The economic turmoil in which India is today, is nothing but mismanagement of the previous five years where ex finance minister Arun Jaitley, was an expert in fudging figures and denouncing every other warning that was sent to him. Even as 2019 general elections were approaching the government tried to side track economic meltdown.
In spite of the resource crunch, the interim budget that was presented was nothing but a pre election sops document. Further, the budget presented by the present finance minister Mrs Nirmala Sitharaman, was another dull statement where revenue and expenditure details were found wanting.
As GDP figures came tumbling out, revealing it at 5% and employment generation was at its lowest, the Finance minister came out with interim measures almost every fortnight. After criminalisation of corporate social responsibility fixed on companies if they failed to adhere to it, the FM, withdrew the criminal clause. Such flip-flops by the government of its policies, does not give confidence to industries to come and open shop in India. Even Indian conglomerates are investing abroad. No company chairman or general manager would want to be dubbed a criminal and put behind bars on account of CSR or if the company crashes.
Then came announcement of amalgamation of PSU banks into 10 large entities and the reason given was that it would be better and profitably managed and be able to finance better. On the contrary, amalgamating financially well managed banks with loss making ones may dent their balance sheets. It becomes much more difficult to culturally integrate, manage and audit such huge institutions. Demand for credit from banks will come only when entrepreneurs feel confident of investing in good business.
After what happened to Punjab and Maharashtra Co-op Banks, people are losing faith in banking institutions. “Are our deposits safe?” Is a moot question, especially after RBI transferred Rs1.9 lakh crores to the government and is contemplating of releasing another interim dividend to tide over the financial difficulties. RBI has been decreasing rates with increasing frequency, which has resulted in deposit rates going down considerably, and is hovering around 6.25%. This has caused anguish to middle and lower income group especially elderly who survive only on interest generated from their meagre savings sans pension. The RBI has not given a thought to this matter, but concentrates on big business, which are sitting on reserves of about Rs 8 lakh crores.
The reduction of GST to the corporate sector will not help the general public in increasing the demand for goods as there is a slowdown in both formal and informal economy. According to estimates informal rural economy was down from 15% to 1% during the last five years which has resulted in loss of lakhs of jobs due to demonetisaion and hasty implementation of GST. Unless rural economy and agricultural sector improves, demand will not improve.
Economy is a complex subject, you cannot solve it with slogans.
