Thread by @taxingpolitics

I don't know why People (incl RWs) blame #NirmalaSitharaman so much for Economic slowdown & mock her continuously.
IMO, it's the policy failures in the first term of Modi Govt which is responsible for slowdown & not #NirmalaSitharaman .
I will explain why.
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Contrary to general perception of layman that #DeMonetisation & #GST are responsible for slowdown, I feel there are other policy failures more responsible -
1. Delayed Payments to Industry by Govt Depts & PSUs. When govt itself never follows payment discipline, how....
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.. how can we expect Payment discipline in Private Sector? According to one estimate, Govt owed more than 5 lac cr to MSMEs alone. Nirmala had nudged Govt Depts for faster clearances last year. I don't know it's current status tbh.
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financialexpress.com/industry/sme/d…

But atleast the intent is clear & they will do it in near future as a part of measures to stimulate economy if not already done.
2. Failure to handle the NPA Mess, NBFC crisis which got spilled over into Liquidity crisis. Nirmala handled Yes Bank crisis well.
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3. Due to Banking frauds which came to light, Modi govt became over restrictive & suspicious about borrowers & bankers. There are genuine business difficulties as well which sometimes leads to default by borrower. Not everyone is a wilful defaulter.
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Due to attitude of looking at every businessman, Industrialist & banker with Suspicion, Bankers became extra cautious while lending as they feared witch-hunt by govt & it's 3Cs (CBI, CVC & CAG). On the borrowers too became extra cautious while borrowing since they were...
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... afraid of being jailed/harassed in case of every default. This over suspicious attitude almost slowed down credit creation. And economy will obviously slow down when Lenders are unwilling to lend & borrowers are unwilling to borrow.
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4. Raising Import Duties/Tariffs on Foreign Goods in the name of protecting Domestic Industry. A tax on Import is equivalent to a tax on export. Because you can't expect other countries to keep their market open for your industry when you are becoming Protectionist.
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In the name of giving a boost to Make in India, Modi govt raised Tariffs on Imports (auto & others). This led to fall in Imports as intended but it led to fall in Exports too as other countries imposed tariffs on our products too. Since imports fell faster than exports,...
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... our Forex reserves increased. But Make in India didn't happen as we intended. Those Domestic Manufacturers became Complacent & never ever tried to produce World Class Products. They just Manufactured goods with the intent of catering to domestic customers.
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And we know how Auto Sector keep crying everytime when their sales fall even by a bit & keep threatening govt to reduce GST or else they will have to fire thousands of people. Inspite of giving Protection from International Competition, Auto Sector still keep crying.
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These are the major reasons because of which Economy slowed down from 8% GDP growth rate to 4.5% for June-Sept 2019 quarter. Blaming Demo & GST for that is just an easy way out. Demo did affect us for 2-3 quarters. Inspite of my objections to present structure of GST..
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.., it's still better than earlier system. We should improve it to Single rate GST with easier compliance to reap full benefit of out it. But to say, it led to slowdown is wrong IMO.
Except Insolvency Law, no major fruitful reform took place in 1st term.
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While Nirmala reduced Corporate Tax, started Auctioning Coal Mines, nudged Govt Depts for faster clearance of payment, took decision of Disinvestment (though still on paper). Jaitely/Goyal sold many PSUs to another PSUs thereby hampering their ability to invest & grow.
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Eg Sold HPCL to ONGC, REC to PFC, IDBI Bank to LIC. Land, Labour & recent Agri reforms require nod of Parliament. In 1st term, RS position was weaker than now. So, can't blame them for not carrying them out in 1st term & won't give credit to Nirmala for that too.
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But why couldn't Jaitely/Goyal reduce Corporate Tax? Who stopped them from Auctioning Coal Mines for raising revenue & issuing payments on time? Why couldn't they handle NPA & NBFC issue? Did anyone ever objectively criticise them for their role as they do now for Nirmala?
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(Note : Swamy's criticism doesn't count as Objective criticism. Grow up.) I know Jaitely managed Politics well, his floor management in RS was extremely well & Modi govt in 1st term was on tight rope politically. I understand Political compulsions.
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But ignoring all that & making Nirmala a scapegoat is injustice to her. She is not responsible for slowdown. Just as when we were on a path to recovery, #Covid_19 happened. GST Collection rose from 90k cr in Sept 19 to 1.05 Lac cr in Feb 20 (inspite of having 2 days less).
(18/n)

All indicators were pointing towards recovery in Feb. IMO, had Corona not hit world, our Growth rate for FY 2020-21 would have been atleast 6.5%. But then Covid ruined the party.
The only Bad Decision Nirmala took is to raise IT rate from 36% to 42.7% for ultra rich.
(19/n)

She could have performed much better. I won't say she is working extremely well. But to say she damaged our Economy is wrong. Her statements like 'Act of God', 'Millenials are not buying Cars', 'I dont eat Onions' etc, are politically incorrect & not Economically.
(20/n)

We can say Nirmala doesn't have an eye for detail & whip over bureaucracy. But apart from that, no fault in her. She is sincere & hardworking.

Corona has given her (& Modi too) an opportunity to prove her worth. Only time will tell whether they redeems it or not.
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