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India’s economic crisis has only one root cause

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The Indian economy has been in doldrums since 8 pm on 8 November 2016, and the Narendra Modi government has finally begun to admit there’s a problem.

The strongest admission yet came Thursday when NITI Aayog vice-chairman Rajiv Kumar said, “Nobody had faced this sort of situation in the last 70 years where entire financial system was under threat.”

He added that the root cause of the problem lay in the UPA-2 years: “The entire episode started with indiscriminate lending during 2009-14 leading [to] rise in non-performing assets (NPAs) post-2014.”

Yes, Manmohan Singh left the economy in a mess in 2014, we know that. If everything was fine, why would people have voted out the UPA? Modi’s job was precisely to fix the economy, and he contested the 2014 election on that very issue.

The good days will come, he promised. Instead, Modi took a bad situation and made it worse.

Today, there is only one root cause for the economic crisis we are facing: the poor leadership of PM Narendra Modi. Here are some of Modi’s acts of omission and commission directly responsible for bringing the Indian economy to a point of crisis.

Also read: Panic in Kashmir helps Modi deflect attention from sinking economy, even if fear is real

1. Letting banking crisis fester

It was only in late 2015, with then RBI governor Raghuram Rajan’s push that the banks started cleaning up their balance sheets, ridden by hidden non-performing assets. The Modi government should have seen this risk, to begin with, and addressed the problem first thing. The bank recapitalisation that began later should have begun much earlier too. Rajan had also sent the PMO a list of top defaulters, but no action was taken. Stressed with NPAs, banks reduced giving out credit to industry, contributing to a liquidity crunch.

2. Not moving projects

Thanks to the ‘policy paralysis’ of the UPA-2 years, a number of infrastructure and industry projects were stalled. Land acquisition and environmental clearances were a major hurdle. Like a statesman, Modi needed to get his hands dirty to clean up the mess, get the projects going. Instead, he made it clear his priority was politics over India’s progress when he went back on amending the land acquisition law. Perhaps just because Rahul Gandhi called him “suit-boot ki sarkar”. The stalling of projects was a big reason why loans went bad, particularly in the case of the infrastructure-lending IL&FS.

3. Gimmicks as policy

Narendra Modi launched one big plan after another, and each one was launched almost as if........

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