Nirmala Sitharaman's rise as spin doctor for Narendra Modi's broken economy

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• Instead of announcing a stimulus package that corporations had been expecting in the wake of Modi’s re-election, Sitharaman had increased the income tax surcharge on those earning more than Rs 2 crore a year, introduced a tax on rich foreign funds, retained a capital-gains tax that had been unpopular among investors, kept the country’s largest companies out of the ambit of a corporate tax cut and raised duties on several goods.¹

• “The markets were expecting some radical ideas from the budget for growth revival. But the budget has been more incrementalist than radical.”²

• “Sitharaman tends to get upset with any direct criticism of the government,” the industrialist said. “She told me, ‘How can we work together if you criticise our policy?‘”

• At an event organised that December by the Economic Times, however, another billionaire, Rahul Bajaj, spoke out about “an environment of fear” for industrialists. “You are doing good work,” he told Sitharaman and her fellow cabinet ministers Amit Shah and Piyush Goyal, “and, despite that, we don’t have the confidence that you’ll appreciate criticism.” Shah responded that the fact that Bajaj could ask such a question meant that no one would believe that people were scared—even though Bajaj had already faced consequences for criticising Modi. In 2003, at an event organised by the Confederation of Indian Industry, he was among a number of businessmen to speak out against anti-Muslim pogroms in Gujarat the previous year. The Gujarat government, headed by Modi, responded by restricting the CII’s access to it and patronising a rival industry group instead.

• In her 2021 budget speech, Sitharaman—whose political success has depended upon her absolute loyalty to Modi—mentioned the prime minister 13 times. This broke the previous record of 11 mentions in a single speech, set by Rajiv Gandhi’s finance minister ND Tiwari in 1988. Jawaharlal Nehru and Indira Gandhi were referenced only thrice each in all the budget speeches across their tenures as prime minister, and almost never by name.

• On 30 August 2019, she announced that ten state-run banks would be consolidated into four. A top government official told me at the time that the announcement was deliberately scheduled to coincide with that evening’s release of quarterly GDP figures, which showed that growth had fallen to five percent—the lowest in six years.

• As for the decline in automobile sales, she blamed millennials, “who now prefer to have Ola or Uber rather than committing to buying an automobile.” A Maruti Suzuki executive soon refuted this analysis, telling the media that the automobile industry had seen “some of its best times” since the ride-sharing apps began operating in India.

• In one of her earliest meetings with the heads of state-owned banks, on 19 September, Sitharaman surprised them by insisting that they organise loan melas in four hundred districts over the next month. Some bankers tried to explain that there would be no takers for loans in a stagnating economy, but she told them to change the perception that banks were not willing to lend.

• “The minister was under pressure to show to the corporate world that she is a reformer,” the official said. “But what was required then was more money into the hands of the people through an income tax cut, before allowing the investments to flow through a corporate tax reduction.” Sitharaman opposed this idea at the time, arguing that her initiatives would spur businesses to boost consumption. But, the official added, corporations used the stimulus “to reduce their debts, rather than pumping money into the economy to create a healthy economic growth.”

• Born in Madurai, in 1959, Sitharaman belonged to an Iyengar family of modest means. Her father, Narayanan, was an officer in the Indian Railways. His job involved frequent transfers, due to which she attended school in different parts of Tamil Nadu. She completed her bachelor’s degree in economics at the all-woman Seethalakshmi Ramaswami College in Tiruchirappalli before joining JNU. Her family had no political connections and held some progressive views—she once recalled that her father spent as much time in the kitchen as her mother, Savitri, did.

• Anand Kumar, who joined JNU in 1972, told me. “Many professors were also of communist ideology. There used to be a running joke: ‘Read Marx for marks.‘” At JNU, Kumar established the Free Thinkers, “a platform with no political affiliations, for radical democrats and against the dogmatic Left.” In 1974, he defeated the future Communist Party of India (Marxist) general secretary Prakash Karat to become the first non-Left president of the union. He went on to become one of the founders of the Aam Aadmi Party and the Swaraj Abhiyan.

• The government’s crackdown on JNU began in February 2016, when six students were arrested and charged with sedition for allegedly raising “anti-India slogans” at an event commemorating the third anniversary of the execution of Afzal Guru, who had been convicted of conspiring to attack parliament in 2001. The charges against the students have not yet been proven in court—a Zee News producer resigned two weeks after the event, claiming that the channel had doctored the video footage used by the police as evidence of their sloganeering—but the government and its cheerleaders in the media used the episode to portray JNU as a den of sedition.

