Economy

Arun Jaitley May Be the Fall Guy, But Modi Is Truly to Blame for India’s Economic Slowdown

Many BJP leaders are attacking the finance minister every day, but there is a convenient silence around the prime minister’s role in the economic decisions that brought us here.

Finance minister Arun Jaitley. Credit: Reuters/Amit Dave/Files

Finance minister Arun Jaitley. Credit: Reuters/Amit Dave/Files

It is a pity that poor Arun Jaitley is being savaged by the BJP for the disastrous handling of the economy. It’s quite unfair since Jaitley ostensibly drives economic policy but key economic decisions, such as demonetisation, have been the remit of Prime Minister Narendra Modi.

Former finance minister Yashwant Sinha, in a well-reasoned piece in the Indian Express, has attacked Jaitley but stopped well short of naming the main culprit, Modi. Demonetisation was a body blow to the economy and a Modi-made disaster. Authoritative sources have confirmed to me that Jaitley and Reserve Bank of India (RBI) governor Urijit Patel were told of the decision as a formality and asked to sign on the dotted line.

In one fell swoop, Modi destroyed both the autonomy that the RBI had zealously guarded for 70 years,  and its global reputation. This came after the globally-renowned economist, Raghuram Rajan, was forced to exit as RBI governor in the wake of daily attacks on him from BJP MP Subramanian Swamy, who even said Rajan was “not mentally fully Indian”.

Interestingly, Swamy, who has a large dedicated “Swamy Army” on Twitter, is now launching daily attacks on the hapless Jaitley’s handling of the economy. Is Jaitley, who has no base of his own after losing the Amritsar election even during the Modi wave, a soft target to ensure that the economic blowback now hurting every citizen bounces off of the teflon-coated ‘pradhan sevak’? Are Swamy and Sinha upping the ante to ensure that Modi is shielded as the growth rate collapses?


Also read: Modi’s Promise of a ‘New India’ Looks Shaky Amid Economic Chaos


Significantly, the last time Sinha had attacked the government he had gone all out against Modi. He had said after the Bihar assembly elections result that Modi would be “consigned to dust”. The only person consigned anywhere was his son Jayant Sinha, who was forced to give up his plum assignment as junior minister of finance for a parking slot at the civil aviation ministry. This time around, the senior Sinha has been careful. He has not even mentioned Modi. Just made Jaitley the fall guy.

The constitution of the five-member Economic Advisory Counsel headed by Bibek Debroy is also an attempt at window dressing to create more fall guys to spread the blame for the economic mess and provide protection to Modi. If the NITI Aayog is any example, it’s just a clueless advisory body which Modi prefers to ignore. And what of the RBI’s monetary policy committee, whose remit is macroeconomic policy? Will it be asked to go on holiday as a new set of toothless advisors take over?

Prime Minister Narendra Modi talks to Union finance minster Arun Jaitley at the Delhi Economics Conclave 2015. Credit: PTI/Shirish Shete/Files

Prime Minister Narendra Modi talks to Union finance minster Arun Jaitley at the Delhi Economics Conclave 2015. Credit: PTI/Shirish Shete/Files

Ideally, Jaitley, who is trying to steer the complex goods and services tax, which has added innumerable layers of procedures to the taxation process and made it more complex, virtually destroying small and medium businesses, would have preferred demonetisation to follow the implementation of the GST. However, just like in most things, he was not given a choice by Modi.

Jaitley is now carrying the can for the twin blows to the economy. Says a senior BJP leader, “Jaitley’s only constituency is the media. He’s called ‘bureau chief’ even within the BJP and is hated by rivals for getting them bad press. He’s the easiest target to blame. He can only hit back with media plants as he has zero base. Even Hasmukh Adhia, a Gujarat cadre IAS official and the incumbent revenue secretary, has a direct line to the PMO and barely listens to Jaitley.” A senior leader revealed that even in Jaitley’s first full budget in 2015, nearly 70% of the input came from the PMO and Modi’s trusted officials.

