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economy

RBI’s ex-chIef explaIns what ty”. He appreciated inflation
control but said that it was
ModI 1 ‘achIeved the Best’ yet to be tested.

Slowing economy
Raghuram Rajan praises reforms in the agriculture sector like crop Coming to his pet subject, he
observed that the growth of
insurance, doing away with middlemen and Director Benefit Transfer the Indian economy is slow-
initiated by Modi government, writes Tehelka Bureau ing down. Explaining what
he calls signs of a deep ma-
he unexpected resource allocation. What laise in the Indian economy,
praise of Prime hit the economy during UPA the noted financial analyst
Minister Nar- II was the fact that opposi- said that it is not only that
endra Modi-led tion and bureaucracy had growth is slowing signifi-
T government turned uncooperative on cantly, the fiscal space is also
came from Raghuram policies like GST while cor- narrowing sharply while
Rajan, Former Governor of ruption scandals during this debt and distress is rising.
Reserve Bank of India and period brought economy About banking sec-
presently Distinguished Ser- to a standstill, inflation tor reforms, he said that
vice Professor of Finance at touched double digits and there were limited efforts
University of Chicago Booth land acquisition bill led to including the creation of
School of Business, while a roadblock in economic Bank Board Bureau to make
talking about what Modi I growth. The then govern- PSU appointments. Then
has “achieved the best”. He ment started course correc- the PSB Bank Boards have
highlighted schemes like Jan tion on macro-stability dur- little power and continue to
Dhan, Aadhar, direct cash ing 2012-13 after a wake-up be politicized. Also, private
transfer of subsidies, pen- 1999-2004, Rajan however, call and initiated some fiscal banks, cooperatives and
sions, and scholarships. said that despite significant consolidation. Then came NBFCs are immune to
He also mentioned reforms, the subsequent Modi I with great expecta- mis-governance. The FDI
prominently flagship “India Rising” campaign did tions like transparency and was flattening. Growth in
programmes like Swachh not convince the electorate promise of jobs. It began im- textile sector was miniscule
Bharat: the clean India in the 2004 elections. plementing some important though China’s share had
programme, toilets for all, macro, sectoral and populist been falling.
Pradhan Mantri Ujwala UPA piggy rides NDA work reforms but the perfor-
Yojana cooking gas connec- He observed that during mance can at best be rated Not global factors alone
tions for poor, Ayushman this period NDA 1 did not as mixed performance. He concluded that to blame
Bharat and the healthcare see strong growth despite Touching on subjects global factors would be
for the poor where Modi I reforms but UPA 1, actu- like demonetization and wrong because IMF global
have “achieved the best”. ally benefitted from lagged GST during Modi II, Rajan growth was 2.7 per cent in
Delivering a lecture on effects of NDA reforms. observed thatdemonetiza- 2013-16, but it actually grew
“India’s Economy: How did However, coalition partners tion was a “misguided in to 3 percent in 2017-19. The
we get here?” he explained limited further reforms. He concept, initiated without global trade volume growth
reasons for the slowdown made another interesting adequate preparation and was 3.1 per cent in 2013-16
in India economy but at the observation and said that it damaged informal sector and this too went upto 4.2
same time lauded reforms the UPA was second time and construction and real per cent in 2017-19. Similarly,
in power sector like restor- lucky when it returned to estate”. The damage was oil price during 2013-16
ing power distribution power in 2009 riding on so huge that it would be was 73.5$/b. in 2017-19 it
companies to health, mov- the success of the farm loan “hard to measure”. Then came down to 60.1$/b. He
ing to renewable energy and waiver rather than econom- came Goods and Services questioned, “Is it just global
revival of stranded power ic growth. Tax, which was “sound in factors?” referring to dip in
plants. There was an explosion concept but was initiated economic growth and said
Giving credit to NDA 1 in investment including without adequate prepara- global factors don’t seem the
for a slew of reforms during infrastructure but strong tion and as such undercut proximate culprits.
the tenure of Atal Behari growth also put pressure compliance and constant
Vajpayee from the year on existing institutions for fiddling created uncertain- letters@tehelka.com

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