The Indian government is not in a position to pull the economy out of recession due to the commitments it has made to the international financial institutions. So, to shift the focus from the economy, the government will go for a more “divisive agenda,” opines C.P. Chandrasekhar, professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University (JNU), New Delhi.
He was delivering the Nanduri Prasada Rao Memorial Lecture on ‘Economic slowdown-impact on the people’, here on Sunday.
Prof. Chandrasekhar expressed the view that the Indian government does not know what to do regarding the looming economic crisis. The government could not go beyond the 3% fiscal deficit due to the FRBM Act, which was promulgated when there was a sudden boom in the economy in 2003.
It was a commitment given to international financial institutions that the fiscal deficit would be limited to 3% of the GDP. As a result, the government spending, even during recession, would not match the requirements, he said.
Neither was the government in a position to go for higher taxation of the super-rich to pull the economy from recession. “So, the government will finally be going for a divisive agenda. Even the Opposition is unable to stand up and tell facts to the people,” he alleged.
Explaining the reasons behind the economic crisis, Prof. Chandrasekhar said the Indian dynamism, which was created on the basis of the economy riding on a credit bubble, had failed. The ability to sustain growth on the basis of the credit bubble collapsed. India could not find a place in the league of exports though it pushed the liberalisation policies.
Investments that have flown into the country did not help in firming up exports. The legitimacy to neo-liberal policies given in the 2003 boom period got eroded. It resulted in the desire of the State to indulge in acts which actually intensified the crisis.
Demonetisation was one such move and the unsuccessful implementation of the Goods and Services Tax (GST) was another. Growth that the country had seen after 2003 had come to a grinding halt. The country was clearly going into a recession, he added. CITU State general secretary M. A. Gafoor, state president Ch. Narsing Rao, and M. B. Vignana Kendram secretary P. Muralikrishna spoke.