What is now being seen as a cruel joke – the loan waiver promised by Modi to win the Uttar Pradesh elections – was also not something that Jaitley had much to do with. It’s a different story that farmers in Uttar Pradesh facing huge agrarian distress are getting relief of Re 1, in some cases with a photograph of Modi and UP chief minister Adityanath affixed to the letter giving them this good news . It is debatable how much Modi is given to seeking and listening to advice. In any case, he prefers inputs from trusted officials rather than members of his extremely silent and decorative cabinet. Take the case of the Mudra bank, which both Modi and Amit Shah perceive as an electoral asset. Sources confirm that it was neither Jaitley’s idea nor is he being trusted with implementation.

With Jaitley’s health difficulties and the fact that he was in charge of multiple ministries including defence till recently, one wonders how much focus he can give the onerous finance ministry.

Swamy, who launches daily attacks on Jaitley via his tweets, had told me earlier in an interview that his name had been finalised to contest the New Delhi seat and he was even told about it by the then Delhi BJP chief Harsh Vardhan – only to have been struck off at Jaitley’s behest. He also holds Jaitley responsible for his lack of a cabinet berth. Last week, Swamy said in a video interview to a news website that Jaitley’s knowledge of economics can be accommodated on the back of a postage stamp. That’s the same comment P. Chidambaram had made  in early 2014 about Modi’s knowledge of economics.


Also read: With Prices Rising Post GST, Has the Government Taken the Public for a Ride?


Is it a coincidence that when the PMO wanted Rajan out, the chosen weapon was Swamy, who is now conveniently targeting Jaitley? Even earlier, former BJP leader Arun Shourie had pulled no punches in his  attack on Jaitley’s handling of the economy, although Shourie has also criticised Modi for the same reasons. Lately even S. Gurumurthy, who advises the prime minister on key economic policy, said the economy was sinking and business was unable to absorb the combined shock of demonetisation and the GST.

So as the economy sinks, Modi sails above the fray. A story in Business Standard said that “if there are any regulatory hurdles the market players concerned prefer to approach the PMO rather then knock on the doors of the finance ministry as they would have done earlier.” The story cited a figure of “20 instances in the past six months where the PMO has stepped in”.

Even as Modi projects welfare schemes in order to manage perception in a sea of terrible economic growth data, it seems that Man Friday Jaitley is the designated fall guy. Jaitley can be blamed for many things, but to hold him solely responsible for the transformation of India from the fastest growing economy in the world to just another slow-growth data point seems a little unfair.

Swati Chaturvedi is a journalist and author based in Delhi. She tweets at @bainjal.

  • alok asthana

    Of course, Modi is the main culprit. However, no tears for Jaitley. He has enjoyed a lot of perks purely on blessings of Modi. Now, he has to face the court martial too, even if Modi is the cause.

    • Anjan Basu

      Yes, and his arrogance, his infamous sneer as he speaks to people who disagree with him, will make sure that no tears are shed for him.

  • Anjan Basu

    Even from the outside, it is not difficult to see that it is Modi who calls all the shots, big and small, here, there and everywhere, and his ministers serve as wallflowers at best. ( What all this says about the BJP’s much-vaunted ‘internal democracy’, as well as about the stuff that frontline BJP leaders– Rajnath Singh, Sushma Swaraj, Arun Jaitley et al — are made of, is quite another matter.) But Jaitley is a cut above the others not for any redeeming quality that he possesses, but because of the supreme arrogance with which he treats all dissent, even all differences of opinion. The fact that he is completely root-less in the party organisation is obvious enough,and that is one added reason why he needs to do Modi’s every bidding. But his arrogance makes him insufferable in all away public discourse. Remember his pompous comments about ‘manufactured dissent’ ( in the context of artists returning govt awards) and about ‘ judicial overreach’ ( about the Supreme Court finding fault with the govt on sundry issues), a comment he made inside the parliament, of all places? He may be Modi’s fall guy, but he must in any case be among the most unpopular politicians in the country on his own merit.

  • ashok759

    Dr Swamy’s own knowledge of economics would fill up the Encyclopedia Brittanica.

  • Amitabha Basu

    Everybody knows that the Pradhan Sevak, Rashtra Rishi, etc etc is the one who dictates (after consulting his hatchet man and strategist Amit Shah, at most), while the rest of his acolyte-ministers and minions, including Jaitley who has no mass base himself, simply follow. However, Jaitley’s supreme arrogance and supercilious attitude make him a person over whom one should not shed tears about his being made the fall guy.

