Not surprised to read a piece pf advice from Parakala Prabhakar, the husband of Union Finance Minister Nirmala Sitharaman advocating PV Narasimha Rao-Manmohan Singh economic architecture. He says Indian economy is in choppy waters and only Manmohanomics can get it out out of this mess. He has also criticized the saffron party for for denigrating the Nehruvian economic framework. "The party think-tank "fails to realise" that the attack remains more a political assault and can never graduate to an economic critique," he wrote in a article.
"Constructs such as 'Integral Humanism' could not be rendered into practical policy initiatives in the modern market-driven, globalised world. The BJP could, therefore, have released itself from that limiting agenda by wholly embracing and even owning the Rao-Singh economic architecture," writes Mr Prabhakar in the article titled "A lodestar to steer the economy". he wrote.
FM husband is pained to see that " Modi government is still in denial mode, data flowing into the public domain show that sector after sector is staring at a seriously challenging situation".
BJP's "inexplicable reluctance" to develop its own coherent set of ideas about the country's economy and the "unwillingness" to take its eye off the Nehruvian policy framework ball are harming the economy, writes noted political economist, P Prabhakar.
There is no denying that Indian economy lost the steam after demonetization and couldn't pick up the desired growth rate since than. "Demonetization ruined business in Indian countryside and caused huge job loss. It slowed down Indian economy, says a new study by economists Gabriel Chodorow-Reich of Harvard and Gita Gopinath of the IMF.
The move soaked over 86 per cent of the liquidity overnight on November 8, 2016 leading to a total chaos among people and businesses. They panicked as cash shortage hit the markets. The paper titled, "Cash and the Economy: Evidence from India's Demonetization", says that the demonetization move lowered India's economic growth and led to a reduction in jobs by at least 2-3 percentage points in the quarter of the note ban.
Written by Gabriel Chodorow-Reich, an associate professor of economics at Harvard; Gita Gopinath, the Economic Counsellor and Director of the Research Department of the IMF; and Prachi Mishra of Goldman Sachs and RBI's Abhinav Narayanan, the study was done to highlight "the consequences of demonetization in the cross-section of Indian districts". It caused drastic fall in consumption nosediving investment anf creating demand probem.The implementation of GST added to the crisis
The study found that "severe demonetization shocks" had much larger contractions in ATM withdrawals. The move, however, led to rise of alternative forms of payment options, including mobile wallets, the study says.
The study found that there was decline in credit of about 2 percentage point in the final quarter of 2016 as a consequence of demonetization. Both the RBI and government maintained secrecy prior to the policy's announcement. The RBI "did not print and distribute a large quantity of new notes before the announcement" leading to an immediate shortage of cash.
Demonetization is one of the contentious decisions of the Modi government after coming to power in 2014. Former Prime Minister Manmohan Singh had said at that time demonetization would lead to slowdown in the GDP growth rate by about 2 percentage point in his criticism of the move. It has proved true.
Indeedm Modi govt will do better if it cares to hear Dr. Manmohan Singh. Despite in Congress, he is more a economist than a politician. Economists don't invoke politics.
(Chander Sharma)
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