Indian PM Narendra Modi on the campaign trail in Aurangabad, Bihar state, in October.
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India's former finance minister has attacked Modi's handling of the economy

Criticism has provoked a rare public spat among senior party members

New Delhi CNN  — 

India’s Prime Minister Narendra Modi, who came to power in 2014 with promises to boost the country’s economy, is facing mounting criticism from within his own party amid concerns about slowing growth.

Modi’s Hindu nationalist Bharatiya Janata Party (BJP) won a landslide victory in the last Indian general election, following a high-octane campaign that portrayed the 67-year-old as an economic reformer who would drive growth and create jobs for India’s youthful population.

But the latest reading of India’s GDP showed that growth had declined to 5.7% in the three months to the end of June — the lowest in three years.

Now, as the economy hits the buffers, a veteran leader from Modi’s party who oversaw the Indian economy in the early 2000s has launched a stinging rebuke of Modi’s handling of the current situation, giving rise to an unusually public spat within the ruling party.

In an op-ed piece for the local Indian Express newspaper, Yashwant Sinha, who has twice served as India’s finance minister, made reference to Modi’s humble roots as the son of a tea-seller while blaming his government for the weakness in growth.

“The prime minister claims that he has seen poverty from close quarters,” Sinha wrote. “His finance minister (Arun Jaitley, who has been responsible for the Indian economy since Modi came to power) is working over-time to make sure that all Indians also see it from equally close quarters.”

He also cited a recent report from the State Bank of India, India’s largest public sector bank. “Even the SBI … has stated with unusual frankness that the slowdown is not transient or ‘technical,’ it is here to stay and the slowdown in demand has only aggravated the situation,” Sinha wrote.

Indian Prime Minister Narendra Modi gives a speech during a session of the International Economic Forum (SPIEF) in Saint Petersburg on June 2, 2017.

Government defends record

Sinha’s piece drew a quick response from the government, with India’s Home Minister Rajnath Singh saying that, “in the matter of economy, in the international arena, India’s credibility has been established.”

India’s finance minister Arun Jaitley hit back at bis predecessor Thursday. “I may point out in 2000, 2001, 2002, 2003 were the worst years since liberalization in terms of growth and Prime Minister (Atal Bihari) Vajypayee had to then force (Sinha) out and replace him,” said Jaitley while attending a book launch in Delhi.

Sinha had accused Jaitley of being “a lucky finance minister” who had squandered the opportunities afforded by depressed global crude oil prices.

India’s Railways Minister Piyush Goyal also came to Jaitley and the government’s defense. “There is bound to be some uncertainty when some transformative changes are made. It (the economy) may take some amount of time to absorb these changes but this will pass,” he said, according to the Press Trust of India news agency. “Challenges come but we will stay the course.”

The spat, however, took a decidedly more personal turn on Thursday, when Sinha’s son, Jayant Sinha, who is a junior minister in the Modi government, stepped up to rebut his father’s allegations with a rival op-ed in the Times of India daily.

“These articles draw sweeping conclusions from a narrow set of facts, and quite simply miss the fundamental structural reforms that are transforming the economy,” he wrote.

The younger Sinha went to say that the government’s structural reforms will bring real change. “The new economy that is being created will be much more transparent, globally cost-competitive, and innovation driven.”

Still, as growth slows, many economists have blamed Modi’s decision to scrap high denomination currency notes at the end of last year, as well as the way his government has implemented a nationwide goods and services tax that came into force this year, for intensifying the deceleration in GDP.

“It was two consecutive shocks over a very weak economy, it’s taken a heavy toll,” Mahesh Vyas, managing director and CEO at the Centtr for Monitoring Indian Economy (CMIE), a think tank, told CNN. A recent CMIE study, for example, showed that 1.5 million people lost their jobs in the first four months of this year.