My View Today



Present Economic Crisis in India

Chanchal Chauhan


Three years back I had written a small article on Indian economy, ‘Greek Tragedy knocking at India’s door’. I had my logic to forecast that by the year 2018 India would face a severe economic crisis as Greece had faced during that period. I am not an astrologer, but a rationalist and that is why what I had forecast has come to be true now.  I had sent that article to Mr. Manas Chakravarty of Mint paper, he humbly directed me to send it to the editor. I sent it to the editor, Mint who did not have courtesy to respond. (I can show the emails)

     Then I sent it to some other newspapers too but no media person responded. In fact, at that time all these journalists were under the spell of Modinomics. Most of them still believe that by the magic wand of Modinomics ‘the country is poised to become US$ 5 trillion economy by 2025 as envisioned by Indian Prime Minister Narendra Modi ’Again a big lie! The lie is exposed by Niti Aayog vice-chairman Rajiv Kumar who says ‘nobody had faced this sort of situation in the last 70 years wherein entire financial system was under threat’. The lie is exposed by the corporate houses themselves that insert advertisements in national newspapers for a bail out. If God’s in his heaven and all’s right with the world, then why the cry, ‘SAVE PAPA’? The former economic advisor to PMO has shown his disgust to this cry.

       I could not get my article published in any newspaper, as I am not a celebrity, perhaps they just laughed at me, and did not see ‘method in madness’ of an ordinary citizen who does not take seriously any ‘Jumla’ of the RSS-BJP’s illiterate Pracharaks and believes in the rational behaviour and scientific temper.

         Then ultimately on 20 July 2016, I uploaded my article on my own website My article  is still there listed in the ‘Archive’ section.

       The reasons given for this crisis in my article cited above are still valid and a number of guest panelists on TV debates now give the same reasons. But the solutions to this crisis that are generally suggested do not convince me. Some suggest more investment in the industry as Vice Chairman of NITI AYOG does, some suggest ‘infusion of capital into Banking sector’, As a solution to the crisis, the RBI is reducing the repo rate on a regular basis, the banks lower the interest rate on loan and also on fixed deposits. The Government has taken a big chunk of the Reserved fund from the RBI. This move was resisted by earlier governors of the RBI as they knew that it was not a wise move to boost the ailing economy. This money will again reach the coffers of the big corporate houses that cry ‘save PAPA’ or through recapitalising the banks that will transform the capital again into more NPAs and thus the crisis will further escalate. The FM has declared concession for more FDI in retail as a piecemeal remedy to the crisis. She does not tell the people that a big chunk of foreign investment in India has left the country recently after earning profits from the stock market that resulted in the steep fall of value of rupee that is already in the ICU

       Asking for more investment as a solution to the crisis is quite illogical. There is no shortage of finance capital in the globalised world today. The IMF, World Bank, ADB and various arms of the international finance capital are ready to provide more loans. The foregn debt on India is already as high as US$ 543.8 billion, on June 2019. Under UPA regime it was only US$ 474.675 billion. The fresh inflow of finance capital will again be converted into goods and services, commodities for sale. But where are the buyers? Cars and other vehicles are not slices of bread or a pouch of milk that can be consumed on daily basis. Those who have means to buy a car have already done so. If vast population is deprived of income, how can people buy a car or a bike? So the automobile industry is in trouble. The problem is that people without any income cannot buy even clothes, that is why even textile industry is in crisis.

        If no new jobs or means of income are provided, and present work force is retrenched, how can one expect new buyers of the stock and inventories waiting to be cleared? Thus the capital invested is dumped in the stores in the form of commodities. Even HUL that produces commodities of daily use is facing a crisis and it has lowered the prices of some of its items to boost the demand. The jobless growth played havoc with the work force and thousands of workers in various sectors retrenched or fired every day.. This factor along with some more causes is totally ignored by the conformist economists.   

