The government misread the problem confronting the economy which is a demand contraction created by the "voodoo economic decision of demonetization and ham-handed execution of the GST", Sanjay Jha said.
The economy is headed for serious stagnation which is reflected by the RBI lowering GDP growth forecast for the current fiscal, the Congress said on Friday, while also questioning the government’s “data integrity”. Speaking to the media here, Congress spokesperson Sanjay Jha said the government is in a deep sleep “like Rip Van Winkle”, the famous fairytale character.
“The Reserve Bank itself has lowered India’s GDP growth forecast for 2019-20 to 6.1 percent which will be the lowest in last six years,” he said. It indicated that the country is headed for “serious stagnation”, he said. The BJP-led Union government’s “data integrity” itself had become questionable, Jha further said. “We are being compared to China’s dodgy data, pregnant with brazen manipulation. For example, CAG reported that real fiscal deficit could be as astonishingly high as 5.8 per cent, while the government claimed it was 3.46 per cent,” he said.
The Union government seemed to have completely ignored the vital role of agriculture, where 50 per cent of people are employed, in the economy, Jha said. “The (promise of) doubling farm incomes by 2022 is a complete sham. The agriculture sector grew by a measly two percent during 2014-19 despite excellent monsoons in the last three years, and was almost half of UPA’s 3.85 per cent (growth),” he said. “The BJP reneged on its promise to give Minimum Support Price by telling the Supreme Court that it would distort market rates. Understandably, farmer protests rose from 628 in 2014 to 4,837 in 2017.
“The real wages of agriculture labour barely rose by one percent in the last few years compared to almost 10-15 per cent in the past decade,” Jha claimed. The government misread the problem confronting the economy which is a demand contraction created by the “voodoo economic decision of demonetization and ham-handed execution of the GST”, he said. “Instead, they are fixing the supply-side, it is like giving someone who is suffering from migraine a foot massage,” the Congress leader said.
“By appropriating Rs 1.76 lakh crore from the RBI and giving it as a tax bonanza to the corporate sector the government missed an opportunity to boost public expenditure and increase MNREGA outlay and help the MSME sector that would have augmented demand,” Jha said. “Instead, most likely the industry will absorb the higher earnings as retained profits given the fact that capacity utilization is at a mere 75 per cent. That is why despite RBI dropping repo rates (it) has had negligible impact on fresh investments which are at 16-year-low,” Jha said. GST collections are at a “19-month-low”, signaling slumping consumer purchasing power,” he added.