India’s economy perched in precarious state, writes former prime minister Manmohan Singh

Former prime minister and senior Congress leader Manmohan Singh on Monday painted a wavering picture of India's economy stating that it is "perched in a precarious state currently". "India’s economy is perched in a precarious state currently. Incomes are not growing. Household consumption is slowing. People are dipping into their savings to maintain similar levels of consumption. Headline GDP growth is accruing almost entirely to the creamy layer at the top," asserted Singh.

India’s economy perched in precarious state, writes former prime minister Manmohan Singh

Former prime minister and senior Congress leader Manmohan Singh on Monday painted a wavering picture of India's economy stating that it is "perched in a precarious state currently". "India’s economy is perched in a precarious state currently. Incomes are not growing. Household consumption is slowing. People are dipping into their savings to maintain similar levels of consumption. Headline GDP growth is accruing almost entirely to the creamy layer at the top," asserted Singh.

Expressing his opinion in an English daily, the former PM alleged that the "root cause of this rupturing of our social fabric is the Modi government’s ‘mala fide unless proven otherwise’ doctrine of governance". He further accused the government of viewing "everything and everyone through a tainted prism of suspicion and distrust", adding that this has "led to a complete breakdown of trust in our society". 

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"The root cause of this rupturing of our social fabric is the Modi government’s ‘mala fide unless proven otherwise’ doctrine of governance. The premise of the government’s policy framework seems to be that economic participants have mala-fide intent unless they can prove otherwise. This suspicion that every industrialist, banker, policymaker, regulator, entrepreneur and citizen is out to defraud the government has led to a complete breakdown of trust in our society. This has halted economic development, with bankers unable to lend, industrialists unable to invest and policymakers unable to act," he wrote.

"The Modi government seems to view everything and everyone through a tainted prism of suspicion and distrust due to which every policy of previous governments are presumed to be of bad intent, every loan sanctioned considered undeserving and every new industrial project deemed to be a crony in nature. And the government has positioned itself as some saviour, resorting to foolhardy moral-policing policies such as demonetisation, which have proved to be ill-thought-out and catastrophic. Wrongful evil characterisation of everyone and a ‘good-vs.-evil governance’ doctrine cannot be a recipe for healthy economic growth," his article further read.

Singh added that there is "profound fear and distrust among people who act as agents of economic growth. When there is such distrust, it adversely impacts economic transactions in a society". "When transactions among people and institutions are negatively impacted, it leads to a slowdown of economic activity, and eventually, stagnation. This perilous state of fear, distrust and lack of confidence among citizens is a fundamental reason for our sharp economic slowdown," he added.

"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 further wrote. He said that his opinion came as a citizen of India and as a student of economics but not as a member of the Opposition political party.

Singh was the prime minister from 2004 to 2014.