The debate on the state of economy of the country has turned fiercely personal. Former Finance Minister Yashwant Sinha, writing in the Indian Express, raised several questions about the state of economy blaming Finance Minister Arun Jaitley for, what he believed, a fiscal mess the country finds itself into.

Politically, Yashwant Sinha gave a shot in the arm of the Congress. Suddenly a barrage of criticism poured in from Congress leaders of all ranks. Former Finance Minister P Chidambaram, while backing Yashwant Sinha's claim, said, "The government is completely clueless about what is causing the economic decline."

Soon, Yashwant Sinha's son and Union Minister Jayant Sinha wrote an article in the Times of India refuting the claims made by his father and emphasised that the fiscal health of the country was sound and structural reforms introduced by the government had impacted some sectors temporarily.

Chidambaram again entered the scene and lashed out at Jayant Sinha. He launched a volley of questions. Why is the outcome a steady decline in GDP growth over five quarters? Why is there no increase in private investment? Why is credit growth to industry negative? Why is there poor demand for electricity and plant load factor at 50-60 per cent?

Finally, Jaitley hit back at both Yashwant Sinha and P Chidambaram saying that he did not have the luxury as yet of being a former finance minister nor did he have the luxury of being a former finance minister who has turned a columnist.

Jaitley also accused Chidambaram of having ordered bugging of his phone during UPA rule. Jaitley further lashed out at Yashwant Sinha, quoting Chidambaram as saying, "I may point out the 2000-2001 and 2002-2003 were the worst years since liberalisation in terms of growth and Prime Minister Vajpayee had then to force him out and replace him."

ECONOMY AND GOVERNMENT

But, in the personal blame game the real debate on the health of India's economy seems to have taken a back seat. The official figures and estimates by experts don't present a rosy picture of economy. Even the government realises this.

Prime Minister Narendra Modi only early this week revived his economic advisory council. The economic advisory council had been abolished soon after the Narendra Modi government was sworn in three years ago.

The reconstitution of the economic advisory council is significant as it came on the back of six consecutive quarters of declining growth after achieving the GDP growth rate of 9.1 in the first quarter of 2016.

The Lok Sabha elections are less than two years away. This calls for urgent corrective measure by the government to put GDP growth rate figures back on the northern flight.

MEANING OF DECLINING GROWTH RATE

At 5.7 per cent, India has seen the slowest quarterly economic growth since Narendra Modi government came in power in 20014. An analysis of the GDP growth rate for April-June quarter suggests that even this less than par economic growth was achieved on account of increased government spending.

Non-government sector forms about 90 per cent of India's GDP. But, during April-June period, this portion of economy grew at 4.3 per cent only.

Manufacturing sector grew at 1.2 per cent while construction witnessed 2 per cent growth rate. Industry, as whole, grew at merely 1.6 per cent.

Economists are of the view that given the scale of economies, India's GDP needs to grow at over seven per cent for an effective fight against poverty. Various estimates have been made about the rate of GDP growth rate and its expected result on the overall growth of millions of Indians.

It is estimated that if India has to enter the club of average high-income country by 2040, the GDP needs to grow at over nine per cent for next 23 years.

REFORMS AND EMPLOYMENT

In the past one year, the government has introduced two major reforms: demonetisation and the goods and services tax. Both were introduce as course correction measures for the Indian economy. But, these steps have vastly impacted mostly unorganised sectors which traditionally employed huge percentage of workforce.

About 1.2 crore youth enters job market in India every year. The quality of education in terms of skill development has not been same across the country.

Large parts of the country still in the want of quality skill development education. This leaves a large number of workforce unskilled or poorly skilled. These jobseekers till last year landed up jobs in real estate and construction sector. But, demonetisation and GST have led to loss of lakhs of jobs in real estate and construction sector.

Cloth industry including apparel manufacturing, leather industry and the like have also been impacted by the course-correction steps taken by the government. Some reports for 2015-16 suggest that in urban areas only three out of five job seekers got employment throughout the year. In rural areas, the ratio changed to only one in every two

BANKS AND ECONOMY

Another persistent worry for Indian economy has been its public sector banks. The PUS banking is in mess for years. The government has infused over Rs 1,500 billion in PSU banks since 2009 in order to save them from collapse.

But, the health of PSU banks has not improved. The official data (till March 31) shows that 17 of 21 PSU banks have bad loans or NPA of over 10 per cent. In one case, it was at 25 per cent level.

Unofficially, the bank officials say that it is the big industry players who have rendered banking sector ill. Over 22 per cent of the loans lent by the PSU banks to industry, particularly to big players, is bad loan. As a result of extreme bad loan stress, the banks have shown reluctance in lending to industry, especially in smaller towns and villages. The big players still get loans under political influence.

GROWING INEQUALITY AND FUTURE

As the focus has been on faster pace of GDP growth since liberalization, India has seen growing inequality. A research by French economists Lucas Chancel and Thomas Piketty shows that the inequality is at the highest (based on figures between 1922 and 2014) in 92 years.

In 1930s, one per cent of income tax payers pocketed about 21 per cent of total earnings by all wage earners. It dropped to 6 per cent in 1980s. But, currently it is at 22 per cent. The researchers also said that India is one of the countries where income inequality has increased at greater pace in the past 30 years.

However, the future outlook is not bad with global agencies predicting faster growth rates for India's GDP. According to a Morgan Stanley report, released earlier this week, India's GDP could reach USD 6 trillion in ten years.

The Morgan Stanley has referred to economic reforms introduced by the Narendra Modi government in positive terms. The report says that digitisation of Indian economy following demonetisation and GST rollout will give a boost of 50-75 basis points to GDP growth in the coming decade.