Economic
Highlights
New
Delhi, 23 December 2019
CAA Non-issue
INDUSTRY WARY OF
PROTESTS
By Shivaji Sarkar
The economy is in a tizzy. Figures apart, certain avoidable
developments are adding to the woes. The slowdown or falling GDP has caused
enough anxieties. In the wake of Citizenship Amendment Act (CAA), countrywide
disruption of traffic, transportation, internet and violence is thawing
activities. It adds to the cost as also delays in production and it’s not easy
to assess the loss to the industry.
The industry leaders maintain stoic silence over such issues
lest they are tagged with political activism. CII President Vikram Kirloskar is
wary of a system that unnecessarily criminalises items in the industries’ normal
work.
The National Capital Region and Delhi have come to a near standstill
with the closure of internet in some parts and severe traffic jams,
particularly on the Delhi-Gurgaon Highway, which led to cancellation of a
number of flights.
Even as the industry is demanding steps for succour from the
budgetary process, misunderstanding over CAA is causing disruptions at
different places. The new amendments to grant citizenship to certain religious
groups are not inappropriate. Political parties, when it suited them, made such
demands. Even the Congress did so in 2003, when former Prime Minister Manmohan
Singh voiced the same demand that has now been turned into law.
Prima facie the NDA government is not at fault. Union Minister
for Communications, Electronics & Information Technology and Law &
Justice Ravi Shankar Prasad and Home Minister Amit Shah justify it. Rightly so.
Democratic procedures need education too. The government should better have
launched a move to educate through public discussion and debate and turned the
opinion in its favour. It also might have chosen a better timing so that the
last economic quarter does not become a victim of an outcry that is out of place.
The Home Ministry has come out with necessary clarifications
that no Indian citizen is affected by it nor can anyone be deported because of
it. Despite this, the country has become victim of violence for days together.
It has recharged the dormant Opposition parties. They have found “cause” to
protest. Public properties have been damaged in many States from Delhi, Uttar Pradesh
to Bengaluru and Ahmedabad to Assam. Damages in various cities in UP from
Lucknow to Sambhal has made Chief Minister Yogi Adityanath issue a threat of
realising the damages from the area concerned or the arsonists.
Railways say it has lost Rs 100 crore in West Bengal alone as
its properties were damaged. It may be recalled that during the Jat agitation
it had lost about Rs 73 crore in Haryana.
New Centre-State conflict begins as the Railways does loud
thinking of claiming civil damages from the West Bengal government. Its
standing counsel in Kolkata says that the Railways are mulling filing a civil
suit against the State government. The step whether taken or not has started
stinging political battle. Chief Minister Mamata Banerjee not only makes a
queer demand of referendum “under UN” but also says that she would defy the CAA
or NRC.
People in West Bengal are rushing to Aadhar Seva Kendras in
apprehension of implementation of NRC that has disrupted Assam. Many States and
even a half-ally of the BJP, the BJD Chief Minister Naveen Patnaik, who
supported the CAA is opposing it and NRC now.
The conflict could not have come at a worse time when economic
activities are at minimal. Industrial productions are at its lowest,
consumption is hit, and purchasing power is ebbing. The CAA agitation has added
to the woes at a time when the Union Budget preparation has begun and States
are demanding payment of huge dues of their GST share.
The States in their interactions with Finance Minister Nirmala
Sitharaman are complaining that delay in release of GST shares are causing
immense problems for them and affecting States’ financial and economic
activities. For a better future they are also seeking increase in their fiscal
deficit limits.
The Centre is neither in a happy state. Its revenue collection
is at its lowest. Both GST and direct tax collections have been contracting for
the past few months. It has revised GST target at Rs 4.55 lakh crore and direct
taxes of Rs 7.55 lakh crore. It also wants to book the tax evaders and seek
many of them to file revised tax returns.
The Reserve Bank of India still does not see the stemming of the
slowdown. RBI Governor Shaktikant Das says that capital expenditure of the States
has remained stagnant around 2.6-2.7 per cent of their gross state domestic
product (GSDP) over the last few years. He says there is need to focus more on
manufacturing. The growth, he says, could be pushed by both Centre and States
increased investments.
Moody’s Investor Services on 16 December expressed concern over
the country’s weak household consumption. It says it is to affect growth of the
economy and weigh on the credit quality in a number of sectors. Moody’s lowers
growth from 5.8 per cent to 4.9 per cent in 2019-20 because of rural financial
stress, low job creations and liquidity constraints.
But would the recent nationwide stir hit the economy? It is not
easy to say. Post-Parliament session troubles may do so. It can be linked to
the performance of microfinance institutions in the wake of the NRC and CAA
troubles in Assam.
Chairperson of MicroFinance Institutions Network (MFIN), Manoj
Nambiar says that Assam disturbances have hit many microfinance companies.
Their disbursements and collections have been affected as normal operations
could not be carried out because of deteriorating law and order situation.
International Monetary Fund (IMF) chief Gita Gopinath sees not
only global growth lower than forecasted. For India she calls for boosting
productivity and supporting employment creation. Gopinath is neither too
optimistic about global turnover nor India.
In such situations the present anti-CAA movement that is polarising
the country between two political camps, is not expected to boost the sagging
economy.
Large industries are hit by many factors. If this anti-CAA
movement continues these may get hit further. The growing distrust in the
society is a concern for industry organisations. It hits them directly and
indirectly. The law and order disturbances hit marketing efforts and
consequently production is affected.
The pre-Budget period is critical for formulating the new
economic and financial path. Disturbances could derail the dialogue apart from
lowering demand. The Centre needs to call all stakeholders to the negotiating
table to sort out what in reality is seen as a non-issue and help boost the
economy.---INFA
(Copyright,
India News & Feature Alliance)
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