November 2019


Raman Jokhakar

None of us would have missed seeing, reading, hearing about the economic slowdown. Empirical evidence sans the media noise does show most economic parameters looking weak if not bleak. That's an outcome rather than a problem. Things donít remain static or unidirectional and slowing is a part of growing.


Governments generally respond to such problems in short-sighted ways Ė giving freebies, waivers, tax reductions, feel-good signals and the like. A common approach often is a mix of deny, shove it under the carpet, dodge issues, deflect, give a counter-narrative opposed to facts, blame extraneous factors or past governments. Washing your hands off and not owning up causes a blind spot for governments which wonít help address the root causes.


The worrying element is the nature and quality of government response these days. Many issues need a healthy inclusive debate rather than denial; critical analysis rather than cherry-picking data; and action rather than justifications.


Impact analysis of DeMo: The first major upheaval that jolted the growth trajectory was DeMo. While it is only fair to give time before analysing outcomes, after three years there is no action on the data gathered from deposits made in those few months. There is no report, analysis or action about a sovereign decision that invalidated 86% of the currency overnight. Aren't people entitled to a report on the outcome of such drastic and pervasive action? So far no one has been punished Ė as if no one had stacks of unaccounted cash! And currency in circulation is much higher now, including higher denomination currency notes. While people were willing and ready to take the pain of one of the most mismanaged economic operations, the government seems to have forgotten the sacrifices of people and its own promises.


Numbers speak: Several sectors look pale and sloppy. Consider textiles. In 2018 Bangladesh had a share in world exports of 6.4% (up from 2.6% in 2000) while India had only 3.3% (up from 3.0% in 2000)1 . Investment in Indian economy has been shrinking (from 15% to 5% YOY comparing 2005-11 and 2012-19 under the new series). Add to that the chaos created by sudden, drastic and constant policy changes. Take the example of automotive sector -  emission standard change; GST credit issues during the introduction phase of GST holding customers back from taking decisions.


GST: A grand, much awaited and transformational idea. Equally shallow has been its drafting and implementation. The FM recently said that GST shouldnít be damned. At the same time GST canít damn taxpayers. How many returns have we got these days? Most changes made were to correct the flaws of a simple Kanoon! That itself shows that Kanoon was flawed. During the formulation stage the then FM did not listen enough. Now the FM wants to welcome delegations with suggestions to continue endless tweaking of a new law that looks like a pair of trousers with 700 stitches! Looks like a landmine of notices and reconciliations is waiting to burst like a strip of firecrackers after GST audit of 2017-18!


Informal sector: Shameful to call it so when 80% find employment in informal sector. Further shame is inflicted on it by targeting it for running on unaccounted money. It is the only sector that gives livelihood and dignity to so many. Last month, my carpenter who had deposited advance in his bank came back saying drawings were blocked. Well, when common people were asked to bank cash, whose job was it to secure those banked amounts? Since the PMC bank debacle, the RBI hasnít had a press conference and no administrator has been questioned for lack of oversight. It is now following a path that has failed in the past.


NPA: Capitalisation seems more like taxpayer funding banks to protect their deposits. We all have read reports of a 25 years old private sector bankís market cap being more than that of 20 odd PSBs. That says it all.


This is not about blame Ė itís about responsibility. FM recently said we all must own up GST; the question is what should government own up? Who makes the law and who runs it? Who makes appointments in banks?


I wish such a list gets shorter. I hope all this is temporary and doesn't last long. Indian experience tells us that we are yet to recognise that the bridge to grand vision is built by immaculate execution.




1   WTO, Goldman Sachs Global Investment Research





Raman Jokhakar



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