Thiruvananthapuram ∙ Former Finance Minister Thomas Isaac said that the loss of national income of the country due to Prime Minister Narendra Modi’s stupidity is regarding 15 lakh crore rupees. Thomas Isaac’s allegation that Prime Minister Narendra Modi has caused a revenue loss of Rs 15 lakh crore to the country by analyzing the economic measures taken during the NDA regime, including demonetisation. In a long note shared on social media, Thomas Isaac demanded that Modi should answer to the people of India for this huge loss caused by wrong economic measures.
He noted that the Modi government should explain to the people not only the demonetisation but also why it adopted the upside-down fiscal and monetary policy. When the Supreme Court took up the case filed in this regard five years following demonetisation, Thomas Isaac pointed out that the central government was sweating from the Supreme Court. The central government has no claim to have achieved the targets. And why did this path? He also pointed out that the request to the court is to dismiss the petition respecting the intention.
∙ The full text of Thomas Isaac’s note
The central government is sweating from the Supreme Court. Even though five years have passed, the Supreme Court has taken up the case filed regarding demonetisation. The central government has no claim to have achieved the targets. And why did this path? The request to the court is to dismiss the petition respecting the intention.
You will be shocked to hear how much loss of national income Modi has caused to the country. Almost 15 lakh crore rupees! After the demonetisation, the Indian economy started rolling downwards. Let there be no demonetisation. If the economic growth rate of the previous years (8 percent) might have been maintained, India’s national income in 2019-20 would have been Rs 151.12 lakh crore. But according to official figures, the national income for that year was only Rs 145.16 lakh crore. Even at constant prices, Modi lost the country Rs 6 lakh crore in 2019-20. Thus, if we calculate the loss of production every year following demonetization, the loss caused to Modi’s country will be 10 lakh crore rupees. Modi must answer to the people of India for the national loss of 10 lakh crore rupees.
One thing to remember is that the above figure is at constant prices for 2011-12. If we calculate on the basis of the price of that year, the national loss caused by Modi’s stupidity will be at least 15 lakh crore rupees.
Did a stupid thing. As a result, it is clear that there will be a decline in economic growth. In such a situation, anti-recessionary measures should be taken. 1) Increase government spending and increase demand in the economy. 2) Lower interest rates should encourage private investment. The central government followed opposite policies in both these respects. In addition to one stupidity, two more stupidities. Central government is not guided by logic. Rather, it is neoliberal dogma.
First, let’s take the case of government spending. Government expenditure was 14.2 percent of national income in 2012-13. It gradually decreased. From 2017-18, it was just 12.5 percent. 12.2 percent in 2018-19. 13.2 percent in 2019-20. Despite the slow pace of economic growth, the central government has tried not to expand the government budget but to reduce it. Can any financial justification explain this action?
In addition to fiscal policy, monetary policy is another important tool in the hands of the government to intervene in the economy. That is the real repo rate.
The repo rate was minus (-2.1) and minus (-1) in 2012-13 and 2013-14 respectively. Taking into account the rise in prices, if the banks take a loan from the Reserve Bank, instead of paying interest to the Reserve Bank, they get interest from the Reserve Bank in return. The UPA government adopted a policy of keeping the real interest rate low to stimulate economic growth.
NDA government came to power in 2014-15. For unknown reasons, the repo rate was raised sharply. Last year the repo rate was -1.8. In 2014-15, it rose to 2 percent. There has been a 3.8 percentage point increase in the interest rate in a single year. The repo rate continued to rise even following demonetisation in subsequent years. No action was taken to reduce the repo rate in view of the slowdown in economic growth. The repo rate was reduced in 2019-20 when the outbreak of Covid-19 hit.
Repo rate is increased to control inflation. That is what the Reserve Bank is doing now. But in the early years of the NDA regime, inflation was low. Not by raising interest rates. This is because the price of oil in the international market is low. Thus, there is no need to raise interest rates to curb inflation at a time when inflation is falling. As a result, investment fell and economic stagnation accelerated.
Modi govt should explain to the people why they have adopted not only demonetisation but also such inverted fiscal and monetary policy. 15 lakh crore national loss should be answered.
English Summary: Dr Thomas Isaac Criticises Prime Minister Narendra Modi
