 Hello and welcome to NewsClick. We are going to discuss with Poranjay Gohar Thakur da, the state of the economy, or shall we say the dismal state of the economy as it is turning out to be. Poranjay, big euphoria after the elections, at least among the BJP circles, country marching forward, endorsement of all these policies. What's happening to the economy? Because it seems that the rupee has sunk. The stock market is in a state of shall we say depression, if nothing else. And the industry is particularly the auto world industry. Numbers are very, very bad. Poor. You're absolutely correct. In fact, people are wondering whether all the noise about Kashmir has been essentially to divert attention from the terrible state of the Indian economy. Let me elaborate on all these points that you mentioned. I think nobody believes the government. Nobody believes Finance Minister Nirmala Sitaraman when she claimed that the current year India's gross domestic product will grow by 7%. We'll be lucky if it grows by 6.5% and this is on the basis of statistics whose credibility is being doubted like never before. In fact, the issue is not that the statistics are wrong per se, but the basis of the statistics have been shifted or tweaked to show higher growth figures, to present a more rosy picture. So it's a framework which has been shifted rather just by tweaking the numbers. In fact, the person who was the Chief Economic Advisor to the Government of India, Dr. Arvind Subramaniam, he himself has presented a paper which shows that the last few years of the UPA government and the first few years of the first Modi government, the rate of growth of India's gross domestic product was possibly inflated by 2.5%. So instead of an average of 7%, it would be perhaps closer to 4.5%. And in some years it's been down to 3.5%, some years it's been 5.5%. This is not you and I, but a person who was there. Now you can crave and complain and say, why wasn't he making all these noises when he was Chief Economic Advisor? But even if he has become intelligent by hindsight, we can't ignore the facts. And there have been other economists including the people we have interviewed on Newslet like Dr. Nagaraj and others who have been saying that, look, you're the credibility of your GDP figures, whether they be different sectors, whether they be jobs are today perhaps lower than it's been in over the last half century. We have discussed this issue of the credibility of the statistics, particularly in the last three years of the Modi government. But I think it became clear even to them that the statistics were not doing well. So the need to shall we say, doctor the statistics. But leaving that out for the time being. Let me interrupt you briefly here and say, even there they did a lousy job about it. When the National Statistical Commission presented its data, they didn't want to put it out in the public domain. And the persons in charge, the official, the government statisticians, they put in their papers. And finally after the election, they released the same data, which says what? That your unemployment is at its highest in the last 45 years. So obviously that the issue was that it shouldn't come out before the elections. But leaving that out, the doctoring of the statistics, which we have discussed in the news click even earlier. Let's look at what are undeniable facts. So let's look at some undeniable facts. You mentioned the auto sector. This is industry statistics. This is the association. It's called SIAM, the Society of Indian Automobile Manufacturers. June figures that have come out say across the board, fall in sales. You compare June 2019 with June 2018, sales of passenger cars are down by almost a quarter. That is 24.07%. Commercial vehicles, heavy vehicles, trucks, lorries, buses down by over 12%. And two-wheelers, scooters, motorcycles also down by almost 12%, 11.7%. And clearly there is demand recession. Whether it be Tatas, whether it be Hero Honda, whether it be Maruti, all the major players, all the major manufacturers have actually shut down their assembly lines for different periods of time, some for a few days, some for a few weeks, because they are stuck with inventories which are not selling. And according to the industry spokespersons themselves, they fear that job losses could be running into tens of thousands. One figure I've read is 32,000 jobs are likely to be lost in the auto sector as a whole. That is how bad the situation is. And it's entirely demand recession. Yes. Let's look at also the two segments which behave differently. One is a luxury car segment, the big cars, the Mercedes Benz and so on, where shall we say the idle rich really buy those cars, even though sales are down significantly. But we also see basically the trucks which are the transport sector, they in fact represent the fact that goods are not moving. There's no demand to move goods more and therefore the demand for trucks are falling. And the same time. And rentals. Rentals have come down which shows you that there is demand recession. Yes. The other part is the two wheeler market which shows the middle class, the lower middle class, even what would be called the kind of market which has been created by Swiggy, Zomato and so on, even they are not growing because if they did, then also the demand for two wheelers would have grown. So you see both ends of the market. That's right. From the luxury segment to heavy vehicles to the two wheelers which are picked up by the middle classes. Now, you know, this is a reflection of a deeper malaise. If you look at what we say the infrastructure sector, the co-sector, electricity, steel, cement, these are capital goods. And telecom. Now these are sectors which give you a clear idea of the state of the economy. Now the figures of June show that it's hardly grown 0.2%. This is the slowest ever rate of growth over the last four years and longer, 50 months. These co-sectors, as a whole, if you put them as a whole co-sector, the rate of growth has been 0.2% in June. This is the lowest rate of growth in 50 months. This also includes railway traffic. And it's an interesting point when you're pointing out capital goods. Capital goods effectively, the infrastructure really drives particular countries like India where there's a huge amount of infrastructure which needs to be created. If that falls, that shows that the entire demand in other sectors is going to fall. And now you see the other aspects of why this is happening. You look at what has happened. Why has this happened? The demand recession. Another is, you know, part of the talk of demand decision is also being driven by the fact the infrastructure is not growing. And infrastructure is not going because government is not spending money on it. And also there earlier, some amount of the, say the purchase of vehicles, some of the purchase of homes, and that in turn would lead to steel consumption going up, cement consumption going up, etc. have also been badly heard by the crisis in the non-banking financial company