The Dhaka Times Desk US economist Steve Hank has indicated that Indian Prime Minister Narendra Modi has neglected the economy while prioritizing religion, tradition and culture.
According to US economist Steve Hank, the Modi government lacks the will to undertake difficult and necessary financial reforms. Due to which the country will have to struggle to take the GDP growth to 5 percent in 2020. Steve Hanke also pointed to a lack of capital and credit crunch as the reason for the slowdown in growth.
India's GDP growth rate fell to 4.5 percent in July-September last year, which was the lowest in 6 years. Even before these results came, there were signs of economic slowdown. Concerns about the crisis in the automobile industry, decline in new industrial investment, rising unemployment and non-creation of new jobs, rising commodity prices and falling purchasing power of people were gradually increasing. Even after 3 months, the situation has not changed much. There is no sign of turning around in the near future in the industry. Many economists are of the opinion that it is difficult to get out of this situation without a major reformist call.
Hank, a member of former US President Ronald Reagan's Council of Financial Advisers, feels that the Modi government has no such goodwill. For the second time, BJP has formed the government with huge public support. They do not have the pressure of numbers. But even after that, the Modi government did not take any major steps towards reforms. Steve Hank opined, 'Instead, the Modi government is giving importance to two things: tradition and religion, which is actually destructive and arguably explosive.'
According to Steve Hank, associate professor of applied economics at Johns Hopkins University, 'The financial crisis in India is largely related to credit squeeze lending, which is a persistent problem, not a structural one. That is why the country has to fight a lot to take the GDP growth rate to 5 percent in 2020.
He thinks that this credit contraction means that banks are not willing to lend to the industrial sector, or even if they do, they have to pay excessive interest. The banks of the country are already burdened with non-performing assets or NPAs. Especially the state of government banks is very bad. Banks are reluctant to lend to industrialist-investors fearing that NPAs will increase further. Because of this, an atmosphere of mistrust and fear remains in the banking community. Due to which the industry is not showing interest in setting up new industries due to lack of capital without getting loans. That's why the economy is not growing.
A report in India's influential daily Anandabazar newspaper also said that Nirmala Sitharaman has demanded a CBI investigation to end the atmosphere of apprehension and mistrust in the country's banking sector. The Union Finance Minister brought the bank officials to a table with the CBI officials to reassure the bank officials. According to Steve Hunk, none of these steps will work. There is a need to take bold and radical reform-oriented decisions. Steve Hank said that the Modi government is not doing it at all. However, no comment was received from the Ministry of Finance or any other representative of the government on the matter.
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