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Resource centre on India's rural distress
 
 

Govt should tackle the demand side instead of dealing with the supply side of the economy -Yashwant Sinha

-The Indian Express

This government is barking up the wrong tree. First of all, it is solely responsible for the present slowdown. Second, it has no understanding of what has caused the problem. Third, therefore, it is flailing its arms in all directions except the right one and causing more pain.

I have often been criticised for being critical of the present regime, even by people near and dear to me. One argument, which has often being flung in my face, is that I am being critical without being constructive. Though that is not correct, perhaps there is no harm in making those suggestions once again in a concise form here.

What is the root cause of the present malaise in our economy? At the risk of differing slightly with a learned economist like Manmohan Singh, who in a recent article said that the root cause was lack of investment, I would assert that the root cause is the “death of demand”. I am not an economist but according to me, growth in any economy depends on the growth in demand, both for investment as well as consumer goods. If that demand slackens, then the installed capacity will not be fully utilised, fresh investment will not take place, employment will slacken and the economy will get caught in a vicious cycle, as we are experiencing today.

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