Subramanian Swamy says economy is heading for depression, claims warning govt last May
The Indian economy is heading for a “major depression” and it can “crash” soon if efforts are not put to revive it, BJP leader Subramanian Swamy has said. The Rajya Sabha MP claimed that a year and half ago, he had written a 16-page letter to Prime Minister Narendra Modi warning him about the economy which is in a “tailspin”.
“Today, the economyis in a tailspin. Yes, it can crash. We need to do a lot of good things torevive the economy. Even a tailspin can be made to steady. If nothing is done,we are heading for a major depression. There will be mass scale… banks mightcollapse, factories might start closing,” he said in an interview to CNN-News18recently.
“Last May, I wroteto the Prime Minister a 16-page letter with stats from his own departments toshow that there are five storm signals,” he said.
Interestingly,former prime minister Manmohan Singh also hit out at the government once againon the GDP growth, saying hasty implementation of the GST and the withdrawal of86 per cent of currency during the demonetisation exercise will further affectthe GDP numbers.
The GDP for thefirst quarter (April-June) of financial year 2017-18 slumped to a three-yearlow at 5.7 per cent, far lower than 7.9 per cent recorded in the same quarterlast year.
Subramanian Swamyalso claimed that India’s growth rate is much lower than what is beingpresented. He said, “It is lower than what is being told to you, and it isgoing to decline, according to what I call Samuelson-Swamy theory of indexnumbers, which tells you how to calculate the correct index numbers.”
Subramanian Swamysuggested that to support the revival of the economy, it is important toenthuse the public with immediate change, which would be possible by abolishingthe income tax. “Whatever you do, the public must see immediate change. I thinkfirst thing we should do is abolish the income tax. It’s such an easy thing todo, but they haven’t done it,” he said.
According toSubramanian Swamy, it would give a huge boost to the savings rate; and thatwould mean the investment cycle would start.
He also suggestedthe bringing down the interest rates which will get the small and medium industriesmoving and further start the employment cycle. Along with that he alsoadvocated raising interest rates on fixed deposits.
“You must bring downthe interest rates to 9%, and raise the fixed deposit interest rate also to 9%to encourage savings. The rate of interest is an instrument that affects thesmall and medium industries,” he Subramanian Swamy said.
“The big industriescan borrow money abroad also. In the United States, you can borrow for 2%.While here, it being at 12%-18% is very cruel, and much of the damage from ithas been to the small and medium industry, which produce bulk of theemployment. The employment cycle must start, which can happen only if you getthese small and medium industries moving, for which the cost of capital must comedown,” he added.