sector. Notably, the collapse of groups like the ILNFS, the Infrastructure Leasing and Financial Services, DHFL, they want housing and finance. These are among the major NBFCs that have happened. And also possibly, bendy crisis in companies like India. Let's see what happened. There could be, I mean, that's what Dr. Subramaniam Swamy is suggesting, that that could be a major housing banking finance, housing finance company that could be in a bad shape. I mean, they put out a huge advertisement saying that, you know, all the money they've got is in order. It's a very, very simple issue. You can see today the housing sector is not growing. And if housing sector doesn't grow on the bubble bursts as it were, the housing sector, the companies which have driven the housing sector are going to do it right. In fact, you can name three or four of these major housing companies, the private companies, which are in a mess. The Supreme Court has passed severe stretches against them and virtually, I mean, telling the government to bail them out, whether it be the Unitech Group, whether it be the JP Group, whether it be Amrapali Group, number of these large housing companies have been accused of literally cheating their customers. And in frustration, they've gone to the Supreme Court and finally the Supreme Court said, do something about it and told the government, you know, bail them out. So what we're seeing is housing bubble has burst. We also see the investment in basic infrastructure, roads, other railways. All of them also constrained as it were by demand. The investment's not taking place, therefore. And when you see the housing bubble collapse, it also means collapse of the banking sector, non-financial banks. And the industries with support housing, steel and cement, notably. Yes, absolutely. Now, the other thing, and this is what I'd like to draw your attention to, the very same industrialists, the big business persons, they, you know, when the budget was announced, you know, like every occasion they don't have anything terrible to say about the budget, but what happened after that? The markets are collapsing. All the indices, the sensitive index, the nifty are in a bad shape. The rupee, the rupee is now trading at over 70 rupees to a dollar. Look at the people. It was Rahul and Rajiv Bajaj. Bajaj is a major player in two-wheelers and in the auto sector. You had people like Mohandas Pai, one of the founders of Infosys. He's a man who, on television, is a cheerleader for Modi. Absolutely. Even now he's, the Larson and Tupro chairman, Mr. A.M. Naik, the HDFC, the housing development and finance corporation group chairman, Mr. Deepak Parek, all of them are today clean. And the most amazing thing, the founder of Biocon, Kiran Mazumdar Shah, she has been quoted in the telegraph newspaper saying that a top official of the government literally told her, don't talk about the economy, don't complain, don't... You know, I mean, she's gone on record and saying... I apologise, it's an interesting issue. The complaint that the government is actually clamping down on dissent has come from what the government officials, not officials, but the government cheerleaders would like to call the anti-national brigade. Yes, the Tukre Tukre, you and me, the civil society guys. So we have been accused, shall we say, of presenting ill news as it were. Now these are all the cheerleaders and they are also speaking, shall we say, in a similar vein to what we have been saying. This has actually unnerved the government, as a result of which the finance minister, Nedmala Sita Raman, she's recently made a statement that they're looking into the problems that industry is facing. But they have done something. They have now put various criminal threats against business. If they don't, if they don't spend on corporate social responsibility. They can go to jail. But there are various other, as we know, this has been, various other measures are being taken. And what I seem to understand from people who do business, not many of my friends do, that the only people today who are making money are the accounts people, the audit people, because and consultancies for, consultants for GST and various other things because the compliances have become so big that you and I, so it's good news for accountants and lawyers. By the way, even some of them are under attack because they've been hauled up for fudging the accounts of some of these companies which I mentioned which have collapsed, including IL and FS. So what I'm saying is that do you think that like, for instance, we have now the various terrorist acts which have come in by which anybody can be declared terrorist. There are also a set of economic terror acts, shall we say, by which they hope to keep the big business quiet. You know, that's interestingly the new discourse that has been talked about. And it's not you and I, it's not the proverbial Tukre Tukre gang or the Khan market gang, representatives of civil society and media persons. No, it is these very same people who have been the cheerleaders of the government who are today talking about tax terrorism, including people like Mr. Mohandar Spai. That's terrorist. That's right. You haven't heard this language for a very long time. No, it was being used by the BJP against the Congress during the UP regime. But now this language is being used against the BJP and that too by that section of the population who would assume who are most favorably inclined towards the Mr. Modi and the policy. And it's interesting, you know, the same government which goes to town about saying how this five trillion dollar economy is our target, has kept completely quiet when we talk about how India's position has slipped from being the fifth largest economy to the seventh largest economy. They're not talking about the fact that the rupee has now, that 70 rupee to a dollar mark has been crossed. They're not talking about the impact that the US Fed, the Federal Reserve's decisions on interest rates are having on the world economy, the China, the trade war that has been going on between India and China, all of which indicate... India and China is not the issue. The US is China. Sorry, sorry. It's the US. India and the US as well. Yes, absolutely. And all of this is going to impact your external environment and you already have a situation where the internal situation, the internal environment in the economy is what it is, what we've just discovered. So your attention can be diverted by Kashmir, by the Unlawful Activities Prevention Act, by the Right to Information Act, by the National Register of Citizens. But the economic situation is dismal and it's a terrible situation, the way I look at it. Thank you, Paranjaya, for bringing all this to our attention. And we hope that at least some semblance of a response to this, when the government will be made, instead of sheltering behind, shall we say, the shield of terrorism. Thank you very much for being with us. This is all the time we have news click today. Do keep watching news click.