Calling the 4.5 per cent growth for the second quarter ending September 2019 as “shock decline” and “worrisome”, former Prime Minister Manmohan Singh Friday said that many industrialists have told him they lived in fear of harassment by government authorities.
His words, perhaps, found resonance in the silence of several leading voices in India Inc after the GDP figures came in. The Confederation of Indian Industry, the leading industry body, skipped issuing a statement on the GDP numbers.
Leading corporate lights active on Twitter Uday Kotak (CEO Kotak Mahindra Bank); Anand Mahindra (chairman, Mahindra Group); Harsh Goenka (chairman, RPG Enterprises); Nandan Nilekani (chairman, Infosys); Sanjiv Bajaj (MD Bajaj Finserv & Bajaj Holdings); Gautam Singhania (CMD Raymond Ltd); Vijay Shekhar Sharma (Founder CEO, Paytm); and Harsh Mariwala (chairman Marico) were prominent among many who chose to maintain silence on the GDP numbers on their handles until late tonight.
In sharp contrast, when the government announced a cut in the corporate tax rate in September, the entire corporate sector had cheered the move saying it would spur growth.
On September 20, Anand Mahindra had tweeted: “Woke up in the US to this news. The best way to start the day. Not only because companies will pay less tax. But because this isn’t just another policy tweak. @nsitharaman fired a shot that will be heard around the world. India has sent an invitation letter to global investors.”
Similarly, Harsh Goenka had on September 20, tweeted, “‘Virat’ cut by FM #Corporatetax. Much needed boost to unleash ‘animal spirits’. I now expect the sentiment to change and private investments to start flowing. Sensex ‘boom’rah!.” In another tweet, he wrote: “Truly showing that the Government knows best!#MarketsRejoice #IndiaRising.” The same day, Kotak and Bajaj, too, had welcomed the tax cut in their tweets.
On Friday, delivering the valedictory speech at the National Economy Conclave, Manmohan Singh warned: “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. Technology start-ups that are an important new engine of economic growth and jobs, seem to live under a shadow of constant surveillance and deep suspicion.”
Singh was speaking at the National Economy Conclave organised by Samruddha Bharat Foundation & Rajiv Gandhi Institute for Contemporary Studies, in New Delhi.
Among the few who reacted to the plunging GDP figures was Kiran Majumdar Shaw, chairman and MD of Biocon. She tweeted, “We can quickly rise to the top again with a few pragmatic policies.”
Other industry chambers such as FICCI, Assocham and PhD chambers issued statements raising concerns.
FICCI said: “There has been a further dip in growth to 4.5% in the second quarter of the current fiscal. While this is a matter of concern, it was not entirely unexpected as many of the lead indicators of economic activity were showing signs of weakness. Private consumption and investment demand continue to remain weak although some improvement was noticed during the recent festive season.”
In his speech, Singh also said that a growth rate of 4.5 per cent was unexpected as aspirations of the people called for a growth of an average of 8-9 per cent.
“The shock decline in the growth rate from 5 per cent in the first quarter to 4.5 per cent in the second quarter is indeed worrisome. Mere changes in economic policy will not help revive the economy,” Singh said. Critical of the government, he said that shooting down messengers of bad news or shutting off economic reports was “juvenile”.
“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 coercion or public relations,” he said. Singh said he had been taught how economic growth and development are shaped “by the societies in which they operate.” And that’s why “one cannot separate society from the economy in any nation.”
(With inputs from Aashish Aryan)