NEW DELHI :
The economic downturn has brought on an inconvenient and potentially difficult political debate for the government ahead of a string of Assembly elections with ministers consulting industry experts on how to meet the challenges posed by the slide.
Elections are due in Maharashtra, Haryana, and Jharkhand later this year and in Delhi early next year. The Bharatiya Janata Party (BJP) is in power in all of these states except Delhi. However, Mumbai being the financial capital, a debate over the deepening economic slowdown can become particularly difficult for the ruling BJP in Maharashtra.
With the Opposition parties trying to corner the Union government after its massive win in the 2019 general elections, three inter-linked economic issues—the slowdown, unemployment and rural distress, compounded by volatility in the exchange rate and oil prices—can quickly turn into a headache for all the three state governments when they go to the people to seek re-election.
Prime Minister Narendra Modi’s second term in office has been clouded by the economic slowdown, tepid job growth and decelerating exports. Asia’s third largest economy expanded at 5% in the June quarter, its slowest pace in more than six years, official data showed last week.
The figure is also worrying because former chief economic adviser Arvind Subramanian had argued in a recent paper that India’s economic growth had been overestimated in the 2011-2017 period, raising questions about how India measures gross domestic product (GDP) in the first place. The government has refuted this argument.
The BJP accuses its rivals of seeking to politicise economic issues, but opposition parties led by the Congress have asked the Union government to accept that there is an economic slowdown and to present a detailed roadmap of its plans to revive the economy.
“Does the government accept that there is a slowdown or not? The FM needs to get over politicking about the state of our economy and come clean with the people of India. How do they plan to resolve the massive problem they have created if they aren’t even ready to acknowledge it?" Congress general secretary Priyanka Gandhi Vadra tweeted on Sunday.
The government recently started consultations with the industry to find ways out of the slowdown and announced the rollback of a planned tax hike on foreign portfolio investments.
Finance minister Nirmala Sitharaman said on Sunday that she has held two rounds of talks with industries and experts. “I am meeting industries and taking their inputs, suggestions on what they would want and expect from government. I am responding to them. I have already done this twice. I will do it several times," Sitharaman said.
Voices of concern are also coming from other opposition parties who have demanded greater accountability from the government. “Who is responsible for this abysmal state of the economy? Will we hear of something called democratic accountability from the government? The lowest GDP growth in decades, a disaster unleashed on 1.3 billion by visionless incompetence and the divisive politics of the BJP," said Sitaram Yechury, general secretary of the Communist Party of India (Marxist) or CPM.
“THe economy is very important for the common men. The government is working to address sectoral issues, meeting stakeholders on a regular basis. We have addressed the supply side constraints. Now our focus is on demand creation by infusing more liquidity into the system. We hope we will be able to give a boost to those sectors that are facing recession," said Gopal Agarwal, national spokesperson of the BJP.