Economy

Disruption of social fabric has hurt the economy, says Moily

AM Jigeesh New Delhi | Updated on January 29, 2020

Budget must focus on growth and employment, says senior Congress leader

“To boost economy, the BJP should stop disrupting the social fabric,” said M. Veerappa Moily, Senior Congress Leader and former Union Minister.

Speaking to BusinessLine, he said the focus of this Budget has to be on growth and employment.

“To achieve these targets when businesses, banks, agriculture sector, exports are simultaneously facing a crisis and fundamentals of the economy have been shaken, the very first step ought to be for the government to stop destroying the social fabric.

“Stability and Rule of Law are the basic criteria of a functioning state. There can be no economic growth if there is social strife. It is unfortunate that even these basics need reiteration,” he said.

The present regime’s insistence on pushing the Citizenship (Amendment) Act (CAA), NRC and NPR has sparked countrywide unrest and it is no wonder that the investment climate has not improved.

For the first time in Davos, India’s leadership was condemned by international investors. No worthwhile investment has come in the last five years. There is distress in business with our neighbours such as China and Pakistan and as a result the exports have come to a critical minimum, he added.

“I headed the Finance Standing Committee of Parliament for five years. We gave 74 reports and gave precise suggestions. Former Prime Minister Manmohan Singh was a member of the panel. We had long discussions with different RBI Governors. But the vast experience and collective wisdom of Parliament was completely ignored and an unfathomable decision like demonetisation was summarily announced. The very presumption about demonetisation and digital economy was wrong. We prepared a draft report on this disaster, but the Prime Minister himself intervened and asked BJP members to oppose it in the panel. They did not allow us to even table it,” he said.

“The downfall started from that point when a country where 90 per cent transactions are done by cash was pushed towards digitisation without any preparedness. They thought that the whole economy will be overnight converted into digital economy. That never happened and there was no possibility of happening. Not even five per cent of the transactions were done on digital mode,” he added.

He said simultaneously, the banking system started disintegrating and banks stopped lending including for MSMEs, agriculture and other sectors.

“They are faced with an acute liquidity problem. There is no money available for lending. Even savings have been discouraged. There is no money available. MSMEs and real estate sector have consequently suffered gravely. This has had a ripple effect on other sectors. Labour economy collapsed. The migrant labour force has returned home,” he said.

“GST has been riddled with delinquencies. The unorganised sector, from where MSMEs purchased their raw materials, was dependant on cash transactions. MSMEs did not get their GST refunds. Except large-scale industries, no one got the benefit of the GST refunds. The government did not comprehend and therefore did not address these problems,” he added.

Demonetisation created a cycle of loss for the agriculture sector and destroyed the Rabi season, he said.

“It is time to address these structural problems. Investor confidence has to be rebuilt. There should be liquidity in the market and immediate remedial steps should be taken to restore stability and law and order. There can be no growth if the ruling party leaders continue to rake up unnecessary controversies and create an atmosphere of distrust and unrest,” he said.

Published on January 29, 2020

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