Everyone is talking about Finance Minister Nirmala Sitharaman these days. Social media is full of memes, and there’s a popular joke going around: ‘If you want to pay less tax, just earn less money.’ Of course, she didn’t actually say that, but it shows how frustrated people are with her policies.
When she became India’s first female Finance Minister in 2019, it was a proud milestone for the country. People hoped to see positive changes and progress. But now, it looks like those high hopes have turned into frustration, with debates about the state of the economy.
Let’s be fair—this isn’t about jumping on the meme bandwagon or blindly criticizing her. We’re here to take an honest look at her policies and decisions. At the same time, it’s important to address the growing concerns and what might have gone wrong.
So, what’s really happening? Is she truly leading the economy into trouble, or is the criticism exaggerated? Let’s break it down and see how her actions have shaped life for ordinary Indians.
Spoiler alert: This is not going to be pretty.
1. Decline in GDP Growth
a) 2019-2020: The First Signs of Trouble
India’s GDP growth dropped to just 4% in 2019-2020, the lowest in ten years. Before this, the economy was growing at around 7% every year. Many think this was part of a slowdown that started in 2018, but this year felt different.
Several things went wrong at once. Exports fell, banks struggled to lend money, and manufacturing took a big hit. Toward the end of the year, COVID-19 started to appear, adding more pressure. While these problems weren’t entirely under the government’s control, people believe better planning could have helped soften the blow.
b) 2020-2021: The COVID Crash
This year, the economy hit rock bottom. It wasn’t just slow growth—GDP shrank by 7.3%. This was one of the worst years for India’s economy.
Lockdowns stopped almost all activity, supply chains broke down, and people stopped spending money. The government chose to focus on saving lives, which was the right call at the time. However, some argue more creative solutions could have reduced the economic damage.
c) 2021-2024: A Lopsided Recovery
Things started improving in the next three years, with GDP growth hitting 8.9%, 7.2%, and 8.2% in these years. But this recovery wasn’t as strong as it seemed.
Most of the growth came from just a few areas like construction and finance. Sectors like manufacturing were still struggling to bounce back. On top of that, inflation and global issues like the Russia-Ukraine war made things harder for the economy.
Even after this recovery, the average growth since the pandemic is only 4.5%, much lower than before. Critics believe that while the numbers look good on paper, the benefits haven’t been spread evenly.
If you compare the economy before and after Sitharaman took charge, the difference is clear. The pandemic and global issues played a big role, but many feel her policies haven’t done enough to fix the deeper problems.
2. Mishandling of Inflation
Inflation in India was at an average of 4.17% between 2015 and 2019. But in the last four years, it has jumped to almost 6%. This increase may look small, but it has badly affected families. Salaries have not grown enough to match the rising prices, forcing people to spend more and save less.
For the lower-middle class, the impact is even worse. They spend almost 90% of their income on essentials like food, where prices have shot up by double digits in some cases. This leaves them with little to no savings and forces them to cut back on basic needs.
If inflation continues to rise without proper control, it will reduce the purchasing power of the citizens and harm the country’s economy further.
3. Tax or Theft?
When we talk about taxes in India, it’s like the most dreaded topic—right up there with the “cricket World Cup loss” (We all know how that felt). Now, don’t get me wrong, I’m not saying taxes are the problem, but… they sure feel like they’re bleeding us dry.
But the tax rate is not the main villain here. The income tax in India caps at 30%, which doesn’t sound too terrible, right?
Compare that to the US at 37%, Australia at 45%, and many European countries where taxes can go over 50%. The numbers look fine. So what’s the real problem?
The Real Problem: Few Taxpayers, Poor Utilization
Let’s break it down. India has one of the lowest rates of tax contributors, with only 2.2% of the adult population paying income tax. Think about that—only 2.2%. Meanwhile, in countries like the US, France, and the UK, more than half the adult population pays taxes.
But here we are, with a vast majority of people simply not contributing, leaving the burden on the same few. It’s like milking the same cow until it just can’t take it anymore.
The government’s focus seems misplaced. Instead of figuring out ways to bring the unorganized sectors into the system, it continues squeezing the ones already contributing.
As if that’s not bad enough, the salaried class is stuck in a system where taxes are deducted right off the bat. No debates, no questions asked. Meanwhile, business owners and corporates get to play around with loopholes and tax-saving tricks. Isn’t it just a little unfair?
The Harsh Reality of Services (Or Lack Thereof)
Let’s talk about where all that tax money goes. It’s not getting us better roads, hospitals, or public services. In fact, it’s just slipping through the cracks of a bloated, corrupt system. Raghav Chadha, in one of his speeches, summed it up perfectly: “We pay taxes like Europeans, but get services like sub-Saharan countries.”
Public schools, hospitals, and rationed food are far from what we’d expect after working hard to pay taxes. The middle class is struggling with high costs. They fund those services that they hardly make any use of.
Then there’s the GST disaster. The inconsistencies have turned even the smartest people into hair-pulling experts. Take ACs, for instance. Is it still a luxury? Apparently yes, because the government slaps a 28% tax on it.
And let’s not forget the bikes. These two-wheelers are a necessity for most of us, especially in rural areas, but the government has decided they’re a luxury too. And 28% GST? Seriously?
