Wrong policies led to crisis: Sinha

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Jamshedpur: Former Union finance minister Yashwant Sinha said the current economic slowdown one was witnessing in the country has been the direct fallout of mistaken domestic policies, global recession as well as India having become an “unsafe” destination as a result of the recent terrorist attack on Mumbai.

“It has been the direct fallout of domestic policies which were perhaps mistaken policies and we could not anticipate global developments, as a result of which we have been hit very hard,” said the former Union finance minister, adding that the freezing of liquidity in order to tame inflation had been a wrong step in the first place. Mopping up of available liquidity by issuance of oil bonds, placing of supplementary demand bills to the tune of Rs 1,50,000 crore by the GoI and the RBI’s imposition of liquidity squeeze had already worsened availability of finance in the domestic market before the global financial crisis actually made things worse for borrowers, Sinha said.

The global financial crisis only came as a final blow for domestic resource mobilizers who found that international financing opportunity had been shut too, he added.

Speaking on “Impact of global economic recession on Indian industry” organised here on Sunday jointly by the Jamshedpur Management Association (JMA) and the Jamshedpur Citizen Forum, the BJP vice-president said the current recession in the country has already seen thousands of job losses across well-known sectors of production like textiles, gems & precious stones, carpet making, automobile, etc.

Advocating that the government should go for a “big bang” approach in the “face of the storm” the country was facing, Sinha said spending on infrastructure projects by way of following a “small incremental growth” strategy would not help the situation in any way.

The Indian government’s announcement of a Rs 20,000 crore package, which though minuscule compared to the $2 trillion US bailout package so far, too could be given a multiplier effect by following the Chinese model of forming a special purpose vehicle (SPV) for every viable infrastructure project, he felt.

He said a strong private-public partnership in the infrastructure projects, which would give the projects the efficiency of the private sector and the stability of the public sector, could see the country through the current global slowdown.