Thiruvananthapuram ∙ Former Finance Minister Thomas Isaac said that the country’s national income loss due to Prime Minister Narendra Modi’s stupidity is around 15 lakh crore rupees. Thomas Isaac’s allegation that Prime Minister Narendra Modi caused Rs 15 lakh crore loss of revenue 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 asked Modi to respond to the Indian people for this huge loss caused by wrong economic measures.
He noted that the Modi government should explain to people not only demonetization but also why it has adopted the fiscal and monetary policy upside down. When the Supreme Court resumed the case it dropped to that effect five years after demonetization, Thomas Isaac pointed out that the central government was sweating the Supreme Court. The central government makes no claim to have achieved the goals. And why this path? He also specifies that the request to the judge is to reject the application in compliance with the intention.
∙ The full text of Thomas Isaac’s note
The central government is sweating from the Supreme Court. Even though it has been five years, the Supreme Court has upheld the dismissed case regarding demonetization. The central government makes no claim to have achieved the goals. And why this path? The request to the court is to dismiss the application 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 demonetization, Indian economy has started to roll downhill. That there is no demonetization. If the economic growth rate of previous years (8%) could have been maintained, India’s national income in 2019-2020 would have been Rs 151.12 lakh crore. But according to official data, 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. Therefore, if we calculate the loss of production every year after demonetization, the loss caused to Modi’s country will be 10 lakh crore rupees. Modi has to 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 in constant prices for 2011-12. If we calculate on the basis of that year’s price, the national loss caused by Modi’s stupidity will be at least 15 lakh crore rupees.
He did a stupid thing. As a result, it is clear that there will be a decline in economic growth. In such a situation, anti-recession 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 has followed opposing policies in both these respects. In addition to one stupidity, two more stupidities. The central government is not guided by logic. Rather, it is a neoliberal dogma.
First, let’s take the case of government spending. Government spending was 14.2% of national income in 2012-13. It has gradually decreased. From 2017-18, it was only 12.5%. 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 public budget but to reduce it. Can any financial justification explain this action?
Besides fiscal policy, monetary policy is another important tool in the hands of the government to intervene in the economy. This is the true repo rate.
The repo rate was negative (-2.1) and negative (-1) in 2012-13 and 2013-14, respectively. Taking into account rising prices, if 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 has adopted a policy of keeping the real interest rate low to stimulate economic growth.
The NDA government came to power in 2014-15. For unknown reasons, the repo rate was significantly increased. Last year the repo rate was -1.8. In 2014-15 it rose to 2%. There was a 3.8 percentage point increase in the interest rate in just one year. The repo rate continued to rise even after demonetization 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 Covid-19 epidemic broke out.
The repo rate is increased to control inflation. This is what the Reserve Bank is doing now. But in the early years of the NDA regime, inflation was low. Not raising interest rates. This is because the price of oil on the international market is low. Therefore, there is no need to raise interest rates to curb inflation at a time when inflation is declining. As a result, investment has declined and economic stagnation has accelerated.
The Modi government should explain to the people why it has adopted not only demonetization but also such an inverted fiscal and monetary policy. A national loss of 15 lakh crores would have to be met.
English summary: Dr Thomas Isaac criticizes Prime Minister Narendra Modi
