we never did to data and statistics what we have done today. What really is the growth rate of the Indian economy over the years? An expert group constituted by the Statistical Commission of India calculated numbers and posted it on their website. Discussions began, but suddenly the data was taken down because the government said ‘we can’t trust those figures’ and it would decide what the figures are and put it up at a later date. When I was FM, there were times when I was distressed with the data that was brought to me, but we accepted it. Nobody, absolutely nobody, is allowed to play around with data but that is not the case today.
3) COUNTING TWENTY: We have heard what the PM said about employment generation during his reply to the discussion on the motion of no-confidence. He said these many cars, two-wheelers etc. were produced, therefore one crore plus jobs have been created. Is it the job of the PMO to make this calculation? There is the Labour Bureau in the Ministry of Labour, which collects and collates employment data, but what it offered was not flattering for the government, therefore some bright mind said let’s ignore that and go by Employee Provident Fund (EPFO) data. Experts cried hoarse, but the government did not listen. An organisation which has more than 20 employees has to register with the EPFO. So, when an organisation with 19 people adds one more to its rolls, it will come under the EPFO ambit. Now, the moment this happens, the government will tell you 20 new jobs have been created, but in reality, it is only one job that has been created. Nineteen others were already there.
4) ONLY AFTER ITALY: In the whole world, as far as non-performing assets of banks are concerned (NPAs), India has the distinction of being the second worst. Italy has 14.2 per cent gross NPAs, while in India, it is 12.2 per cent. Imagine, the total NPAs of public sector banks is Rs 14 lakh crore and the total budget of the central government is Rs 20 lakh crore. In 2014, we had Rs 2 lakh crore in NPAs. That was bad, but in the last four years it has been allowed to go up. When this government was sworn in, it organised a three-day brainstorming session with chairman of banks. This session was attended by the PM also. And as is the habit with this government, it coined something called the ‘Indradhanush,’ a seven-point programme to bring down NPAs. The net result of ‘Indradhanush’ is NPAs have gone up in the last four years from Rs 2 lakh crore to Rs 14 lakh crore.
5) WE’LL SHOOT YOU: If anybody in the government says we should applaud the economic performance of this government on the strength of such figures and after interference with figures, then I’ll say I can’t do that. Because there is politicisation of data happening. It has never happened in this country before. This is very dangerous. Whom do we believe and what do we believe in? This government is shooting the messenger. They say, if you come with a bad report, we’ll shoot you. So, people will go to powers that be and say all is well with the economy.
6) NOT THIS FORMULA: As regards growth rate calculation, the Department of Statistics can’t collect real time data, so what they do is take corporate results that are filed quarterly and estimate the growth rate. This leaves out MSMEs and the unorganised sector because it is not possible to get this data quickly. Earlier, this formula was perhaps alright, but now in the context of demonetisation and a flawed implementation of the GST, which severely hurt MSMEs and the unorganised sector, to capture these figures is crucial, but these figures will be known after a lag of two years.
7) THE MONARCH’S MOVE: With regard to demonetisation, the RBI report says that 99.3 per cent of money that was in circulation has come back, why not 100 per cent? All the pressure which is being put on the RBI from outside the government, is not able to match the pressure being put from within the government on the RBI not to reveal the real figures, because those figures will embarrass the government. Have they accounted money deposited in the central district co-operative banks, including the one in Ahmedabad? Have they counted Indian currency in Nepal? There is a political game here. RBI is being prevented from revealing the real figures, so they will go on repeating 99.3 per cent until the elections are over. By the way, what happened to the five or six objectives of demonetisation? It is a hundred per cent failure because people are still throwing stones in Kashmir; counterfeit notes are still in circulation and black money still abounds. Every objective the PM had mentioned has come unstuck. So, demonetization was just a step taken by a monarch, who thought he could get away by doing anything. If he stands by the promise he made to the people of India to judge him after a while, he himself would have said: ‘Here’s my resignation, I took this foolish step. This is the impact and I am going.’ Do we expect this kind of standard anymore? You could have expected it from Ramakrishna Hegde, not from the present prime minister.
