Former Prime Minister Dr Manmohan Singh mentioned the arrival of stagflation in the economy in the article “The source of India’s economic malaise”. He said that only a trustworthy economic environment can revive the economy.
Social discontentt
Citing the current economic downturn, the former prime minister said that society’s mistrust, fear and helplessness is also reflected in the country’s economic situation. Industrialists, bankers and entrepreneurs, agents of the economy, remain in constant despair and avoid acting. This becomes a negative sign as they play an essential role in the economic development of the country.
Industrialists fear harassment from government authorities and bankers resist issuing new loans for fear of reprisals. In addition, entrepreneurs are reluctant to start new projects because they could get into trouble with the government if they fail. He further added that citizens live under constant surveillance, which reduces their confidence.
Economic situation
Regarding the economic situation, he said that a sharp drop in GDP, the biggest drop in consumer spending in four decades. The rise in unemployment proves the existence of a “malaise” which is raging in the economy. Confidence and self-confidence are lost and the economy suffers the consequences. The country is heading towards stagflation due to persistent low demand, high inflation and unemployment. Adding to the slowdown is negative sentiment among stakeholders affected by fear.
Solution
Manmohan Singh pointed to ineffective monetary measures and said that now fiscal measures must take over to stimulate the economy. He stressed the need for a “twin action policy†where fiscal policy is used to boost demand and social policy to build confidence between economic actors in the country. Alleging the Modi government for its behavior of “depth of suspicion”. He further insisted that the government abandon the “bad characterization of evil” and spread confidence among the people to boost the health of the economy.
In conclusion, the whole process needs to be corrected to see positive effects in the future. The source of India’s economic malaise very clearly explains the country’s current economic situation.