  • The Wire
  • S.N.Iyer

    This analysis is perhaps true knowing Modi’s style of governance. But unfortunately the
    party has made Modi their only mascot to win the elections. Since coming in to power, Modi relies completely on the PMO and the whole team consists of handpicked bureaucrats from Gujarat including senior secretaries of key Ministries who possibly report directly to him. It is doubtful if any Minister can function without Modi’s concurrence. Even professionally qualified Ministers like Prabhu, Goyal, Nirmala Sitharaman etc seem to work according to Modi’s wishes on many issues. But equally, Jaitley and others should not shirk their tesponsibility by being silent supporters of the PM’s policies if they disagree with him and should take the blame of being complicit partners to his ill advised policies.

  • S.N.Iyer

    This may be a wild guess without any proof. In the game of politics, everyone has ‘secrets’ or what are called ” skeletons in one’s cupboard”‘which one knows about another and therefore they may be forced to keep up relations or appearances. Some former leaders are supposed to have a file on many. Edgar Hoover used this method during his career and was feared on this count. I ka be entirely wrong on this matter

  • Anjan Basu

    If nothing else, let us get our facts straight. The country won independence not 80 years ago, but in 1947. Of these past 70 years, the BJP and its sundry avatars, with help from other like-minded — or similarly hare-brained — political outfits, have ruled India for at least 11 years now ( or is it 12?). Please also recall that the first post-independence Indian govt was essentially a national coalition: though the Congress had enough majority and to spare on its own, Nehru insisted on having non- Congressmen like Dr Ambedkar and Shyama Prasad Mukherjee ( the latter a preeminent leader of the Hindu Mahasabha) as ministers in his cabinet. Strictly speaking then, even the first national govt in independent India was not a purely Congress govt. — So, unless the Saffron project of completely rewriting our country’s history is done and dusted already, we cannot yet start talking about ’70-80 yrs’ of Congress rule.

    • http://socioproctology.blogspot.co.uk/ windwheel

      Basu Sahib, do you really want straight facts? Well then, here’s one- India did not ‘win’ Independence at all. The British Navy- thanks to Churchill taking a penny of income tax and abolishing the ‘ten year rule’- no longer ‘ruled the waves’. London needed Delhi- not the other way around- in order to keep up an absurd pantomime.

      Within a few years, it became evident that Britain could not keep even small islands like Cyprus- that too while maintaining conscription.

      The truth is that the ‘Independence Movement’ was a delusive ‘Availability Cascade’ based on ‘Preference Falsification’. The INC had good esprit de corps- albeit developed by blind alley behaviour- in the same way that the RSS, in Modi’s youth, had good esprit de corps. But, like the RSS, most of its stalwarts were stupid, corruptible, and bad administrators. Nehru, was the one clean man- in the opinion of Tata and Birla- because, like his Dad, he made his own money by his own skills. Also, as a Hindi speaker- one who presided over the emigration of a large Urdu speaking Ashraf class from his own Province, not to mention huge demographic change in Delhi, the City of his ancestors- he, like his daughter, was more Hindu and Brahminical than the RSS.

      Why not tell the truth? In the same way that Modi has to appoint non-RSS people so too did Nehru. Any price C.D Deshmukh? What about TTK?

      The ‘Left’- once stupid Commie jokers & Gandhian shitheads evacuated the field- had a program… once. Basus added noise to signal. Okay, that was rational so long as your man was running Bengal and Presidency and so on into the ground. But why now? What is wrong with you?

      Iqbal, in 1916, spoke of ‘zamin bukh’ as a truer motivation than ‘jihad’. Do you still not get that you live in ‘land hungry’ highly segmentary society?

      Oh! Right. You do. Your preferences are not antagonomic at all. They are strategic. You are determined to extract a rent from a vanishing ‘obligatory passage point status’ even if you endanger your own residency in the process. Wonderful! Trust a Lorca reading Kayastha to go out on a limb only to adversely saw it down.
      Very Freudian.