If a former Finance Minister, that too from within the BJP, finds fault with the state of the economy, normally, it should be treated as a matter of concern. But when one remembers that Yashwant Sinha has been a routine critic of Narendra Modi and his radical political moves to transform India, it in fact creates hope, not despair.
This is why.
Yashwant Sinha is not an economist. His tenure as Finance Minister was disastrous and shook the faith of the middle class who voted whole-heartedly for the BJP in the 1998 and 1999 elections. The BJP had to pay a heavy price for the UTI scam that affected and shook the faith of the small investor. This along with falling returns on fixed deposits, financial instruments, pension schemes and Provident Funds shattered the faith of the common man in the reform process and that put the BJP on the backfoot for two successive general elections. Farmer distress allowed the Congress to head for the elections with a promise to waive loans, which the UPA famously executed in the fourth year of its first term, leading to a big win in the 2009 election. Yashwant Sinha had become so unpopular with the BJP cadre that finally Atal Behari Vajpayee replaced him with Jaswant Singh, who, as Finance Minister, then retrieved the economy, leading to the "India Shining" slogan of 2004. Perhaps Vajpayee lost because he advanced the polls by over six months, before the fruits of India Shining could percolate to the masses.
High onion prices and a general failure to address the scarcity of certain essential commodities plus the failure to control prices and some questionable disinvestments had created a feeling that the government was too right of centre. This alienated the working class, leading to Sangh affiliates like the
Bharatiya Mazdoor Sangh and the
Swadeshi Jagaran Manch raising the banner of revolt against the then NDA government. The widely-publicized golden handshake and VRS schemes in the PSUs, along with the closing down of many loss-making units, adversely impacted the BJP prospects. Yashwant Sinha gave no credible rational explanation for any of these follies. In fact, Sinha had taken charge of the Finance portfolio convincing the
Swadeshi leadership that he was their friend and opposed to the IMF template of liberalization, but within months he betrayed their trust.
Yashwant Sinha, as Finance Minister of the Chandra Shekhar government, pawned Indian gold for the first time in our history. It was the most shameful phase in India's economic history.
The Modi government's liberalization policies have to be judged in this background. Sinha is not really giving any economic argument to besmirch the Modi government's economic initiatives. Rather, he is spreading a fear factor and trying to build political arguments to damage the image of the BJP government. He is critical of both demonetisation and GST. He has been critical of the government's foreign policy, Kashmir policy, anti-terror operations and even about exposing Pakistan as the terror incubator of the world. So criticism is his habit.
Narendra Modi has been following a well-charted path. His economics is clear for all those who wanted to understand it. This writer had hailed demonetisation in an
earlier column as "Modi's proud socialist moment". He has shown the guts to introduce far-reaching economic and tax reforms - demonetisation and GST - within a span of eight months. Yet, there has been no big disruption or turmoil in the economy. Those who opposed these reforms had predicted a steep fall in growth and huge job losses. Both did not happen.
The Indian economy is still the fastest-growing in the world. The growth is still substantially high, almost double of what the BJP inherited from the UPA in 2014. The Modi-Jaitley team should be given credit for not only restoring investor confidence and putting the economy on the growth path, but also managing it so well.
Modi's objective as PM was very transparent from day one. He said he will account for every single penny spent from the exchequer. He wanted to increase revenue, fight the deficit, widen the tax net, fight corruption, unearth black money, eliminate fake currency and attract FDI into India by enhancing the ease of doing business. Now India is the most preferred destination for FDI if the last two years of inflow is any indication.
Inflation is down to three per cent, lending rates are consistently coming down, projects like Make in India, Skill India and Stand Up, India have started showing positive results. Nobody has so far denied that there was a parallel economy of black and fake currency. Modi took the first concrete step to unearth black money and destroy fake currency. It is also well-known that almost one third, that is around five lakh crore of the high-denomination currency issued by the RBI, was untraceable because of hoarding by black money holders. After demonetisation, the RBI has said that 99 per cent of the banned currency has been deposited in banks. This shows how successful demonetisation was. The money that has returned to the banks is all not white. It only shows that the money so far untraced has now come into the open. These hoarders need to be prosecuted and tax collected from them.
Sinha has questioned tax notices. In a country where only 4 per cent of the people pay income tax, even if all the tax payers get notices, it will still not be widespread. Yes, they are a very influential class. In a country where one per cent of the population is holding 58 per cent of the national wealth, some sort of affirmative action had to be taken. And Modi has done it. Yashwant Sinha is speaking as if he holds a brief for these hoarders, black money and fake currency peddlers.
The difference Modi has made is in the lives of the millions who so far had nobody to speak for. That is why Modi has transformed the BJP base and emerged the messiah of the poor. He is the greatest leveler India has seen. A huge redistribution of wealth is taking shape.
Before taking up painful economic reforms, Modi created an economic safety net with free LPG connections to BPL families, insurance cover for the poor, old and destitute, housing, toilets and electricity for all, health insurance and crop insurance for farmers, Mudra bank loans for small traders. These are all changing the economic landscape of India and giving hope for those who form the lion's share of India. For them, the economy is looking up. Those in ivory towers will never see this.
(Dr R. Balashankar is Member, BJP Central Committee on Training, and Committee on Publications and former Convener BJP National Intellectual Cell and former Editor Organiser.)Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.