Yaswant Sinha Vs Jayant Sinha – Father Vs Son by Pavithran

I need to speak up now by Yaswant Sinha, Former BJP Finance Minister –

(an article published in the Indian Express)

Sinha had criticized the Modi Government in a most uncharitable way even though he is still a BJP – more critical than the Opposition Parties put together.

According to him, while Demonetisation is an unmitigated economic disaster, GST – a badly conceived and poorly implemented has done havoc with the economy thereby making countless millions losing jobs and new entrants hardly having any new opportunites to the labour market.

For the quick read, all the main points spelt in Sinha’s article are brought out:

Point 1: Growth rate of economy reached 5.7 % in the first quarter of the current fiscal year – lowest in three years. The methodology for calculation of the GDP was changed by the present government in 2015 as a result of which the growth rate recorded earlier increased statistically by over 200 basis points on an annual basis. So, according to the old method of calculation, the growth rate of 5.7 per cent is actually 3.7 per cent or less.

Point 2: Bonanza due to low oil prices with lacs of crores of rupees is not put to proper use – but wasted along with stalled projects and NPAs. 

Point 3: Indian Economy is at its worst – Private Investment, Industrial Production, Agriculture, Construction Industry, Service Sector, Exports – all shrunk, collapsed, dwindled and in doldrums.

Point 4: Demonitisation – economic disaster and GST – badly conceived and poorly implemented having played havoc with businesses and resulting in job loses with no opportunities for the new entrants to the labour market. In fact demonetization is not a reform at all – it was an administrative measure. Objectives of demonetization had failed, as the entire black money is back in the system and hence demonetization, apart from disrupting the economy, has made no other contribution. 

Point 5: Input tax credit demand under the GST is Rs.65,000 crore as against a collection of Rs.95,000 crore.

General Comments:

•         Arun Jaitley  - a defeated MP in the election was chosen as the Finance Minister and given 3 or 4 important portfolios including that of Defence. Hence it is impossible for any one in that position to do full justice to his main portfolio – viz. finance.

•         Raid Raj had created fear complex  in the minds of the people.

•         Economic Recovery not possible by 2019 – the election year and BJP will end up in hard landing.

•         The prime minister claims that he has seen poverty from close quarters. His finance minister is working over-time to make sure that all Indians also see it from equally close quarters.

Sinha, though a former BJP Finance Minister, is not an economist – but that does not mean that he is not competent to air his views as per his assessment. It would have been better, if Sinha had given some data to prove his points instead of generalizations and accusations and sarcastic comments.

To my mind, there are only two valid points raised by Sinha – Point No.1 about GDP and Point No.5 – GST Collections vs Tax Credit Demand.

Let me answer these two points first and tackle other points later.

Demonetisation and GST are two major economic surgical strikes initiated by Modi Government. Hence there will be initial setbacks which will find its logical levels and then the economy will pick up speed.

Demonetisation had resulted in white economy to the forefront and in the process killing black market, counterfeit currencies etc. which are real menaces for a healthy growth for a country. 

The downfall of GDP for the present quarter will be set right in the near future and there are other parameters which are quite favourable like the World Economic Forum Report ranking India at 40th position amongst 137 countries from 71st rank three years ago.

Incidentally, Morgan Stanley had predicted India likely to be the world’s fastest-growing large economy in the next 10 years, driven by digitations, favourable demographics, globalization and reforms. Hence, Morgan Stanley’s observations here are a direct hit and answer to what Sinha said in Point No.3. 

Point No.5 – about tax credit demand vs collection under the GST, Sinha himself had answered by stating that the Government has asked the income tax department to chase those who have made large claims! Even in Demonetisation, it is good that almost all note ban notes of Rs.500 and Rs.1000 had come to the Bank Vaults and steps have been initiated to find those who had deposited huge money so as to levy taxes on those hitherto unaccounted money deposits.

Point No.2 in General Comments – Raid Raj:

Sinha has questioned tax notices. In a country where only 4 per cent of the people pay income tax, even if all the tax payers get notices, it will still not be widespread. Yes, they are a very influential class. In a country where one per cent of the population is holding 58 per cent of the national wealth, some sort of affirmative action had to be taken. And Modi has done it. Yashwant Sinha is speaking as if he holds a brief for these hoarders, black money and fake currency peddlers.

Here, it is pertinent to add that Jayant Sinha, Minister of State for Civil Aviation and son of Yaswant Sinha, had chosen to answer his father’s accusations in an article published in The Times of India on the next day of his father’s article published in the Indian Express under the heading: New economy for new India: Fundamental changes put in place for an open, transparent, competitive and innovation-driven economy.

Jayant Sinha was earlier Minister of State for Finance and hence his reply is quite relevant and opt. But, Yashwant Sinha had taken objection to his son taking on his shoulders to reply to his criticism thus: “My simple reaction is that it is not a father-son issue, it is not a family issue with Jayant on one side and I on the other. That is a national issue and, therefore, if anyone is trying to debase it or turn it into a family issue it should be condemned. If it is a question of national interest, other interests become insignificant. And if there is a collateral damage to his career, so be it.”

Such a stand – instead of replying to his son’s comments – only shows Yaswant Sinha’s weaknesses in dealing with political issues without bringing his family relationship and his concern for his son’s political career is quite strange and making him small in the eyes of others.

This Link will lead you to Jayant Sinha’s article wherein he had answered all points raised by his father.  Click LINK

For the benefit of readers, the main counter points put forth by Jayant Sinha are culled hereunder:

qSeveral articles written recently on the challenges facing the Indian economy unfortunately draw sweeping conclusions from a narrow set of facts, and quite simply miss the fundamental structural reforms that are transforming the economy.  Moreover, 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. These structural reforms are not just desirable, they are necessary to create a ‘New India’ and provide good jobs for our billion-strong workforce.

qGST, demonetisation and digital payments are game-changing efforts to formalise India’s economy. Transactions that were taking place outside of the tax net and in the informal sector are now being brought into the formal sector.

q The Bankruptcy Code will enable speedy resolution of stressed assets providing relief to NPAs in the banking sector.

qThe Jan Dhan-Aadhaar-Mobile (JAM) trinity is powering Direct Benefit Transfer (DBT) and dramatically reducing leakages. Rs 1.75 lakh crore of benefits have been transferred directly to beneficiaries over the last three years. JAM is weeding out many ghost and fake beneficiaries and cutting out middlemen.

qThe National Investment and Infrastructure Fund has been established to provide long-term equity risk capital for the development of world-class commercial infrastructure projects in conjunction with other long-term global investors.

q100% village electrification by 2018 with the number of villages remaining to be electrified having decreased to only 4,941 villages by 2017 from 18,452 in 2014, Construction of Rural roads  at a record rate of 133km per day, almost double the rate of 69km per day in 2014, housing for all, gas connection for all, health insurance at affordable cost, banking for all, education for all.

q New Economy is all set to create New India by 2020.