New Delhi: Mohan Bhagwat spent some time on Vijayadashami defending the Narendra Modi government in general and its handling of a worsening economy in particular. Of course the Rashtriya Swayamsevak Sangh (RSS) chief also touched upon some major political and social topics. But his comments on the economy were particularly noteworthy. In fact, a new RSS lexicon seemed to emerge from this annual speech: ‘lynching’ was dubbed a foreign term, the Sangh Parivar war cry of ‘swadeshi’ was reinterpreted and ‘videshi’ did not seem to be such a bad word anymore. If one were to go purely by what Bhagwat said – do not engage in discussion over the economy, all is well – the government is doing all it can to steer the economy and there is really no need to worry about a slowdown, rising joblessness, falling domestic consumption or industrial activity. Nor should we waste time thinking about enabling farmers to earn more or about India increasing exports to improve the trade deficit. For how can there be any prognosis when the disease itself is dismissed, with a stern warning to not even hold discussions on the current economic situation?
This brushing-under-the-carpet attitude of the RSS chief came even as latest government data show that the economy is in a deepening slowdown and incremental steps are needed to revive consumer demand. After announcing the fifth successive cut in repo rates, Reserve Bank of India (RBI) governor Shaktikanta Das said last week: “The slump in real GDP growth to 5 per cent in the first quarter of 2019-20 has been followed by generally weaker high frequency indicators for the second quarter. Industrial production was lower in July 2019 on a year-on-year basis, pulled down mainly by manufacturing. The production of capital goods and consumer durables contracted. The output of eight core industries contracted in August, with the production of coal, electricity, crude oil and cement decelerating or going into contraction. The manufacturing PMI for September 2019 was flat, though still in the expansion zone. High frequency indicators suggest that services sector activity weakened in July-August. Indicators of rural and urban demand continued to slow down in July-August. The Reserve Bank’s consumer confidence survey also shows weak consumer sentiment, especially relating to non-essential items.”
In other words, almost all the parameters generally used to track economic growth have shown further weakness after September, compared to August. The 5 per cent GDP growth clocked in April-June this year was a six-year low. GDP growth in the immediate previous quarter was also at a historic low. Over the past few weeks, the government has announced a series of measures to kick-start the economy, including announcements of sector-specific measures and a hefty cut in corporate tax rates. The effects of these steps would either be limited or long-term. The jury is out on whether these will boost growth in any significant way in the near future. The general consensus between economists and market watchers is that sequential growth could be even lower in the current quarter.
In this scenario, Bhagwat’s sangfroid over the economic worries was a thinly veiled attempt to protect the government from charges of mishandling a worrying situation. He even dissuaded people from actively discussing the current economic situation.
“If we were growing below zero per cent that would have been recession. Right now we are growing at 5 per cent. Why do we need to panic? We need to worry but not discuss. Discussions will make investors wary,” he said.
The economy was mentioned within the first few minutes of the speech, when Bhagwat said, “Slowing down of the world economy has left its impact everywhere. Many countries including Bharat have to suffer the result of the ongoing global trade war between the US and China. The government has taken many initiatives to tide over the situation in the last one-and-a-half months. This gives a definite indication of the government’s sensitivity towards people’s interests and its prompt and proactive attitude. We will definitely come out of this cycle of so-called recession. The personalities leading our economy are competent enough.”
After expressing confidence in the government in tackling any economic stress, the RSS chief went on to say, “To strengthen the economy, the government is compelled to take steps such as allowing foreign direct investment and disinvestment of industries.” This is being seen as a significant change in stance by the conservative Sangh.
RSS affiliates Swadeshi Jagran Manch and Bharatiya Mazdoor Sangh have repeatedly voiced clamorous protests against the Modi government’s move to boost FDI as well as over its aggressive disinvestment calendar. The government needs an aggressive divestment target to manage the significant shortfall in receipts expected this financial year as tax collections have remained well below the target. In addition, the government went ahead with some fiscal incentives such as a massive reduction in headline corporate tax rates, which will mean further revenue loss. An aggressive disinvestment target could help mitigate the revenue shortfall to some extent as fiscal worries continue to trouble the government. The same logic applies to FDI, since increased foreign investment should help support economic growth.
Bhagwat linked this altered position on endorsing FDI, etc, with a new definition of the word ‘swadeshi’. “Swadeshi is someone who lives in a globalised economy but only on conditions that favour India,” he said. “If something can be produced in my country, why will I buy it from any other place and thus ruin my domestic trade?” He further explained that a swadeshi would only buy a commodity from outside the country if it were an absolute necessity. “Having said this, during these times we cannot move towards a closed economy at all.” And he summed-up his take on FDI by saying, “Only if life cannot function without a particular commodity and we cannot produce it, will we look out.”
(Author is a senior journalist. Views are personal)
Comments
0 comment