The Congress on Sunday dubbed as "half-baked and half-hearted" the steps announced by the BJP government to boost the economy and said they reflected the "bankruptcy" in its economic vision and they will have an adverse impact.
Congress chief spokesperson Randeep Surjewala said the last ditch attempt by Prime Minister Narendra Modi and Finance Minister Arun Jaitley to check rupee devaluation and control the current account deficit (CAD) reflects the bankruptcy of economic vision of 'Modinomics' that has failed India's economy.
"Half-hearted, half-baked and feeble measures announced by the finance minister, after a meeting chaired by the prime minister, reflect the myopic and parochial economic vision of a government caught in a web of its own making," he alleged in a statement.
"The measures are superfluous, parochial and would not have the desired impact, except for taking the country to the pre-liberalisation era. Their impact would be adverse on the economy," he claimed.
The Congress leader claimed the falling Rupee and uncontrolled CAD were a "failure of 'Modinomics'" which had "utterly failed" to take stock of the country's economy.
He said India's current account deficit (CAD) has widened to a four-quarter high 2.4 per cent of gross domestic product (GDP) in the April-June quarter of 2018-19 from 1.9 pc in the January-March quarter of 2017-18.
The 'Merchandise Trade Imbalance' is also expected to rise to USD 188 billion in Financial Year 2018-19, compared with USD 160 billion in Financial Year 2017-18 (SBI Report), he said.
The trade deficit has jumped to USD 18 billion in July 2018 on account of falling export performance, he said.
The net outflow of portfolio investments from India in the first quarter of 2018-19 was USD 8.1 billion, as against a USD 2.3 billion inflow of portfolio investments in the fourth quarter of Financial Year 2017-18, reflecting no-confidence in Modi government's economic policies, the Congress leader claimed.
"A 'flawed GST' and demonetisation 'disaster' have adversely impacted and de-motivated global investors.
"Do the prime minister and finance minister even comprehend that the 'net estimated cost' impact of rupee depreciation ('71-72 level) on India's economy in second half of 2018-19 fiscal is Rs 1,44,000 crore?" he asked.
Surjewala alleged this has led to a liquidity crunch in the financial system.
He said post-demonetisation, it was expected that cash in banks will reduce interest rates. However, the country's largest banks, including the State Bank of India, ICICI Bank etc. are raising lending rates making capital costly for the common man.
The Congress leader also said the Modi government is silent on the 'fuel tax' cut and inflation remains high for the common man on account of Rs 11 lakh crore worth of such taxes due to central excise on petrol and on diesel, besides a multi-fold increase in customs duty.
On the Modi government's review of mandatory ECB hedging conditions for infrastructure loans, he said when there is continuous depreciation of Indian rupee against the US dollar, it is doubtful if any borrower will be interested in an unhedged product.
On permitting manufacturing companies to avail of ECBs up to USD 50 million with a minimum maturity period of one year, he said due to an increase in NPAs for over four years under the Modi government, banks are refusing to finance manufacturing and infrastructure companies and hence Indian companies have to look for external commercial borrowing (ECB) option.
On the exception of masala bonds from withholding tax for issuances up to March 31, 2019, the Congress leader asked why this option been restricted till March 2019.
"Is this an attempt to provide a limited window to certain foreign investors to bring hot money into Indian economy for speculative purposes?" he asked.
Surjewala said the Modi government should learn from the UPA-Congress which took fundamental steps during the economic downturn to insulate the economy.
"Unfortunately, the inherent myopia of Modi government has failed it from travelling beyond headline management measures," he claimed.
The government announced Friday an array of steps, including removal of withholding tax on Masala bonds, relaxation for FPIs, and curbs on non-essential imports, to contain the widening CAD and check the rupee fall.
The decisions were taken at a meeting chaired by Modi to review the prevailing economic issues.
He was briefed by RBI Governor Urjit Patel and top officials of the Finance Ministry on the health of the economy.
These measures are likely to have a positive impact to the tune of USD 8-10 billion, a top Finance Ministry official said.