• ALTHOUGH SHE WAS PRIVY to most of her roommate’s secrets, Balachandran did not find out about the on-campus romance between Sitharaman and her future husband, Parakala Prabhakar, until after she left JNU. Even Mohanty was surprised to find out, at the 2008 alumni meet, that Sitharaman and Parakala were married.

• When Parakala arrived at JNU, in 1978, to pursue a master’s degree in sociology and an MPhil in international studies, his local guardian was the future prime minister PV Narasimha Rao, who became foreign minister in 1980.

• The year before their wedding, Parakala secured a scholarship from the Indian government to study abroad. “In those days, one must be either highly capable or politically well-connected to get that scholarship,” Imtiaz Ahmad, Sitharaman’s fellow Free Thinker and the only other student to get the scholarship that year, told me.

• Three decades later, in an interview with The Pioneer, Parakala recalled that Najma Heptullah, the general secretary of the All India Congress Committee at the time, “was close to us and mentored us. One day, when Rajiv Gandhi visited the AICC office, she took me by hand, dragged me to his office and complained that I was wasting my time.” Gandhi had recently taken over as prime minister and had campaigned for Kalikamba in the 1983 election. “With a charming smile, Rajiv said, ‘Prabhakar, just finish your studies and come back.’ That nudged me to accept the scholarship.”

• Sitharaman abandoned her doctoral thesis, on the textile trade between India and Europe, to accompany Parakala to London. She took up her first job as a sales assistant at the home décor store Habitat, before working as an economist’s assistant at the Agricultural Engineers Association, as a Tamil-language translator for the BBC World Service and, finally, as an assistant researcher at the consultancy firm Price Waterhouse, where she soon rose up the ranks to become a manager.

• Sitharaman and Parakala, meanwhile, established the Centre for Public Policy Studies, an organisation that, according to Parakala’s LinkedIn profile, provided “research and policy consultancy to bodies like UNICEF, ILO, UNDP, WTO, Union and State Government Departments as well as Banks and Corporate clients.”

• I spoke to five Pragna Bharati officials, all of whom credited Madhav with inducting Sitharaman. At the time, Madhav was an RSS pracharak—full-time worker—based in Hyderabad.

• Tripuraneni described Sitharaman as “brilliant, articulate and intellectual,” so much so that he was willing to overlook her educational background. “Although she came from JNU, which is the hub of propaganda for the Marxists and madrasas—I told her we should also discuss how the government funds are producing anti-Indians—she used to take keen interest in all discussions and contribute to our journal and the association,” he said. “She came prepared in every discussion; she would talk with knowledge and not gas. I must say that, although JNU produces a lot of anti-Indians, they do study quite a lot.”

• In the early 2000s, Parakala joined Sitharaman on the editorial board of Bharatiya Pragna, taking over as a stopgap managing editor. In one article for the journal, he criticised the Congress as “politically moribund, programmatically cynical and organizationally fatigued,” arguing that the country needed a “pan-India party with clear-cut nationalist ideology to thrive.”

• Parakala quit the BJP in 2006 and, when the Andhra Pradesh legislative council was resuscitated the following year, contested as an independent. He lost once again. In 2008, he joined the Telugu actor Chiranjeevi’s Praja Rajyam Party as a spokesperson but left before the 2009 elections, citing corruption in the allocation of tickets.

• When the TDP won the Andhra Pradesh assembly election, in 2014, Parakala joined the state government as a media advisor. He resigned four years later, after the TDP withdrew its support to the Modi government.

• In recent years, Parakala has occasionally made headlines for being a vocal critic of the Modi government and Sitharaman’s economic policies. Five months after Sitharaman took over as finance minister, he wrote an opinion piece in The Hindu listing various indicators that the economy was slowing down.

• The opposition was quick to gloat about the criticism, but this was not the first time Parakala and Sitharaman had publicly disagreed on a matter of policy. Parakala had been a vocal opponent of the bifurcation of Andhra Pradesh, while Sitharaman had followed the BJP line of supporting the creation of Telangana.

• The BJP amended its constitution, in 2008, to reserve a third of all party posts for women. Sitharaman benefited from this decision, as she was appointed to the party’s national executive. She soon impressed BJP leaders, and Arun Jaitley took her under his wing.