       So the real bottleneck is the ‘lack of demand’ created by the policies dictated by the World Bank and IMF and implemented obsequiously by NDA government that supported the richest and sucked all the cash from the pockets of the poor by various measures, such as by increasing railway fares, then every day increasing prices of petroleum products, demonetisation, GST and ignoring the rural distress. The NDA leadership cunningly raised the slogan of nationalism and surgical strikes against Pakistan to win the election this time. The economy is no priority of this Government. Let the academic economists make a hue and cry, let the Vice Chairman of NITI Ayog shed tears on the condition of Indian economy, let the corporate houses advertise their appeal, the market economy will take care of itself. The NDA government is not going to mend its ways.

       Our honourable PM who once boasted in Lok Sabha that he was wiser than “Harvard economists”, remained busy mostly in foreign tours seeking FDI or purchasing war planes. At home, he always enjoyed to be a Sangh Pracharak and not the PM of the country. All of his speeches inside or outside Parliament had to be Election speeches, and after winning the General Elections, 2019, he began to provide training to his cadres to win the next General Election in 2024. That is why, the country is still fed with emotive issues based on Hindutva agenda and every day a step is taken to polarise the Indian citizens on the divisive lines. The issues that directly or indirectly target Muslim community are given the top most priority. For example, look at the moves of creating the NRC in Assam, the Bill on ‘TripleTalaq’ and abrogation of article 370 and 35 A. All these are glaring examples of the dangerous moves of the Hindutva forces to tarnish the image of a whole community and treat it as the ‘other’.

      These steps will hardly benefit any community by any logic, but surely polarise the citizens of India and will become a tool to win any future election. No body will listen to the sensible voice, no body will care for the thousands of workers that are rendered jobless every day. All of them lose their purchasing power, so the goods and services now rot in the stores and markets. Those waiting for jobs will get nothing in this scenario of recession, so they too will not purchase a vehicle or buy a home. Farmers are hard hit by natural calamities such as droughts and floods and the menace of stray ‘mother cows’ destroying valuable crops of farmers. Moreover, the agricultural produce does not fetch enough cash to purchase commodities produced by the corporate houses that became richer by selling earlier their goods and services on high profit. Still the farmers have to purchase fertilisers, pesticides, seeds and other necessities by taking loans from banks or local money lenders. While in distress they fail to repay loans, they commit suicide. The official economists and even academics hardly take into consideration the bitter fact that large number of suicides too hit the economy as the bereaved families can purchase nothing after the loss of that precious life, the head of the family. The same logic applies to war and communal violence when thousands of people and soldiers lose their lives and leave behind them a trail of poverty for the bereaved. Thus the economic growth is hit hard by such foolish acts too.  All economic activities including tourism and horticultre have been hit hard  by Modi government and its steps will hit further Indian economy

    The Modi government is hell-bent on privatisation of a number of public sector undertakings. We all know that a number of private companies and even banks turned bankrupt and left the country. Still the government following the neo-liberal regime pushes privatisation that leads to retrenchment of workers and that is why the workforce resists such moves. The workers of many PSUs are on war path against the moves of privatisation of their companies because they know the move will again add to their woes and thus add to the illness of economy. The SC, ST and OBC aspirants of jobs are hit hard as there is no reservation for them in the private sector. They have already been alienated by the policy of outsourcing and contract labour.

     But alas! These foolish acts of spoiling Indian economy are pursued without caring for any advice. That is why all economic advisors with self-respect left the Modi government and India too. Modi-Shah duo does not care a fig for economy. They are adopting measures to create an atmosphere of communal hatred, both physical and mental, against Muslims. A war against Pakistan may also be on the agenda of the BJP-RSS to win the next Elections and then converting the secular democratic republic into a Hindu Fascist state, may be, in the form of a military dictatorship for which a new post of the Chief of Defence Staff has been announced by the PM in his Red Fort speech recently.

                But who will bell the cat?