Give Yashwant Sinha his due, he played a key role in pulling India out of recession during 1997-2002: Prem Shankar Jha

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New Delhi | Updated: October 9, 2017 10:46:10 AM

Political slugfest has erupted after former Finance Minister Yashwant Sinha targetted the PM Narendra Modi government over the alleged economic slowdown.

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Political slugfest has erupted after former Finance Minister Yashwant Sinha targetted the PM Narendra Modi government over the alleged economic slowdown. Finance Minister Arun Jaitley lashed out at Sinha by terming him ‘an applicant for a job at 80’. Sinha had hit back with a stinging retort. Sinha has received some support from various quarters and now noted author and senior journalist Prem Shankar Jha has hailed the ex FM, saying he had played a key role in pulling India out of the recession during 1997-2002, according to Indian Express report.

“Political jousting is normal in a democracy but Jaitley’s remarks bode ill for the country because they show that despite being in office for three years he has no idea of what caused the recession of 1997-2002, or the role Sinha played in pulling India out of it,” Jha stated in article carried by IE on Monday. Jha said this while referring to Jaitley’s remark “I must confess that I do not have the luxury as yet of being a former finance minister…Therefore, I can (not?) conveniently forget a policy paralysis… (and)… forget the 15 per cent NPAs (non-performing assets of the public sector banks one presumes)… of 1998-2002”.

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“The difference between Sinha and the FMs who have followed is that he was conscious throughout the recession years that high-interest rates were the main cause of the severe deceleration of industry. The Economic Survey for 2000-2001 listed a high-interest rate environment, (and consequent) lack of demand for capital goods” among its principal causes. When year-on-year inflation measured by the wholesale price index fell to 1.3 per cent in January 2002, the Survey pointedly shifted blame to “continued high real interest rates, and lack of both consumer and investment demand,” Jha said.

“Therefore, as soon as the India Resurgent Bonds had done their job, Sinha began to ease money supply till, by 2003, both deposit and credit rates were half of what they had been four years earlier. Not surprisingly, share prices began to rise and new IPOs began to be offered from late 2002 onwards. Maruti Udyog’s public offering of 16 per cent of its shares in May 2003 lit the fuse for the eight-year economic boom that followed,” Jha said.

Sinha had no difficulty in achieving this because he was supported by Bimal Jalan, perhaps the best RBI governor the country has ever had, Jha said.

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