Former prime minister Manmohan Singh on Tuesday blamed demonetisation for the slump in growth rate and expressed serious concerns over the state of the economy, saying that it is running on just one engine of public spending.
While addressing the Congress Working Committee (CWC) here, Singh said, “The slowdown was primarily due to demonetisation that was announced by Prime Minister Narendra Modi on November 8... Private sector investment has collapsed and the economy is running on just one engine of public spending.”
Singh referred to the government data released on May 31 which showed that India’s economy grew 6.1% in the three months through March from a year earlier – slowing from a provisional 7% in the previous quarter.
The former prime minister said while the gross domestic product (GDP) growth was 6.1%, gross value added (GVA) growth – a measure that economists now favour to understand job creation – slowed even more sharply in the fourth quarter to 5.6%, compared to 6.7% in the third quarter.
Singh said sustained fall in GVA, which is the true sub-measure of economic activity, meant a serious impact on jobs.
“This implies a loss of millions of jobs for the nation’s workforce. The GVA growth of the industry has fallen from 10.7% in March 2016 to just 3.8% in March 2017, a decline of nearly seven percentage points of growth.”
Even the construction sector, which is one of the largest employment generators in the country, has suffered contraction, the former prime minister said. Earlier this year, Singh had described the government’s abrupt decision to ban high-value notes as “organised loot and legalised plunder” and predicted that the economy would shrink by up to 2% as a result of demonetisation.
In her address, Congress president Sonia Gandhi said Singh had accurately predicted a fall in growth due to note ban.
“The GDP figures proved that the former prime minister’s forecast that demonetisation would slow down economic growth...Where there was economic potential there’s stagnation. Where there was rich diversity there’s a brazen campaign to straitjacket the whole country into a regressive world view,” Sonia said.
The Congress chief blamed the Centre and the state government for the “insensitive handling” of the Kashmir situation, saying there was relative calm earlier in Kashmir “but now there is growing confrontation, tension and fear. The crisis has come to represent the colossal failure of the government.”
The CWC decided that a party panel set up under Singh on Kashmir will formulate a clear line to avoid party members from speaking in different voices. It , however, did not discuss the issue of elevating Rahul to the party presidentship.
DH News Service
Grim outlook
*Economists now favour GVA (gross value added) growth to understand job creation
*In fourth quarter of FY 2016-17, GVA slumped to 5.6%
*It was 6.7% in the third quarter
*Sustained fall in GVA means a serious impact on jobs
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