Narendra Modi government is manipulating data; GDP back series needs to be urgently examined: Yashwant Sinha
Demonetisation was the biggest mistake of Modi in his tenure as Prime Minister and the damage the move has done to the economy is unpardonable, said Yashwant Sinha, who quit the BJP in April 2018.
At 81, there is no ambition to hold any ministerial post or position in the BJP government; the sole reason that prompted him to turn into a critic and part ways with the party was his disagreement with Narendra Modi’s back-to-back flawed economic policies that has put the nation on the back foot, said former finance minister and senior BJP leader, Yashwant Sinha in an exclusive interaction with Firstpost. His book, India Unmade: How Narendra Modi Broke the Economy written with Aditya Sinha was released recently.
“Believe me, there is nothing personal between me and them (the party leadership). I decided to quit and take my criticism public only when the Modi government forced flawed economic policies on the people of this country and did not care to listen to advice,” said Sinha.
Sinha said he decided to write the book at this point to tell the 'truth' to the people before they walk into poll booths during the 2019 elections. “The truth needs to be told.,” said the former finance minister in a telephonic interview. “There was no option but to publicly voice my criticism to speak up on the Modi-government’s wrong policies. It was then that I decided to write an article ‘I need to speak up now’ in September 2017 in the Indian Express newspaper, Sinha said. “That was the first time. But even after that the Modi government refused to listen and continued with its flawed policies, " Sinha said.
The space for constructive criticism has narrowed in the present context. Critics of the government are being dubbed as anti-nationals, anti-Modi, so on, said Sinha.
Referring to the recently introduced GDP back series and the claims about employment figures using EPFO-data, Sinha said the Modi government is manipulating data to mislead the country. “The data is being manipulated so that the Prime Minister can give a speech in Parliament. The GDP back series needs to be examined urgently,” Sinha said. On 28 November, the Modi-government released GDP back series data that showed lower growth in UPA-years. The move was criticised for the accuracy of the numbers and the way NITI Aayog dominated the back series launch.
Analysts pointed out that the new data back series failed to correlate with important, multiple high-frequency growth indicators during their respective periods. Sinha questioned the government on its claims of employment growth using the EPFO-figures saying it didn’t represent a true picture. “There is massive unemployment and we are seeing it. There used to be Labour bureau surveys that used to study employment trends; this government has stopped that as well,” Sinha said.
Sinha said during his tenure he had undertaken the first major reform in indirect taxes and the GST (Goods and Services Tax) is only a logical progression of that. But, in the current form the GST is flawed; it needs to be brought into a three rate structure as he had proposed in the past, Sinha said.
The BJP is hoping to convert the 2019 general elections into a presidential-style poll making Narendra Modi the central issue but Opposition parties need to be careful not to fall prey for this plan, warned the former Union finance minister, Yashwant Sinha.
“Modi is not the issue here. Issues are issues. Modi and the BJP would want Modi to become the issue and convert the polls to a presidential-style election yet again. The Opposition should be on guard,” cautioned Sinha.
Demonetisation was the biggest mistake of Modi in his tenure as Prime Minister and the damage the move has done to the economy is unpardonable, said Sinha, who quit the BJP in April 2018. Sinha served as Minister of Finance and Minister of External Affairs under the Chandra Shekhar and A B Vajpayee governments respectively.
Yashwant Sinha was external affairs minister under Prime Minister Atal Bihari Vajpayee ( 2002-04) and finance minister in the same government from 1998-2002. He was finance minister in Chandrashekhar's government in 1991.
Modi announced his decision to invalidate Rs 500 and Rs 1,000 notes on 8 November, 2016 in search of black money, fake currency and as a shock treatment to cash-based corruption. This exercise, which was executed keeping the country’s central bank on the sidelines, instantly sucked out 86 percent of the currency in circulation from India’s cash-intensive economy.
The move hit the informal economy particularly hard since cash plays a dominant role in making daily transactions seamless. Supply chains were broken and small shops were shut. The impact on unemployment and rural economy became more visible in the period that followed. The speculated gains of the note ban—widening taxpayer base and push for digitalisation—are much less compared to the pain the exercise inflicted upon the economy.
Recently, a working paper from the National Bureau of Economic Research (NBER) titled as ‘Cash and the economy: Evidence from India’s demonetisation’ authored by Gabriel Chodorow-Reich, Gita Gopinath, Prachi Mishra, and Abhinav Narayanan showed that demonetisation indeed lowered the GDP (gross domestic product) growth by at least 2 percent in the near-term post-demonetisation.
(Yashwant Sinha is a former Union Finance Minister and External Affairs Minister. He quit the BJP in April 2018. His new book India Unmade: How Narendra Modi Broke the Economy written with Aditya Sinha is just out.)
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