And what is the effect of these absurd taxation policies? Millionaires are packing their bags and leaving for countries with better tax policies. Why? Because the tax system in India isn’t just harsh, it’s borderline oppressive, with very little return for their contributions.
So while the middle class gets overtaxed and under-served, the rich are finding ways to live it up in other countries. It’s no surprise, really—wouldn’t you leave too if the system treated you like a walking ATM?
4. Lack of Transparency and Accountability
When it comes to managing a country’s economy, one thing is clear: accountability and transparency are non-negotiable. Sadly, when it comes to Smt. Nirmala Sitharaman, these values seem to be missing in action.
Dodging Questions Like a Pro
- In 2019, during her initial term as Finance Minister, she was asked by Lok Sabha MP Supriya Sule about the rising bad loans and problems faced by onion farmers. Instead of addressing the real issue—the decline in onion production—she casually responded by talking about her own personal habits regarding onion consumption, stating, “I don’t eat a lot of onions and garlic.” A response completely out of context and utterly unhelpful for the farmers struggling on the ground.
- A stockbroker once questioned the Finance Minister about the taxes that retail investors face, including CGST, IGST, stamp duty, STT, and long-term capital gains tax. He explained how the Centre seemed to be earning more from the brokers than the brokers themselves, and therefore was like a sleeping partner. The Finance Minister’s response? “A sleeping partner cannot answer sitting here.” This is the person in charge of managing India’s economy—an answer as dismissive as it is uninformative
Illogic Statements
- When questioned about the poor performance of the auto sector, one might expect a reasoned response. Instead, the Finance Minister’s explanation was that people were now opting to hail cabs.
- When asked about the weakening of the Indian Rupee, Smt. Sitharaman casually remarked that the rupee wasn’t depreciating; rather, it was the dollar appreciating.
- One of the most shocking comments came after a young 26-year-old lost his life due to work pressure. Instead of showing empathy or offering solutions to prevent such tragedies, the Finance Minister suggested that women need to work harder and have more faith in God.
Instead of leading with clear, accountable actions, the Finance Minister seems more focused on evading tough questions and responding with arrogance. At the heart of the issue is a lack of transparency and maturity in the answers provided. This doesn’t just harm the economy—it creates a deeper disconnect between the government and the people.
5. Falling Investor Confidence
Investor confidence shows how healthy an economy is. When foreign investment starts to decrease, it’s a warning sign. Let’s understand why foreign investors are leaving India.
Declining FDI Flow
India’s share of foreign investment has decreased in recent years. In 2020, it was 6.5% of the world’s total. But by 2023, it had dropped to 2.1%. India used to be the 8th most popular country for foreign investors. Now, it has fallen to 16th place. This is a problem for the Indian economy.
The amount of foreign investment in India fell by 62% in the last financial year compared to the year before. This is the biggest drop since 2007. It shows that people are worried about investing in India.
Half of all foreign money invested in India goes to just two states, Gujarat and Maharashtra. This means that foreign investment is not spread evenly across the country, which raises questions about whether it’s sustainable and if everyone in India will benefit from it.
Key Factors Behind Falling Confidence
Three important reasons are causing investors to lose interest:
- Ease of Doing Business: India faces issues with red-tapism and corruption. This makes it hard for businesses to run smoothly. Even after reforms, dealing with officials and authorities is necessary, and many expect bribes. This situation discourages both local and international investors from investing in India.
- Exit from Trade Agreements: The government took India out of some important trade agreements. One is the Regional Comprehensive Economic Partnership (RCEP) with China. This was mainly done because of trust issues and concerns about India’s growing trade deficit with China. This may protect Indian businesses, but some foreign investors are worried about how steady India’s trade policies are and how open they are.
- Free Trade Agreements (FTAs): India has signed FTAs with countries like Australia and the UAE. It is also trying to make similar agreements with other countries. This allows foreign goods and services to be sold in India. But it also means that foreign investors may not need to invest directly in India. This lowers the amount of foreign direct investment because businesses can sell their products in India without having to set up operations here.
The COVID-19 pandemic slowed down foreign direct investment (FDI) in India. But it’s not the only reason. The government’s policies, such as trade agreements and ease of doing business, have also played a role. These challenges make India less attractive to investors. If not fixed, they could hurt the economy in the long run.
Should Nirmala Sitharaman Be Replaced as the Finance Minister?
After everything discussed, it’s tempting to say that replacing the Finance Minister is the solution. However, that’s not how politics work. The real decisions are made by the Prime Minister and his team, with the Finance Minister merely formalizing them. Even if a change happens, it wouldn’t bring much relief unless the entire government shifts.
The BJP controls the Cabinet, and unless the Finance Minister defies them, she’s unlikely to be replaced. Her term runs until June 2028, and if she continues to toe the party line, re-election is possible. The truth is, to see real change in the finance sector, we’d need a shift in the entire government. But, with no strong alternative, we’re likely stuck with her.
Even with all the challenges, Sitharaman did a good job handling the economy during tough times like wars and pandemics. Cutting taxes for the middle class sounds good, but it’s not as simple as it seems. The government would need to find a different way to collect taxes, and that might not be popular.
Ultimately, replacing the Finance Minister alone won’t solve the broader issues. It’s a problem that needs a more comprehensive change.
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