The BJP has held the UPA government responsible for the current liquidity crisis. Describing the crisis as “the UPA government’s own creation,” the BJP maintained that it was the government’s preference for monetary measures that is responsible for the crisis.
Going a step further, the BJP said that the Indian economy was in real danger and that finance minister P Chidambaram was misleading the country by stating that the fundamentals of the economy were strong. Warning that the finance minister’s regular reiteration of the Indian economy’s strong fundamentals was meaningless, senior BJP leaders Jaswant Singh, Yashwant Sinha and Arun Shourie drew attention to the fate of economies of southeast Asia, Brazil and Argentina as well as the western economies, which despite strong fundamentals now find themselves in deep crisis.
“If the government continues to fail in taking appropriate measures, India may face the situation of Brazil and Argentina. Our already vulnerable economy is now in real danger of being seriously destabilised. To go on chanting the lullaby, ‘our fundamentals are strong’, is worse than useless.
Nothing happened to the fundamentals of southeast Asian economies overnight, yet their currencies, their financial systems, and eventually their economies collapsed,” senior BJP leader Arun Shourie said. The BJP has argued that far from the fundamentals of the Indian economy being strong, these have been “decidedly weakened” by the UPA government. “What we have today is a crisis of confidence and trust: These cannot be restored by empty pep talk. They have to be restored by specific measures,” the BJP leaders said.
The BJP locates the cause of the current economic crisis in the country to the preference for monetary measures to tackle inflation. Former finance minister Yashwant Sinha said that the government ignored “the supply side, which was responsible for this inflation”. The party has called short-term responses to the liquidity crunch as well as longer term measures to strengthen the economy. Countering charges from the government, that the main Opposition party “only criticised without offering solutions”, the BJP put forth a 12 step programme to deal with the crisis.
The party’s contention is that the Indian economy, which was already facing a crisis arising out of the government’s mismanagement has now been “severely mauled” by the prevailing global financial crisis. Senior BJP leader Jaswant Singh said, “the global economic tsunami has hit India as well. There are global dynamics to the crisis but there are national challenges as well.
There is a problem of solvency of the national government and institutional solvency”. Countering finance minister p Chidambaram’s contention that a bailout like the West would resolve India’s liquidity crisis, Mr Sinha said that the current liquidity crisis has little to do with the global crisis “The stock market crisis is just one manifestation of it. Equally badly affected are the money market and the exchange market.
Sentiment is weak and loss of confidence is palpable. The violent fluctuations, noticed in these markets in the last couple of weeks, is the surest sign of the nervousness which has gripped these markets. It is the crisis in the real economy, however, which is the cause for more serious concern”, the former finance minister said.
The BJP maintained that the government’s mismanagement had already resulted in imbalances such as the high fiscal deficit, high current account deficit, elevated inflation levels, and a collapsing real estate sector. None of these, according to Mr Sinha, were the creation of the global crisis. Instead these are all the direct result of the “complacency and the cavalier attitude of the UPA government which slept on the wheel while the crisis was brewing”. The senior leader said that the government contributed to this problems by its acts of omission and commission.
