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, former finance minister Yashwant Sinha has 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 federal polls, he said. With both businesses and farmers suffering, Modi will face voters who are angry about the lack of job growth, Sinha said in an interview, noting the prime minister will “have to take the entire blame” himself. “We will be judged by the promises we made. They’re backslapping each other and convincing the people that everything is hunky-dory. But let’s see what the people think,” he said.
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 RBI Governor Urjit Patel. Although the Modi 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 Oct 4, 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,” he said.
Sinha also had harsh words for RBI 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 RBI spokeswoman 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 per cent from 7.3 per cent 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 in Mumbai said. “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.”