India / Modi govt doesn't acknowledge the word 'slowdown': Manmohan Singh

Former prime minister Manmohan Singh on Wednesday slammed the economic policies of his successor Narendra Modi, saying the government was not acknowledging that there was a slowdown, and that there was a need to rethink the reform process afresh to deal with the country’s challenges.

“Today we have a government which does not acknowledge that there is a word as slowdown. And I feel this is not good for our economy. If you do not recognise the problems that you face, you are not likely to find credible answers to take corrective actions measures and that is the real danger,” Singh said at the launch of a book authored by former planning commission deputy chairman Montek Singh Ahluwalia.

“And therefore, as Montek has also pointed out in his book, the (target of) $5-trillion economy by 2024-25 is wishful thinking. Also, there's no reason to expect that farmers' incomes can be doubled in three year period.”

Singh said while an annual gross domestic product growth of 8 per cent was achievable; it required a rethinking about the role of fiscal policy, and bolder tax reforms. “As Montek says (in the book) if you look at the real fiscal picture, the real fiscal deficit of states and Centre combined is as high as 9 per cent and that's not good for satisfying our ambition of having a dynamic economy, growing at the rate of 8-10 per cent,” Singh said.

He said the Centre’s expenditure should be boosted and focused on infrastructure, health, education, defence, and all these sectors require much greater attention than they have received in the past. India’s growth rate is officially projected to come down to an over six-year low of 5 per cent in the current fiscal year. The economy grew by 5 per cent in the first quarter and 4.5 per cent in the second one. Though the back series data has revised the growth rates prior to 2011-12, but the original figures showed that the economic growth rate (on the base year of 2004-05) clocked at least 9 per cent for the three years in a row in the first stint of the Manmohan Singh government.

Ahluwalia seconded Singh’s views: “The growth rate is low and is unlikely to be 5 per cent next year. We are nowhere near the long-term growth targets.” He said the economy had the capacity to respond provided the right kind of expertise was put in place. He said the previous regime got Raghuram Rajan from outside and Nandan Nilekani from the private sector.