India’s Financial Truth
Who is telling the truth? If the remarks made by the Union Finance Minister and the Home Minister are true, then NITI Ayog’s assessment about country’s economic situation is far from reality. But the question arises why the NITI Ayog is on a different page on this crucial issue? Moreover, even after claiming all is well, why has the Union Finance Minister offered quite a few sops deviating from her budget proposals?
According to NITI Ayog the country’s economic situation is grim, which is going to affect the growth rate severely in the near future. There is a liquidity crunch in the country. As a result, availability of capital has become very difficult. Setting up a new venture or expanding existing ones are being hampered. The lenders have become more cautious than usual to grant loans to entrepreneurs. A trust deficit between the financial institutions and businessmen are clearly visible. Banks are no longer willing to extend loans to firms or individuals where return is not guaranteed. Clearly, the banks are not interested in increasing the Non-Performing Assets or NPA which is already sky high. As a result, all three sectors of the economy i.e. primary, secondary and tertiary are suffering. NITI Ayog suggested out of box thinking to get rid of the situation so that cash becomes easily available in the market.
But the government’s version is different. The government is still busy selling its dream of $ 5000 trillion economy. It is in no mood to admit fall in growth rate. Even the huge number of retrenchment from various industries is not worrying the government. In government circles such developments are being seen as a temporary phenomenon. Whatever the economists may say, the government is confident that the sops announced by the Union Finance Minister will put the economy back on track. According to finance ministry officials, some steps were required to revitalise the economy and it has been done. The sops, announced recently should not be termed as a step by a nervous government. Adjustments to policies are not rare occurrences. Every economy goes and grows by this process.
In such a situation, where the government and its think tank are not on the same wavelength, the common people are negatively affected. While the common people stand by the government, they can’t ignore the warning signs as economic instability is more harmful than political instability. So it will be the best way possible to remove confusion about the economic situation of the country, if the government sits with Niti Ayog and discusses the differences in respective perceptions. If one party continues to the counter other and the war of words prevails, our economy will not prosper. Very rightly, former President and the man who managed the country’s finances for more years than anyone else, Pranab Mukherjee highlighted the need of managing the economy efficiently and warned that ‘if the situation goes on like this, the dream of India becoming an economic superpower will remain unfulfilled.’ On the other hand, Reserve Bank Governor Shaktikanta Das is of the view that demand should be increased and to do so the country needs go through some structural adjustments. No one should take the words of either the former President or the present Governor of the apex bank in the country lightly. If reforms are needed, it should be done. No need to ponder over possible political impacts of the reforms as the famous proverb says a ‘stitch in time saves nine’.