By K. Raveendran
Finance Minister Arun Jaitley’s portfolio must be redesignated as minister for defence of Modi. This is what he does mostly these days either because he has not fully got over his sabbatical mood or he has nothing much else to do in the finance ministry. He shamelessly defended demonetisation even on a day when the Reserve Bank published its most damning report on the patently ill-conceived move. Even Modi does not refer to demonetisation these days, probably because there is nothing that he can talk positively about it. His most recent major reference to demonetisation was on the first anniversary of the ‘monumental blunder’ last year, when he “bowed to the people of the country for steadfastly supporting the several measures taken by the government to eradicate corruption and black money.” Some small mercy to them. He could not have forgotten his promise to the people to “hang” him if he failed. So, he has left the task of defending ‘note bandi’ to Jaitley, whose performance in the finance ministry was any way nothing to set store by.
Despite a hundred reasons to the contrary, Jaitley continues to insist that demonetisation was good as its larger purpose was to move India from a tax non-complaint society to a tax compliant society. But he does not cite one tax compliant country which achieved compliance with demonetisation. Tax compliance and demonetisation are two different issues. There are other more effective ways to ensure tax compliance and you do not need to destroy an economy to make it compliant. That can only be the height of short-sightedness. He claims that post demonetisation about 1.8 million depositors have been identified for enquiry. Is it such a big deal in a country with 1.3 billion people? Does he mean to say that these people did not have bank accounts before demonetisation and opened them only to deposit demonetised notes? In the age of modern banking, which can track even mood changes of customers, there can’t be a more specious argument that you have to close down everything and start afresh to collect details about depositors and their compliance levels.
Jaitley feels gargantuan delight at the latest Central Statistical Organisation GDP growth figures, which show that India’s economy grew at 2-year high of 8.2 per cent in the April-June quarter of 2018-19 on strong performance of manufacturing and agriculture sectors, increasing its lead over China to remain the world’s fastest growing major economy. Thankfully he stopped short of attributing it to demonetisation, by only saying “reforms and fiscal prudence are serving us well”. In an otherwise environment of global turmoil this represents the potential of New India, he said in a tweet.
The 8.2 percent growth is definitely positive. But it shows the huge opportunity loss caused by demonetisation. India has lost several quarters of high GDP growth, which would have taken the country to maybe double-digit growth by now, but for the most outlandish decision to disrupt the economy. That this has been achieved despite the retrograde move and the faulty and hasty implementation of GST shows the inherent strength of the Indian economy.
Mahindra Group executive chairman Anand Mahindra has likened the April-June quarter GDP growth data to news of a new medal for India at Asiad. True, some of the Indian boys and girls have shown splendid performances at the Jakarta Asiad, but these have been individual performances anchored on dedication and hard work. Modi’s and Arun Jaitley’s ‘New India’ was nowhere to be seen at Jakarta.
As of Saturday morning, India was only at the eighth place in the medal tally for gold and sixth position overall. In the overall tally, it was way behind China, Japan, Korea and Indonesia and was even trailing Thailand. India had only 13 gold, compared to 118 for China, the two countries that are often bracketed in terms of growth, population size and economic profile. It is not at all comforting that Japan has won more gold medals than India’s total tally.
If the Modi government wants to claim credit for the country being set to surpass the UK to become the world’s fifth largest economy next year, as Arun Jaitley has done in a recent tweet, it also has to take the blame for India’s lacklustre performance in the Asiad. In fact, the performance of a country in premier sporting events like Olympics, Asian and Commonwealth Games has more to do with the overall economic development of that country rather than the calibre of their sports people. Performance at these championships is a more perfect index of economic progress, compared to many other data sets.
For instance, all the countries that are ahead of India in the medal tally in Jakarta Asian Games have a higher percapita GDP in terms of purchase price parity (PPP), which is a comparable value calibrated against the US dollar and calculated on the basis of the exchange value of a particular country and using a basket of consumer goods. Even Uzbekistan, which has won more gold medals than India, enjoys a higher per capita income than Indians. In terms of comparable figures, if India’s PPP per capita income is 6,490, that of China is 15,500 and of Japan 42,870. Even Iran has nearly three times per capita GDP compared to India. No wonder that Iran has won 19 golds, compared to India’s 13. So the medal tally has a deeper meaning than merely the sum total of individual achievements and amounts to another ominous commentary on the performance of the Modi government. (IPA Service)
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