There are red lights flashing on the key indicators of the economic dashboard, said P Chidambaram, former union finance minister and Congress leader. He was speaking at a panel discussion on ‘Which way is the economy headed - North or South?’, at the Tata Literature Live! Festival in Mumbai.
Every finance minister, the prime minister and RBI governor must have a dashboard, he said, and added that the key indicators such as gross fixed capital formation, private sector investment, credit growth, loans to SMEs and jobs – both macro and anecdotal data – are all flashing red. He quoted CMIE numbers to say that in the six months from January to June 2017, about 19.60-lakh jobs were lost.
“The anecdotal evidence is even more compelling. No one whom I have met in the last few months says that they have created even one additional job,” he said.
He pointed out that in centres such as Tirupur, Moradabad, Agra, Jalandhar and other places with SME industries, it has been the same story. Campus placements are down 40 per cent this year and we cannot afford so many young people without jobs, he said. He also urged the government to fill up the existing vacancies at various levels (panchayat and State government-level), which run into millions of jobs.
While not disagreeing with the above summation of Chidambaram, retired banker Naina Lal Kidwai said that the situation was dire, but went on to compliment the government for its Swachh Bharat and Jan Dhan initiatives. “We have not seen a national movement like this,” she said about the focus on cleaning and sanitation. These issues are important because 1,600 kids die of diarrhoea every day in India and this is a matter of shame, she said.
State of reformsY V Reddy, former governor, RBI, in his closing remarks, cautioned that the biggest problem lies in the external sector, and asked the government to constantly monitor the situation . No lobby is interested in it, so that may not get the necessary attention, he said, in lighter vein. Geopolitical risks are very important and the government would do well to keep this in mind, he said.
He clarified during the question-and-answer session that the earlier reforms were consensus-based, while now it is more of agenda-based reforms.
This is a more high risk strategy, but it also brings high rewards if it succeeds, he said.