Monday, 30th October 2017

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Pranab Mukherjee nudge on economy

It was clear from Mukherjee’s speech that one of the reasons behind the slowdown is the policies the Modi government has initiated

By Subhankar Chowdhury in Calcutta
  • Published 25.08.19, 1:05 AM
  • Updated 25.08.19, 1:05 AM
  • 2 mins read
  •  
Pranab Mukherjee in Calcutta on Saturday. Picture by Gautam Bose

Former President Pranab Mukherjee on Saturday said there were “visible signs of economic slowdown” and the economy was badly in need of “prudent financial management”.

The comment comes at a time a broad consensus is developing around the state of the Indian economy, which grew its lowest at 5.8 per cent in the fourth (January-March 2019) quarter of 2018-19 — the lowest in the last 20 quarters.

“India’s growth rate came down from 9.3 per cent in the first quarter of 2010 to 5.8 per cent in the last quarter of 2018-19. Annual GDP growth is at a five-year low…. Slowdown signs have started becoming visible since last year with the GDP growing at 6.6 per cent in the October-December quarter of 2018,” Mukherjee, who as finance minister of the country had presented as many as seven budgets, said.

Mukherjee made these comments while delivering the Sukumar Bhattacharya memorial lecture organised by the Association of Corporate Achievers and Executives at a city hotel on Saturday evening.

“It is a well-known fact that economic development and growth will not be achieved if the finances are not managed well,” Mukherjee said in a comment that could be interpreted as an attempt to nudge the Narendra Modi government into acting prudently.

Mukherjee, as finance minister, had provided stimulus to industry in 2008-09 in an attempt to arrest the slide in the growth rate and consequent unemployment.

That booster dose had resulted in a broadening of the gap between the government’s income and expenditure and prised open questions, albeit in hindsight, on whether the move was right, although the former finance minister had defended his decision in later years.

On Saturday, Mukherjee did not comment on the performance of the Modi government, but it was clear he wanted the finance ministry to do much more.

“Without investment the economy cannot develop and grow,” Mukherjee said, a day after Union finance minister Nirmala Sitharaman made some announcements to lift the mood of a sulking economy.

The government had on Friday rolled back a controversial tax surcharge on foreign portfolio investors and come up with measures to revive housing finance companies and the automobile industry, among a slew of other steps.

Sitharaman’s intervention is being viewed as a tacit acknowledgement on the part of the central government that there was something wrong with the economy.

It was clear from Mukherjee’s speech that one of the reasons behind the slowdown is the policies the Modi government has initiated.

“The implementation of GST law has led to the replacement of a plethora of central level taxes. However, there is a need for the government to bring more clarity in many contentious issues for better implementation and compliance in GST,” Mukherjee said.

The former President in his speech flagged concerns over the “astonishing” rise of corruption in the last couple of years and said such a scenario posed a challenge to the growth of meaningful business.

“In the last couple of years, the frequency and scale of frauds has been astonishing. Many would have thought post Satyam scandal, lessons were learnt and proper governance practices were put in place. However, with irregularities at Punjab National Bank (and) Infrastructure Leasing and Financial Services, amongst others, coming to the fore, the burning question about loopholes in the system of accountability and risk management are again up for debate in the corporate world,” Mukherjee said.

“If such fraudulent activities are not put under control, economic activity will be stalled as no meaningful business will flourish in an environment where misappropriation and embezzlement are all that we hear in the news almost on a daily basis.”