Opinion: Not Amrit Kaal, This Could Be India's "Vish Kaal"

Here is the annual growth rate of the Indian economy over the last nine years:


Annual growth rate of India's Economy over the last nine years.

Why am I starting this piece by quoting the annual growth figures? Because these are nine-year figures that include one year of UPA rule and eight years of Modi rule, for comparison purposes.

These figures clearly tell a story.

When the Modi government assumed office in May 2014, the economy was already on the upswing after the global financial crisis had started to wane. So, without doing very much, the government started reaping the benefits of the previous government's efforts and the general surge in the global economy.

The growth rate gave confidence to the government, especially Prime Minister Narendra Modi, to take risks. He ended up taking the biggest and the most uncalled for risk on November 8, 2016 - demonetisation.

Our economy never recovered from the shock, and it is clearly noticeable from the annual growth figures.

That year, growth remained the same as in the previous year but the upswing in the growth rate was arrested. Then from the next year there was a continuous decline until it was brought down to half from 8% in 2017-18 to 4% by 2019-20.

When Covid arrived, the past was completely forgotten and the people were led to believe, through narrative management, that their economic problems were on account of Covid and not because of the mismanagement of the economy by the government.

Demonetisation was not an innocuous economic step; it was a sinister move to help friends and supporters convert their black money into white. Six years have elapsed since then and not one of the stated objectives of the notes ban have been achieved.

Not only that, the government has neither told us, nor the RBI, how much of the currency came back. The RBI used to publish these figures until it touched almost 100%. The Indian currency in Nepal and in other places had not yet been fully accounted for.


Yashwant Sinha writes: Demonetisation was not an innocuous economic step.

It will not be wrong to assume therefore that perhaps more than 100% of the currency in circulation was returned and the authorities thought it fit to just keep quiet about it. More importantly, I am not aware of any major case of black money that may have come to light as a result of demonetisation.

We can safely conclude, therefore, that all the black money was allowed to enter the banking system and become white. What a clever way to help one's supporters and friends. Actually, demonetisation is the major financial scam of our times, buried seven fathoms deep by the government and not even spoken about now.

According to my understanding, there are two cycles that affect the economy from time to time. The first is a virtuous cycle consisting of low inflation, low interest rate, bountiful money supply, rising demand both for consumption and investment goods, full utilisation of existing capacity, increased investment for the creation of fresh capacity, a rising economy with all cylinders firing and the creation of numerous employment opportunities.

On the other hand, we have the second cycle that is vicious because it consists of high inflation, high interest rates, tight money supply, depressed demand, excess capacity, low investment, a failing economy and lack of employment opportunities.

When Covid-struck central banks the world over followed an expansionary monetary policy, as a result of which the world was flush with funds, the immediate impact of this was on the stock markets, which soared and soared and created a false sense of feel-good. All that is over now, and we are entering the phase of the inevitable vicious cycle of rising interest rates etc. India is no exception to this rule; it is, in fact, a bigger victim of it than other countries because of its own policy miscalculations and the conviction that you can go on fooling all the people all the time.

Management of the economy is not done under the controlled conditions of an operation theatre of a hospital where the doctor performs surgery on a patient. Management of the economy has to be done in the real world where one may have control over some factors and no control over many of them.

Managers of the economy may use these factors to explain what is happening, but they cannot be offered as an excuse. It is the responsibility of policy makers to anticipate developments, take timely steps to meet their adverse impact and shield the economy from crises.

Have the managers of the Indian economy done their job efficiently?

The growth rate of the Indian economy was arrested first by demonetisation and then by Covid. Now, the world economy is entering a vicious cycle. In India, the twin problems of high unemployment and unbridled price rise are making lives miserable. Can we expect relief in the near future? Given the global and domestic conditions it appears difficult to predict that the worst is behind us. Perhaps it is ahead of us.

So, fasten your seat belts and be ready to face more turbulent weather ahead.

The recent rash of communal issues in our country is therefore not unexpected. What else can take people's attention away from their economic troubles? Do expect more of this.

The target is often the Muslim community - or Christians where it can ensure an electoral win, as in Karnataka. The Prime Minister, who is so fond of sharing his "Mann ki Baat" with his people, has nothing to say on this issue. Obviously, his 'mann'(mind) is not disturbed by these events. Is he enjoying the situation? Varanasi is his Lok Sabha constituency, and he has no views on what is happening there? Can one believe it?

The country is today in a 'bhakti' blindfold. It may get votes for the ruling party and they may continue in power for the next 25 years. But this "Amrit Kaal" may go down in our history as the worst "Vish (Poison) Kaal".

(Yashwant Sinha, former BJP leader, was Minister of Finance (1998-2002) and Minister of External Affairs (2002-2004). He is currently vice-president, Trinamool Congress.)

Disclaimer: These are the personal opinions of the author.