Modi 2.0 needs to fix a broken B.U.L.B.
The state of business in the Indian economy is not hidden from anyone. The businesses of all nature, shapes and sizes are suffering from liquidity crunch, and low consumer demand. Unemployment is being talked about at being 40 years highest. Government tax collection and Capex are below par. Over last 2 years, government Capex has actually witnessed a declining trend. Therefore, its not wrong to say that MODI 2.0 has inherited a fused B.U.L.B. (See image below)
The reasons for above problems can be many. The roots lie in the 2009-2011 reckless lending under UPA government. But it has some aggravation from Demonetisation and NPA resolution delays, during the NDA rule. Whatever may be the perception, the finance ministry of last NDA government has not been on its toes to resolve these problems in a strategic manner. Previous Modi Sarkar scored well on social welfare scheme, but fared poorly on employment generation and kick starting the economy. The government has been a bit too conservative towards inflation and fiscal deficit. It is worthy to note that prolonged period of low inflation, unemployment and low fiscal deficit can actually lead a country in recessionary trap. We are not yet there, but any further delays in economic revival and take us there.
In my opinion, the new government should worry less about inflation and currency for next 2 -3 years, and start to pump-prime the economy J.M.Keynes style.