• The BJP suffered a decisive defeat in the 2009 general election, under the leadership of LK Advani, necessitating a generational shift. The RSS handpicked Nitin Gadkari as the youngest ever BJP president. Gadkari diversified the party’s second-rung leadership by inducting several younger members and women into the national executive, and increased the number of national spokespersons—including Sitharaman among the new appointees.

• IN THE JANUARY 2001 ISSUE of Bharatiya Pragna, Sitharaman laid out a media strategy for the RSS. “The Sangh appears uncomfortable in effectively handling the electronic media,” she wrote, ascribing two reasons for this. The first was “the irreverential atmosphere accentuated by the provocative anchors, interviewers, comperes, and news casters” towards the RSS. “Irreverence and disrespect shock a Swayamsevak and therefore even at the outset he falls out of gear,” she explained. “This way he easily gets pushed against the wall and sounds defensive. He loses the game from the viewer’s point of view.” The second reason was that RSS spokespersons struggled to provide the “crisp and juicy sound bite” required in television debates, which “is as important as a well argued article in a journal or even a sincere soul-stirring speech.”

• Jaitley was sometimes referred to in Delhi circles as the “bureau chief,” because of his strong connections in the media. Even though Gadkari was the party president, Jaitley became her de facto boss.

• A senior journalist who covered the BJP for over three decades told me that, in 2011, Jaitley leaked to them that the party was going to give Sitharaman a Rajya Sabha seat from Gujarat. Sitharaman did not make the cut, however, as the president of the BJP’s women’s wing, Smriti Irani—whose candidature was backed by Gadkari—was chosen over her.

• As a result, when the BJP amended its constitution in September 2012, to allow Gadkari a second term as party president, Sitharaman thought it was the end of the road for her. “She had almost packed up to go back to Andhra Pradesh,” a political editor who had followed Sitharaman’s career since her early days in the BJP told me, “but then a scandal related to Gadkari’s Purti Group broke out, leading to a probe, and the new party president, Rajnath Singh, retained her.”

• Gadkari was accused of favouring a business conglomerate—where his driver was listed as a director, and a bureaucrat close to him was the managing director—while serving as Maharashtra’s minister of public works. Six years later, The Caravan reported that Jaitley had been responsible for leaking the pertinent documents to the media. Tensions had been brewing between Gadkari and Modi over the former’s decision to bring Sanjay Joshi, Modi’s bitter rival, back into the party fold.

• Sitharaman’s close association with the Jaitley camp meant that she had to keep her distance from Sushma Swaraj, the leader of the opposition in the Lok Sabha, as the two BJP leaders often crossed swords internally. Their differences became public in February 2014, when Sitharaman shared a tweet that said, “If only Shushma had stood for Seemandhra in LS just like Venkaiah & Jaitley did today.” Swaraj responded by retweeting a user who said, “With Spokespersons like @nsitharaman, u don’t need enemies.” She deleted the tweet soon after.

• Swaraj had for long been a vocal supporter of the creation of Telangana and, two days earlier, had spoken in favour of the Congress-sponsored legislation to bifurcate Andhra Pradesh. In the Rajya Sabha, however, Jaitley and Venkaiah Naidu had insisted on concessions for the Seemandhra region before the BJP provided support for the bill. As the disagreement began making headlines, Sitharaman attempted damage control, insisting that the BJP leaders were on the same page.

• AT A WORKSHOP organised by the BJP’s youth wing, in October 2013, Sitharaman taught future spokespersons how to handle press conferences. “When you sit there, you should assume that you are the party that is coming to power in May 2014,” she said. “You should have the gloss and the glory of a powerful person sitting there and speaking, but not arrogantly.”

• Spokespersons should never act defensive, she said, as it would signal to the media that they are on a “weak wicket.”

• In his election affidavit for the 2014 campaign, Modi declared, for the first time, that he was married. His opponents attacked him for having left blank the column for marital status in the affidavits for his previous campaigns. Appearing in a television debate, Sitharaman explained that Modi was complying with a 2013 Supreme Court order requiring candidates to provide all the details asked for in the affidavit—a requirement that had not existed earlier. Modi had been married as a minor, but the couple had “not lived together ever after that, and the families have both agreed to that state, and the lady has no complaints,” she said.

• The official speculated that Sitharaman’s loyalty owes to the fact that she does not have a political constituency of her own and is, therefore, beholden to Modi. “To my mind, she comes across as a first-bencher in a classroom who is over-eager to get the admiration of a teacher,” they said.

