Wednesday, April 18, 2018

Surely one so critical cannot he a job applicant?

"The situation demands that you speak up in the national interest," wrote Yashwant Sinha. "If you remain silent now you will do great disservice to the country." Yashwant Sinha was the Finance Minister from 1998-2002 and Minister of External Affairs from 2002-2004 in the BJP government of Prime Minister AB Vajpayee. He is critical of the present BJP government of Prime Minister Narendra Modi because "The economic situation is grim", "corruption has raised its ugly head again", "Women are more unsafe today than before", and "The sum total of our foreign policy seems to consist of frequent foreign visits by the prime minister and his hugging foreign dignitaries, whether they like it or not". Why is he angry? "I do not know how many of you will get the ticket for the next Lok Sabha elections but if previous experience is any guide, half of you at least will not," he wrote. His son Jayant Sinha is Minister of State for Civil Aviation and was Minister of State for Finance before this. Yashwant Sinha criticised this government's economic policies last year for which he was savaged by the present Finance Minister, A Jaitley who called him job applicant at 80 years of age. During Sinha's time as Finance Minister GDP growth was weak. Sinha renewed his criticism point by point in an interview, following Jaitley's outburst, and a few days later compared Modi to Muslim invader Mukammad bin Tughlak. Jayant Sinha wrote an article defending the government and opposing his father. A survey by the Reserve Bank of India showed that households are pessimistic about "the overall economic situation and on the employment situation", wrote VA Nageswaran. The puzzle is that "capital formation by non-financial private sector corporations as a percentage of GDP" has remained "stable between 11% and 12% between 2011-12 and 2016-17" and yet there has been "a dramatic decline in capital expenditure proposed to be incurred incurred since reaching a peak in 2011". So, on the one hand, investment is supposed to be increasing, while, on the other, private sector is reducing capital expenditure. Figures are obviously wrong. Exports as a share of the GDP is lowest in 14 years, since 2003-04. The strength of the rupee is one cause of falling exports but helps those who have borrowed in foreign currency, importers and the government, wrote TK Arun. A strong rupee reduces inflation and helps keep fiscal deficit in check. It is precisely for these reasons M Merchant favors a strong rupee. But even a strong rupee cannot keep the price of oil in check. Allowing the price of fuel to increase will increase inflation and cause anger while reducing taxes on fuel will hit fiscal deficit. Sinha may not have been a good finance minister but his criticism seems to be right. Trouble is, Modi is stuck. 

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