Former Prime Minister Manmohan Singh believes that demonetisation and faulty implementation of Goods and Services Tax is responsible for the current economic slowdown. While suggesting five remedial measures to reverse the current slowdown, Singh has urged the government to come out of the habit of "headline management".
The Modi government should come out of the habit of headline management. Already a lot of time is wasted. Instead of making sectoral announcements, efforts should be made now to simultaneously take forward the entire economic framework, said Singh in an interview to Dainik Bhaskar.
The former prime minister added the very first step before implementing the five reform measures is to accept that the country is facing an economic crisis. He said that the government can’t live in a denial mode. He further stated in order to bring the country out of the current economic crisis, the government must listen to experts and all stakeholders with an open mind.
Singh suggested that the first remedy to bring the economy back on track would be to make GST "logical" even though it would mean a revenue loss for a brief time. Second remedy, he devised, is to make new ways to revive the agriculture and boost rural consumption. He also cited Congress manifesto here, saying that it mentions concrete alternatives , wherein money could reach in the hands of people by freeing agricultural markets.
Third, he mentioned that there is a need to infuse liquidity in the system for capital formation.
The fourth measure is to revitalise key labour-intensive sectors such as textile, automobile, electronics and affordable housing. For that easy loans would be required, especially for micro, small and medium enterprises (MSMEs), he said.
Singh also said that the government need to harness emerging export opportunities because of the ongoing tariff war between the United States and China. Elaborating his fifth measure, he said, " We must recognise new exports opportunities emerging because of America-China trade war. Remember, solutions to both cyclic and structural problems are a must. Then only, we can get back to the high growth rate in 3-4 years."
Singh, known as the architect of India’s economic reforms in the 1990s, further commented that India is in an extremely serious economic slowdown. "The growth rate of 5% in the last quarter is the lowest in the six years. The nominal GDP growth is also at a 15 year low. Many key sectors of the economy have been affected, he said.