• Although the Modi government agreed with the deal in principle, it objected to a provision that capped a country’s farm subsidies at ten percent of the total value of the foodgrains it produced. Developed nations, especially the United States—even as they continued with heavy agricultural subsidies of their own—had insisted on this limit as they saw India’s practice of providing minimum-support prices to farmers as violating WTO norms. The government also opposed a clause prohibiting members from raising disputes over subsidies for four years after the agreement’s ratification.

• “It was one of the rare occasions for India, in 2014, when Sitharaman, at the cost of being isolated from other countries, dug in her feet,” the veteran trade negotiator told me. “But in 2015, she caved in to the pressure.” Another official who has represented India at the WTO said that Sitharaman should have insisted that how India fed its population is nobody else’s business, “but these outcomes also depend on what kind of free hand the prime minister gives to their trade minister.” Vajpayee, the official added, “had put complete faith in his commerce minister, Murasoli Maran, promising no interference during the WTO talks that were held in Doha. And Maran did ensure that India stood its ground and the Americans were left extremely unhappy back then. In today’s time, the trade minister does not have that leverage. Sitharaman would not try to put up a fight with the PM, but rather make those compromises so that she could survive.”

• A commerce ministry official told me that Sitharaman’s intransigence often proved costly during trade negotiations. “In a global supply chain, one has to import to be able to produce more and export,” they said. “This is how we have developed our automobile sector, too. There is a time cycle when imports would certainly outgrow exports but, if we produce well, things can turn. But she didn’t want to let it go.”

• DAYS BEFORE the Modi government’s first major cabinet reshuffle, in September 2017, news began pouring in about possible inclusions and exclusions. Sitharaman was reportedly on the way out. “There were rumours that Sitharaman was being sent back to the party,” a Delhi-based political journalist told me. “When I called up her residence, her staff told me that she is in the prayer room and it will take her a while there today.”

• Instead of being dropped, Sitharaman was made a full member of the cabinet. “Her promotion, in a way, was a snub to some whom Amit Shah wanted to cut to size,” the journalist Coomi Kapoor wrote. “Someone at the party headquarters deliberately leaked the news that Sitharaman was likely to be dropped, so as to put potential aspirants off their guard.”

• Among the charges against the Modi government were that it had overpaid for the aircraft and unduly favoured Anil Ambani’s Reliance Defence—which was chosen, at the expense of the state-run Hindustan Aeronautics Limited, as the Indian company in which Dassault was to invest half the amount it received under the deal, as mandated by procurement rules.

• That December, The Caravan reported that the benchmark price for the jets, as per defence procurement procedures, had been €5.2 billion and that the Modi government had revised the mechanism for pricing to arrive at a new benchmark that was almost fifty percent higher. The following month, with a general election approaching, the government agreed to debate the matter in the Lok Sabha. Sitharaman’s “point-by-point” reply to the debate lasted over two hours, but did not address the specific concerns raised by journalists and the opposition.

• In September 2018, while appearing on the popular television show Aap Ki Adalat, she was asked whether the government was living up to its campaign promise of beheading ten Pakistani soldiers in retaliation for the killing of two Indian soldiers. “All I can say is, we are also cutting, but we don’t display it,” she replied. When it was later pointed out that this would violate the Geneva conventions, she downplayed her comments as “light-hearted.” All she had meant, she said, was that India was “pushing back” Pakistan.

• “WHY WAS SITHARAMAN made the finance minister, and not Piyush Goyal?” a senior BJP leader asked me. “And why was there a choice only between these two? This is what you should ask every person you meet.” The BJP leader did not provide me with an answer or further context, but referred to Sitharaman as a “deer caught in the headlights.”

• As the primary fundraiser for the country’s richest political party, Goyal was close to a set of rich industrialists colloquially known as the Bombay Club.

• “Goyal was trying to rewrite what Jaitley had been doing,” an editor who has tracked the finance ministry for decades told me. “There was a rough edge to his personality as well, which I don’t think the top government machinery was comfortable with.” Several bureaucrats told me that they had not been fond of Goyal, whom they accused of being uncivil at times.

• Multiple people said that Sitharaman was chosen over Piyush Goyal because the BJP wanted to avoid the optics of the country’s finances being handled by a former party treasurer.