8) WHATEVER RHYMES IS A SLOGAN: Introduction of GST was made at par with the Independence of India. A midnight session was called. The prime minister made his ‘tryst of destiny’ speech. The nation became free again. In ten months, from 01 July 2017, 357 amendments to the GST were introduced, it must have crossed 400 by now. What kind of a taxation system can you run in India if you make these many amendments, both in terms of rate and procedure? Government said everything has to be online. I come from Jharkhand, so if there is no electricity line, how do people go online? What kind of world are we living in? As a finance minister, I had already put in place three central excise rates: A merit rate of 8 per cent, a demerit rate of 24 per cent, and a mean rate of 16 per cent. It was already done. Why have five rates of GST? We started with five rates and three types of GST. We are very fond of saying these days, ‘one country, one tax,’ ‘one country, one election,’ whatever rhymes is a slogan. All this is very dangerous. The worst sufferers are the unorganised sector and MSMEs. They are in distress as a result of demonetization and a flawed GST. Their loss will never be made up. GST is a good tax, I am for it, but not in the manner it has been introduced.
9) MODERN RUINS: I live in Noida, in the NCR region. You only have to travel from Noida to Greater Noida to see on both sides what I call the ‘modern ruins of India,’ unfinished blocks of concrete. Company after company in the real estate sector has gone bust, because they are not able to deliver flats, the whole thing has collapsed. GST and demonetization were a body blow to the economy in quick succession. Therefore, the growth rate has suffered, therefore the employment rate has suffered, and therefore we are trying to make up by cooking up statistics.
10) FILL UP THE COFFERS: Today the international crude oil prices are inching up. But when the Modi government took over, it fell from $105 to $25. The principle this government has followed is if international crude oil prices go up, or rupee is devalued against the dollar, then we’ll go on raising prices, but if there is a decline, the benefit will not go to the people, it will be cornered by the government in terms of fresh levies and it will go to fill the government’s coffers. People have the right to know what happened to the lakhs of crores that accrued as a result of the crude oil collapse.
11) HIGHWAY LOSS: How important is inclusive growth? This is something that I have personally experienced. The most publicised scheme of the Vajpayee government was the National Highways project, where we built four lane roads and six lane roads criss-crossing the country. In my constituency of Hazaribagh, NH 2, also known as the Shershah Suri Marg, passes through. It was in poor shape, it was beautifully four-laned. However, during the elections, I went to a village, which was just by the side of the highway. The people assembled there said you have done no development work. I said, what do you mean? Look at the highway, isn’t that massive development for the constituency? They said we have nothing to do with the road. The village roads have not been built, the village ponds have not been deepened. We wanted a primary school in the village, which we have not got. So, you have done nothing for the village. And I lost that election. I was not the only one who lost that election, every BJP candidate whose constituency fell along the Shershah Suri Marg from Bengal to Punjab lost. This was the political fallout of that famous highways project of the Vajpayee government. Why? Because it was not inclusive. The NH had to be built, I am not against it, but we had to ensure that village infrastructure too improved. We did a bit, but did not do the whole gamut of it. Growth is not merely figures. ‘Can people eat growth rate?’ I had once asked in Parliament. The fruits of growth should be equitably distributed among the people.
12) VICIOUS CYCLE: In the last four years, bank NPAs have led to a lack of investment from private sector. No new, or very little fresh investment is taking place. Whatever little growth we have seen is on account of government spending. They have spent the monies that accrued to them as a result of crude oil price crash. Private sector can’t make fresh investments because banks are not lending due to the NPA problem. So, we have got into a vicious circle. Until we break this cycle, we will not see India get out of the woods.
13) EVERYTHING IS A JUMLA: People of India gave this government a historic opportunity in 2014. The world conditions gave this government a historic opportunity to do wonders on the economic front. Unfortunately, we have wasted that opportunity. And today, what we have in return is not an honest assessment of what is happening to the economy but jumlebazi. Everything is a jumla. As you know, Jumla is an untruth ultimately. Anyone who frankly expresses truth today is in danger, and the recent arrests of activists is an indication of how ruthless the government of the day can become. We have to stand up against this. The time has come to assert our rights, our identity as citizens of the country, and make sure no mischief maker will be allowed to compromise our democracy. We shall preserve democracy in this country, by all means, by making whatever sacrifices needed, as we did in 1975-77. If democratic values survive in this country, the economy will take care of itself.
(Edited and compiled by Sugata Srinivasaraju, who was also the moderator at this lecture session)