Modi govt’s doctrine of governance behind economic slowdown: Manmohan Singh

India’s large economy can not be directed at will or managed by managing colourful headlines, wrote the former PM

Former Prime Minister Manmohan Singh has said India’s economic slowdown is the result of ‘profound fear and distrust’ among people who act as agents of economic growth. The tearing of our social fabric of trust is the fountainhead of our current economic malaise, he said.

Singh, who was the Prime Minister of India between 2004-14, has blamed the Modi government for “rupturing” the country’s social fabric through “mala fide unless proven otherwise” doctrine of governance. Citing that nominal GDP growth is at a 15-year low, unemployment is at a 45-year high, household consumption is at a four-decade low, and bad loans in banks are at an all-time high, the senior Congress leader said “these are mere manifestations of a deeper underlying malaise that plagues the nation’s economy today.”

“Many industrialists tell me that they live in fear of harassment by government authorities. Bankers are reluctant to make new loans, for fear of retribution. Entrepreneurs are hesitant to put up fresh projects, for fear of failure attributed to ulterior motives,” the senior Congress leader said in a piece he wrote for The Hindu newspaper.

Singh said policymakers in government and other institutions are scared to speak the truth or engage in intellectually honest policy discussions. Singh claimed that people’s trust in independent institutions has been “severely eroded” and there is a lack of a support system for people to seek refuge against “unlawful tax harassment or unfair regulations.”

He said the present government’s suspicion that every industrialist, banker, policymaker, regulator, entrepreneur and citizen is out to defraud the government has led to a complete breakdown of trust in our society. “This has halted economic development, with bankers unable to lend, industrialists unable to invest and policymakers unable to act,” he added…

Global investors bet $45 bn on Modi’s India. Now they are reversing it

International money managers are starting to fall out of love with Narendra Modi

After pouring $45 billion into India’s stock market over the past six years on hopes that Modi would unleash the country’s economic potential, international money managers are now unwinding those wagers at the fastest pace on record. They’ve sold $4.5 billion of Indian shares since June, on course for the biggest quarterly exodus since at least 1999.

“The euphoria around Narendra Modi before 2014 has tapered off,” said Salman Ahmed, the London-based chief investment strategist at Lombard Odier Investment Managers, which oversees about $52 billion.

It’s hard to fault investors for losing faith. India’s economic growth has decelerated for five straight quarters to the weakest level since early 2013, one year before Modi became prime minister. And the 5% headline number for the second quarter may actually understate how painful the slowdown has become. Car sales are sinking at the fastest pace on record, capital investment has plunged, the unemployment rate has surged to a 45-year-high and the nation’s banking system is hamstrung by the world’s worst bad-loan ratio. Monday’s oil-price spike adds yet another headwind for a country that imports most of its crude….