• The official added that Sitharaman has been careful not to cross paths with Goyal, who took over as commerce minister instead. Her private secretary was recently promoted in the civil-service ranks, which led to his transfer to the commerce ministry. “Sitharaman’s person sitting in a ministry looked after by Goyal became awkward,” the official said. “She had expressed her disappointment with the PMO on this move, too.”

• BESIDES LOBBYISTS, journalists also found themselves frozen out by the new regime at North Block. As long as they carried government-accredited identity cards, journalists had previously been allowed to walk into the finance ministry without having to register themselves at the reception desk—just as they were in every other government office except South Block, which houses the prime minister’s office and the defence ministry. Sitharaman, however, forbade them from entering the ministry without an appointment, which made it easier to monitor their interactions with officials. As protest, the beat journalists boycotted a pre-budget dinner she hosted that year, but the decision has not been reversed.

• The finance secretary was part of a six-member committee, headed by the former RBI governor Bimal Jalan, that was looking at how the central bank would manage its accumulated capital. The committee was set to recommend that the RBI should transfer its surplus reserves—estimated at over Rs 9 lakh crore—to the government in tranches over the next three to five years. Garg wrote a note of dissent, insisting on the amount being transferred in one go. Sitharaman objected to this in a meeting with Garg, who told me that he asked her to put in writing that she wanted him to withdraw his dissent.

• On 11 June, the cracks appeared in the open, when Sitharaman chaired her first pre-budget consultation meeting with representatives of farmers’ bodies. Several top finance ministry officials were also present. “When I thought that the meeting was about to get over and I was summarising, I did say something to the extent that ‘we take note of all the suggestions made, and we will give a serious thought to it,’” Garg told me. “She might have thought that I was referring to her and was trying to educate her.” He noted that Sitharaman had said at one point in the meeting that she was feeling upset. “I feel it was a misunderstanding, but there was no attempt to minimise the authority of the finance minister.”

• AS SITHARAMAN PREPARED for her second budget speech, on 1 February 2020, economic growth declined to 3.7 percent, the lowest figure in eleven years. It was the first time that India had had three straight years of decelerating growth since 1988–91.

• With economic activity at a standstill and the GDP falling by almost a quarter, Modi announced, on 12 May, that his government would provide a stimulus package worth Rs 20 lakh crore. It was left to Sitharaman to spell out the contours of that package. Once again, instead of making the announcement in one go, she held five press conferences over the next month.

• Much of the heavy lifting was done by the National Rural Employment Guarantee Scheme, which Modi had once sarcastically promised to preserve as a “living memorial” to the Congress’s failure to tackle poverty.

• More importantly, Sitharaman had prepared the budget under the assumption that the pandemic was about to end. After all, Modi had declared victory over the coronavirus while addressing the World Economic Forum in January. Many finance ministry officials I spoke to around that time said that a general lack of hygiene and resulting strength of immunity had protected Indians from the worst ravages of COVID-19.

• Even in the middle of a pandemic, India was spending only 0.35 percent of its GDP on health, as compared to a global average of 1.2 percent.

• A person familiar with the preparations for that budget told me that bureaucrats in the finance ministry had advised Jaitley to set a higher target in order to signal to industry that the new government was willing to spend more to spur economic growth. But Jaitley remained firm, determined to make the political statement that the Modi government would be fiscally responsible.

• The Food Corporation of India was purchasing grains by borrowing from the National Small Savings Fund. Irrigation, railway and power projects were being funded by bonds issued by dedicated agencies. This debt was guaranteed by the government, but it did not show up on the balance sheet. “Such off-budget financial arrangement,” the CAG argued, “defers committed liability, being interest bearing, increases cost of subsidy, and understates the annual subsidy expenditure and prevents transparent depiction of fiscal indicators for the relevant year.”

• The COVID-19 pandemic proved to be a blessing in disguise, since governments around the world became more tolerant of higher budgetary gaps. In May 2020, the finance ministry announced that it would borrow over fifty percent more than it had originally estimated for the fiscal year. “A large part of the borrowings went into cleaning up the government’s balance sheet,” a person involved in the ministry’s decision-making told me.

• In her 2021 budget, Sitharaman admitted that the fiscal deficit would be 9.5 percent of the GDP by the end of March—instead of the 3.5 percent she had estimated the previous year—and set a new target of 4.5 percent by March 2026. She also announced that the government would repay its debts to the National Small Savings Fund. The decisions were lauded by economists, the markets and even her critics.

• Sitharaman’s plans to shore up the government’s revenues, however, were not as popular. She continued her predecessors’ tactic of employing cesses instead of taxes, since cess revenue does not have to be shared with state governments.

