Arun Kumar, an eminent economist and leading authority on black money, who has taught at the Jawaharlal Nehru University till 2015 has continuously underscored “demonetisation opened the floodgates for earning “black incomes” and affected the unorganised sector so adversely that the overall Indian economy has stagnated and is not growing any more.
The economy has been growing at 1% in the last 3 years, Kumar pointed out in an interview in mid-2019 and said since it’s an unorganised sector that got hit first by demonetisation, followed by GST and the NBFC crisis, it has left an impact on the economy.
Newsroom24x7 is sharing here with our followers an ongoing dialogue on social media. We are only using the initials for those engaged in this dialogue on Arun Kumar’s view point that GST and demonetisation were grand disasters that have brought about the downslide in India’s economy.
The deadly post-demonetisation, the new GST regime and direct policy impact of select corporates have led to this debacle. Its just not Modi the previous and the present FM and the policy makers within the BJP are responsible for this mess
There are two different things here. One is that GST, demonetisation, are not measures which will make the economy grow immediately. Rather, they are measures without which the economy will never grow any more than what it had already done. The second is the downturn in the economy. That downturn was bound to happen as India adjusted to more formal, more systematic, ways of working. That will happen because Narendra Modi has effectively liberated the people of India from the clutches of politicians and civil servants.
The GST and demonetisation were both steps in the direction of such liberation. The liberation of banks from the clutches of politicians and bureaucrats too needs to be counted here. These measures will empower those who wish to grow to grow. Earlier only those with contacts could.
The Indian economy which had been liberated in the 1990s, had reached the limits of its growth. The five decades of independence had shown us that no growth was possible for anyone without the active help of politicians and civil servants. Two and a half decades of indifferent growth since the 1990s, at least showed the people that there was a possibility of them growing without kowtowing to politicians and civil servants.
Demonetisation was a colossal failure. The timing of the GST post-demonetisation was a blunder in the waiting. In politics, the decisions should not be arbitrary even if they claim to be for public good. The rationale for both the decisions had brought India to its knees even before corona. This bet of bringing the unorganised sector or restructuring it by the fiats has brought economic hardship to millions, destroyed small enterprises and has pushed the nation into a poverty trap from which it was barely trying to get out. Unless policies are not nuanced and fine tuned, this reckless arrogance with an authoritarian streak so visible in the present regime will not improve anything whatever might have been their intentions. Unlike you, I don’t credit them with wisdom that you find in them and their half baked ill-conceived schemes(unless you being closer to power centres have more access to the brilliant effort that has gone into this planning and its execution).
There is this belief in India that such changes that empower the poor, the commoner, come through social consensus. They don’t. The only way to bring changes such as the GST is through fiat. Even the zamindari abolition bills of the 1950s, came about in the face of stiff opposition from many academics, analysts, journalists and of course zamindars. Similarly with the nationalisation of banks and the coal mines and LIC.
The manifestation of consensus is not merely that all political parties, all journalists and all academics support such a measure. If they do, it makes life easier for those bringing in the change. The manifestation of consensus in such issues is also about taking a chance of annoying a lot of people. The Narendra Modi government took that chance.
Also, I know that every government has sought to bring in these changes but has been scared that those in power and authority would find the transformation upsetting. If the Modi government went ahead to still go in for the transformation, it deserves accolades rather than criticism.
The accusation that the present slow-down in the economy is a consequence of introducing GST and demonetisation is merely an unfair accusation.
Even the common public who is claimed by critics to be hurt by these changes does not support these accusations when it comes for them to make a choice: Modi or Congress– and the public has consistently, with ever increasing strength, opted for Modi while rejecting the Congress eco-system.
I have said this earlier and will continue to say that academics like Arun Kumar, Prabhat Patnaik, are simply out of their depth when they indulge in criticism of the structural transformations that Modi is bringing in. Maybe they are competent economists, maybe they are not; but they are certainly extremely poor when it comes to comprehending political and structural transformations. And they definitely don’t have the good of India or the people of India in their hearts. Their criticism is mindless. They have no roots on the ground.