New Delhi: Prime Minister Narendra Modi is running out of time to turn around India’s $2.3 trillion economy before impending elections, leaving the party reliant on “good marketing" to win over voters, a former finance minister and member of the ruling party said.
India’s cash ban and the “poorly planned" implementation of a national sales tax have slowed growth, hurt job creation and will threaten Modi’s administration in upcoming state and general elections, Yashwant Sinha, finance minister under former Bharatiya Janata Party (BJP) prime minister Atal Bihari Vajpayee, said in an interview.
With both businesses and farmers suffering, Modi will face voters who are angry about the lack of job growth, Sinha said in his home just outside New Delhi, noting the prime minister will “have to take the entire blame" himself.
“We will be judged by the promises we made," he said. “They’re backslapping each other and convincing the people that everything is hunky-dory. But let’s see what the people think."
The strong words from a former finance minister and senior member of Modi’s own party constitute the most significant criticism yet of Modi’s and finance minister Arun Jaitley’s economic policies, as well as the actions of Reserve Bank of India (RBI) governor Urjit Patel. Although Modi’s government has won praise for reforms ranging from a bankruptcy law to the long-stalled GST, Sinha’s criticism of the government’s policies threatens to unravel the positive economic story Modi is telling Indians.
A spokesman for the prime minister did not respond to calls and texts seeking comment. On 4 October, Modi used a speech to mount a vociferous defence of the government’s economic record. “There are some people who sleep well only after they spread a feeling of pessimism," Modi said.
Sinha, whose son is a minister in Modi’s government, recently penned a critical opinion piece that went viral. He wrote that he considered it his “national duty" to speak out against “the mess the finance minister has made of the economy." He told Bloomberg other party members felt the same but fear they’ll be punished for criticizing the government.
Sinha also had harsh words for central bank governor Patel.
“The way Urjit Patel behaved when the demonetisation question was posed to him, and the supine manner in which he surrendered, has not brought any glory to him," Sinha said.
A spokeswoman for the Reserve Bank of India did not respond to emails seeking comment.
With growth estimated to slow to a four-year low, the central bank on Wednesday cut growth forecasts to 6.7% from 7.3% following a slew of downgrades by investment banks and private sector economists.
Sinha had touched upon some important concerns, such as India’s widening current account deficit, that will prove difficult to fix in the coming months, Anjali Verma, an economist with PhillipCapital Pvt. Ltd. in Mumbai said by phone.
“With all the macro data turning adverse I would say things are not as stable as they were a month back," said Verma. “The problem of jobs will persist —they haven’t done much to revive that."
At the time of the introduction of the GST, Jaitley was handling both the finance and defence ministries, which was too many portfolios, Sinha said. He has since handed over defence.
“I mean, why is he in charge of the defence ministry? The defence ministry is a huge ministry," he said. “That doesn’t work, as far as the finance ministry is concerned."
Jaitley has since defended the government’s economic record, saying he didn’t have the “luxury as yet of being a former finance minister."
A finance ministry spokesman didn’t answer calls on his mobile phone.
“I’m not saying we’re going to lose the 2019 election, we might still win," Sinha said. “But as far as the employment opportunities are concerned, people are certainly going to tell us, ‘you promised so many jobs, and where are they?’" Bloomberg