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Father, son and the Indian economy: Whom to believe, whom not?

In an all out attack, Yashwant Sinha on Wednesday accused the Finance Minister of working extra-hours to make sure every Indians see poverty. Not only that, he further called the demonetisation 'an unmitigated economic disaster' and GST- a badly conceived and poorly implemented tax reform.

BT Online | September 28, 2017 | Updated 15:31 IST
Father, son and the Indian economy: Whom to believe, whom not?

A day after his father and former Union Minister Yashwant Sinha made a scathing attack on Finance Minister Arun Jaitley for putting economy in a mess , Minister of State for Civil Aviation Jayant Sinha today shot his first covering fire for the government and said the recent articles on Indian economy were based on a narrow set of facts. The articles Jayant Sinha was referring to were written after his father Yashwant Sinha held Prime Minister Narendra Modi and Finance Minister Arun Jaitley responsible for the recent economic slowdown.

In an all out attack, Yashwant Sinha on Wednesday accused the Finance Minister of working extra-hours to make sure every Indians see poverty. Not only that, he further called the demonetisation 'an unmitigated economic disaster' and GST- 'a badly conceived and poorly implemented' tax reform. Yashwant Sinha's these very statements provided opposition enough ammunition to target the Modi government's economic policies. And then came the articles, all asking for an explanation.

Today, Jayant Sinha countered his father, exactly the way Yashwant Sinha did- by writing an article. Jayant Sinha squarely dismissed his father's 'economy in a mess' argument and said one or two quarters of GDP data is not enough to evaluate the long-term impact of the structural reforms that are being taken by the government. "These articles draw sweeping conclusions from a narrow set of facts, and quite simply miss the fundamental structural reforms that are transforming the economy," he said. These structural reforms, he said, are not just desirable, they are necessary to create a 'New India'. He further said: "The new economy that is being created will be much more transparent, globally cost-competitive, and innovation driven."

HERE'S WHAT JAYANT SINHA SAID IN POINT BY POINT COUNTER

GST and Demonetisation: Taking one by one, Jayant Sinha addressed all of the concerns raised by his father. He began with the government's two most talked about economic moves- GST and demonetisation. While Yashwant Sinha called these two policy decisions as economic disasters, Jayant Sinha termed them game-changing moves that would help in formalising India's economy. He said: "Transactions that were taking place outside of the tax net and in the informal sector are now being brought into the formal sector. In the long term, formalisation will mean (a) tax collections go up and more resources are available to the state; (b) friction in the economy is reduced and GDP goes up; and (c) citizens are able to establish credit more effectively as transaction records are digitised."

Crisis in SME sector:
Talking about the initiative taken to revive SME sector, Jayant Sinha said: "The Mudra programme and the India Aspiration Fund will catalyse thousands of crores of investment into startups and micro, small and medium enterprises (MSMEs) thus creating employment for crores." His father in his article said that the SME sector was suffering from an unprecedented existential crisis. He further said that the Atal Innovation Mission is creating an entrepreneurship culture by building tinkering labs in over 1,000 schools, enabling new incubation centres and scaling established ones.

Job loss and job creation:
Yashwant Sinha on Wednesday said the demonetisation and GST have played havoc with businesses and sunk many of them and countless millions have lost their jobs with hardly any new opportunities coming the way of the new entrants to the labour market. To which Jaynat Sinha today responded by saying fundamental reforms have been initiated to prioritise micro-entrepreneurship and startups that will create millions of jobs in next few years.

Slow GDP growth:
In the first quarter of the current fiscal, India's GDP growth rate came down to 5.7 per cent. Yashwant Sinha mentioned this fact in his hard-hitting piece and suggested that the economy was allowed to decline. However, Jayant Sinha feels otherwise. According to him, one or two quarters of GDP growth and other macro data are quite inadequate to evaluate the long-term impact of the structural reforms underway. The Aviation Minister further referred to FDI to suggest that the investors are still bullish on India. He said: "A streamlined, rules based FDI regime is inspiring confidence: FDI has accelerated from $36 billion in FY2014 to $60 billion in FY2017."

Jayant Sinha concluded his defence for the government by saying that in sum, the structural reforms unleashed by the Modi government since 2014 constitute the third generation of reforms. He said the first generation of reforms initiated in 1991 and the second generation in the 1999-2004 NDA government. "Unlike the first and second generation of reforms, this third generation of reforms balances a better life for all Indians with the requirements of an advanced, sophisticated 21st century economy," the Civil Aviation Minister said.

 

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