Former Indian Prime Minister Manmohan Singh has blamed the rapid economic slowdown of the country for a “climate of fear,” accusing the government of Narendra Modi of building a “toxic” atmosphere that has stifled business activity and development.
In a strongly-worded commentary piece in Monday’s The Hindu newspaper, the typically reticent economist argued that the root of India’s sharp economic deceleration was “a dangerous state of fear, mistrust, and lack of trust” created by the government’s deep suspicion of the business community.
Gross domestic product production dropped from 8% in the second quarter of 2018 to a six-year low of 5% in the second quarter of this year. The economy appears to have lost more traction in the third quarter, with the Indian State Bank forecasting that GDP growth figures will be as low as 4.2 per cent for the duration due to be released on November 29.
Mr Singh has kept a low profile since Mr Modi became prime minister in 2014, a former bureaucrat-turned minister who served as prime minister for 10 years as part of a congress-led government.
He, who helped launch India’s revolutionary liberalization program back in 1991 as finance minister, still commands wide public support, particularly on economic issues.
While private investment remains sluggish and demand tumbles, the party-led government of Bharatiya Janata has both downplayed the severity of the downturn and blamed it beyond its influence on external factors.
The BJP also criticizes Mr Modi’s battle on crony capitalism, bribery and money earned from the black market as one of the biggest achievements of the state.
“Through a warped lens of cynicism and distrust, the Modi government seems to see everyone and everything,” Mr Singh writes. “Each previous government’s policy is believed to be of bad intent; each loan approved is deemed undeserving, and every new industrial venture is perceived to be potentially crony.”
Saurabh Mukherjea, chief executive of Marcellus Investment Managers, said Mr Singh’s assessment is widely shared by many in business and political circles, though few are willing to articulate it so clearly and publicly.