Former Prime Minister Manmohan Singh believes that demonetization and faulty implementation of the Goods and Services Tax are responsible for the current economic downturn. While suggesting five corrective measures to reverse the current downturn, Singh urged the government to break the habit of “headline management”.
“The Modi government should get out of the habit of managing headlines. Already a lot of time is wasted. Instead of making sectoral announcements, efforts should be made now to advance the whole economic framework simultaneously,” Singh said in an interview with Dainik Bhaskar.
The former prime minister added that the very first step before implementing the five reform measures is to accept that the country is facing an economic crisis. He said the government cannot live in denial mode. He further said that to pull the country out of the current economic crisis, the government must listen to experts and all stakeholders with an open mind.
Singh suggested that the first remedy to get the economy back on track would be to make the GST “make sense” even if it meant losing revenue for a short time. The second remedy, he imagined, is to find new ways to revive agriculture and revive rural consumption. He also cited the congressional manifesto here, saying it mentioned “concrete alternatives,” where money could reach people by freeing up agricultural markets.
Third, he mentioned that there is a need to inject liquidity into the capital formation system.
The fourth measure is to revitalize key labour-intensive sectors such as textiles, automobiles, electronics and affordable housing. For this, easy loans would be needed, especially for micro, small and medium enterprises (MSMEs), he said.
Singh also said the government should exploit emerging export opportunities due to the ongoing tariff war between the United States and China. Developing his fifth measure, he said, “We need to recognize the new export opportunities that are emerging as a result of the trade war between America and China. Remember that solutions to cyclical and structural problems are indispensable. Only then can we return to the high growth rate in 3-4 years.
Singh, known as the architect of India’s economic reforms in the 1990s, added that India is experiencing an extremely severe economic downturn. “The 5% growth rate in the last quarter is the lowest in six years. Nominal GDP growth is also at its lowest in 15 years. Many key sectors of the economy have been affected,” he said.