Former prime minister Manmohan Singh said on Friday a gross domestic product growth rate of 4.5 per cent was unacceptable and worrisome, and urged his successor Narendra Modi to set aside 'his deep-rooted suspicion' of society and nurse India back to harmonious, mutually trustworthy society that can help the economy soar.
Delivering his valedictory address at a national conclave on economy, Singh said mutual trust is the bedrock of societal transactions fostering economic growth, but 'our social fabric of trust, confidence is now torn and ruptured'.
The 'toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society' is stifling economic growth, he said.
"The GDP figures released earlier today point the growth rate of our economy in the second quarter of the current fiscal year is as low as 4.5 per cent. This is clearly unacceptable. And, the aspirations of our people want that this country should grow at 8 to 9 per cent per annum. Therefore, the sharp decline in growth rate from 5 per cent in first quarter to 4.5 per cent in second quarter is indeed worrisome," he said.
Singh, an eminent economist himself, said with an absolute majority in Lok Sabha and low global oil prices, the government has a once-in-a-generation economic opportunity to catapult India to the next phase of economic development and create new jobs for hundreds of millions of youth.
"I urge the prime minister to set aside his deep-rooted suspicion of our society and nurse us back to a harmonious, confident and mutually trustworthy society that can revive the animal spirits and help our economy soar," he said in a direct message to Narendra Modi.
While the former prime minister lamented 'deeply worrying' state of economy, he said the state of the society is even more worrisome.
"But today, I will argue how the state of our society is even more worrying and that is a fundamental reason for the precarious state of our economy. I will talk today, largely as a concerned citizen and as an economist, so that we can keep politics out of this important discussion," he said in his speech.
A nation's state of the economy is also a reflection of the state of its society, he said.
"An economy is a function of the numerous exchanges and social interactions among the people and institutions. Mutual trust and self-confidence are the bedrock of societal transactions that fosters economic growth.
"Our social fabric of trust and confidence is now torn and ruptured," he noted.
"There is a palpable climate of fear in our society today. Many industrialists tell me they live in fear of harassment by government authorities. Bankers are reluctant to make new loans, for fear of retribution.
"Entrepreneurs are hesitant to put up fresh projects, for fear of failure attributed to ulterior motives.
"Policy makers in government and other institutions are scared to speak the truth or engage in intellectually honest policy discussions. There is profound fear and distrust among our various economic participants.
"Public trust in independent institutions such as the media, judiciary, regulatory authorities, and investigative agencies has been severely eroded. This toxic combination of deep distrust, pervasive fear and a sense of hopelessness in our society is stifling economic activity and hence economic growth," he said.
Singh said root cause of this is the government's policy doctrine that seems to suspect every industrialist, banker, policy maker, regulator, entrepreneur and citizen, which has halted economic development with bankers unable to lend, industrialists unable to invest and policymakers unable to act.
"The Modi government seems to view everything and everyone through a tainted prism of suspicion and distrust through which every policy of previous governments was considered of bad intent, every loan sanctioned was undeserving, every new industrial project was crony in nature and so on.
"And the government has positioned itself as some saviour, resorting to foolhardy moral-policing policies such as demonetisation, that have proved to be disastrous. For economic growth to revive, it is very important that the government enthuses trust and confidence.
"It is very important for businessmen, capital providers and workers to feel confident and exuberant rather than being fearful and nervous. This is possible only if the government sheds its current doctrine and begins to trust India's farmers, India's entrepreneurs and India's citizens at large," he said.
"There is no one today that can deny the sharp slowdown in India's economy and its disastrous consequences, particularly for farmers, youth and the poor. But it is my belief that mere changes in economic policy alone will not help revive the economy.
"We need to change the current climate in our society from one of fear to one of confidence for our economy to start growing robustly again," he said.
India is now a $3 trillion global economic powerhouse driven largely by private enterprise and it is not a tiny command and control economy that can be bullied and directed at will, he noted.
"Nor can it be managed through colourful headlines and noisy media commentary. Shooting down messengers of bad news or shutting off economic reports and data is juvenile and does not behove a rising global economic powerhouse.
"No amount of subterfuge can hide the performance and analysis of a $3 trillion market economy of 1.2 billion people. Economic participants respond to social and economic incentives, Not diktats or coercions or public relations," he said.
We are in virtual free-fall: Cong
The Congress on Friday took a swipe at the Bharatiya Janata Party government over the GDP growth falling to 4.5 per cent, saying the declining numbers are a reflection of a failed 'Modinomics' and a 'PakodaEconomic Vision'.
Congress' chief spokesperson Randeep Surjewala also alleged that for the BJP, the GDP is 'Godse Divisive Politics', as he sought to bolster his attack by using the ongoing row over BJP MP Pragya Thakur's remarks praising Mahatma Gandhi's assassin Nathuram Godse.
Congress senior spokesperson Anand Sharma accused Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman of 'ruining' India's economy.
'Facing falling revenues, reducing Corporate tax and losing 1lac 40 thousand crore of revenue has ruined finances. Government has no fiscal room left as it stares at record fiscal deficit. Modi ji and Nirmala Sitharaman can you still be in denial after ruining our economy?' he said on Twitter.
Sharma alleged that the government had wrong priorities and the sharp fall in the GDP is a 'new low' under the watch of Modi.
'Knee jerk interventions have been counter-productive. With a crippling industrial production and collapsing demand and consumption, government had wrong priorities.
'Continuing and sharp fall in GDP a new low, confirms the disastrous mismanagement of Indian economy under the watch of a boastful PM Modi and a confused finance minister,' Sharma tweeted.
In a series of tweets, Surjewala said India's economy was in a 'virtual free fall'.
'India's GDP has collapsed to an abysmal 4.5%. We are in a virtual free-fall. This is the lowest GDP quarter in 6 years. But why is the BJP celebrating? Because their understanding of GDP (Godse Divisive Politics) suggests double digit growth levels. All in the perspective,' he said on Twitter.
He further said that the GDP figures were a reflection of failed 'Modinomics' and a 'PakodaEconomic Vision' which has sunk the economy and plunged the country into a deep 'Economic Recession'.
"People have not forgotten Modiji's promise of giving 2 Crore Jobs per year. BJP Government has ended up as the 'biggest destroyer of jobs'. Unemployment Rate is at a 45 year high (NSSO Report).
"According to CMIE methodology, Unemployment Rate is 7.6 per cent in November 2019. This is almost double the current global rate of 4.95% (as per ILO)," he said.
He also said that new private investments have hit a 16-year low and industrial output growth was at an eight-year low. Eight core industries growth is at minus 5.8 per cent, he said.
'Ravi Shankar Prasad cities the success of films to deny the current economic recession. Shri Piyush Goyal claims that 'Maths didn't help 'Einstein' discover gravity' citing the pointlessness of the entire exercise of economic data crunching. Smt. Nirmala Sitharaman herself admits that there is all around slowdown but no recession. (sic)
'BJP is not ruling any of the four metros now – Mumbai, Delhi, Kolkata or Chennai and is ruling only 41% of India. This is the real reflection of people's anger against their misrule,' he said.