• Another strategy Sitharaman employed was to increase excise duties on petrol and diesel, even though global oil prices crashed during the pandemic. This generated Rs 3.72 lakh crore in revenues during 2020–21 but contributed to rampant inflation at a time when supply chain issues were already causing prices to rise. Whenever she was asked about rising fuel prices, she would pass the buck to state governments. More recently, she has blamed the Manmohan Singh government for issuing bonds worth Rs 1.44 lakh crore in 2012, to support oil companies and control fuel prices.

• In October 2021, Krishnamurthy Subramanian abruptly resigned as chief economic advisor, days before Sitharaman was to visit the United States for the annual meeting of the International Monetary Fund. Subramanian, a professor of finance at the Indian School of Business, had been a vocal supporter of demonetisation. He was considered ideologically close to the BJP and had a personal relationship with Modi, often meeting the prime minister for hours and sending the prime minister’s office economic data on a weekly basis during the pandemic.

• A person close to Subramanian told me that his direct line to Modi, bypassing Sitharaman, was a bone of contention between the minister and her advisor, making their relationship untenable. Multiple sources told me that Sitharaman and ministry officials were unimpressed with Subramanian’s suggestions and considered him a “lightweight” in policy circles.

• Days before presenting the economic survey in parliament, Sitharaman chose Venkatraman Anantha Nageswaran as the new chief economic advisor. A month later, Sanyal was moved to the prime minister’s economic advisory council. Observers told me that, with these personnel changes, Sitharaman has assumed more control over her ministry’s bureaucracy than ever before.

• During her reply to the budget debate in the Rajya Sabha, she justified the government’s emphasis on capital expenditure as being guided by the “multiplier effect.” Every rupee spent on infrastructure projects, she said, is worth an increase of around three rupees in the national income, because of the private investment it generates. She added that “spending money through revenue does not give you the required multiplier,” claiming that a rupee of revenue expenditure only generates about fifty paise in national income.

• Having relaxed the fiscal-deficit target the previous year, Sitharaman announced that the government would not resort to off-budget borrowing in 2022–23, though the debt-to-GDP ratio is expected to increase.

• “The multiplier effect of any government spending is identical, be it consumption-led or investment-led,” Patnaik said. “This is because the multiplier effect operates through demand.” It did not matter how much the government subsidised private investment—corporations would expand production only if people were willing to spend on their products or services.

• In an interview with the Indian Express, the finance secretary, TV Somanathan, echoed Sitharaman’s justification from the previous year when asked about the government’s refusal to extend cash transfers to the poor during the pandemic. During the first wave, he said, government studies had shown that people who received funds in their Jan Dhan accounts tended to only spend about seventy percent of the transfers, saving the rest. The implication was that it was pointless to put more money in people’s hands if they were going to salt it away instead of boosting their consumption. This has not stopped the government from providing monetary support to corporations, which have not increased spending either.

• The economic policies adopted during Sitharaman’s tenure as finance minister have deepened inequality in India, and even some of those who have benefited cannot help but blush. “In Charles Dickens’s words, it is the best of times and it is the worst of times,” an influential businessman whose company profited during the pandemic told me.

• A recent report by Oxfam India found that 84 percent of the country’s households experienced a decline in income in 2021, while the wealth of India’s billionaires more than doubled between March 2020 and November 2021.

• Yamini Aiyar of the Centre for Policy Research told me that the government’s assumption that the pandemic required measures to boost supply rather than demand was being proven wrong. “The biggest challenge that Sitharaman confronted when she became the FM was to address the deep failings in the formal sector while simultaneously responding to the deep rut that the informal sector fell into since the time demonetisation and GST were implemented, which used a butcher’s knife to formalise the economy,” she said. “I think we have ignored the informal economy for a long time, and we are still in a deep demand slump.”

• Sen worried that the current policy direction, with its soaring corporate profits, could reproduce the after-effects of demonetisation: the formal sector might do well in the initial years, but it would soon collapse as an ever greater share of small businesses, which act as ancillaries to larger companies, went under. “What we are seeing is massive income-distribution changes,” he told me.

Footnotes

1. If this did not happen then how would the govt. raise revenues even as the economic growth slowed. As a critique of the budgets presented, what were the ideas that were proposed by policy circles (possible the kind that would be good economics but bad politics)? ↩

2. Again, like what? ↩