Three Years of Modi raj: A Complete Economic Mess

Cs logo Fri, 16 Jun 2017

Three Years of Modi raj: A Complete Economic Mess

With a series of tall promises for ‘achhe din’, made in LS polls, Narender Modi led BJP grabbed the power with thumping majority. This regime has now completed more than three years which is fair enough time to examine the progress on those promises. Growing social disharmony and dismal economic performance are eluding the common people away from the dream of ‘sabka saath sabka vikaas’. The thoughtless and autocratic economic decisions undermining the institutional sanctity by the Modi government has created a complete economic mess. The government’s launching of new policies, new catchphrases, almost every other month, that’s buzzing with buzzwords and mantras, and is populated with cabinet ministers with a penchant for acronyms has failed terribly to make any tangible economic impact. Whether it’s demonetisation, which impacted India’s poor and lower middle classes the most, robbing them of hard earned cash and source of livelihood, hitting the informal sector so bluntly that the GDP growth rate dipped by two per cent. The downward slide in economic growth, falling private investment and high unemployment rate are the gross indicators reflecting utter failure of demonetisation demon and various flagship schemes. The recent CSO data speaks of horrors of economic sufferings with a major dip in the GDP growth rate in fourth quarter 2016-17. India’s economy grew at 6.1 per cent from January to March 2017, slowing from even the provisional 7.1 per cent that was estimated in January 2017 by the government. While the gross domestic product growth rate was 6.1 per cent, the gross value added growth (GVA), that’s revenue minus indirect taxes, slowed to 5.6 per cent in Q4 compared to 6.7 per cent in Q3. In the same quarter last year, the GVA was 8.7 per cent. The GDP investment graph has dipped sharply to a low of 26.7 percent, and had it not been for the government’s own spendings, the GDP growth rate would have been even worse. Economic analysts and financial experts have ascribed much of the current crisis to the impact of demonetisation diktat on November 8, 2016. On November 23, 2016, in his Rajya Sabha speech, former PM Manmohan Singh had made a passionate plea warning us of the imminent impact of demonetisation, which he described as a “monumental mismanagement, legalised plunder and organised loot”. One of the soundest economic brains of our times, Singh cautioned that GDP rate would decline by about two per cent, and he has been vindicated by the Q4 statistics.

The investment activity is closely linked to the job creation, the biggest sore point for Modi. India has around 600 million people below the age of 35 years which requires 10 million jobs creation every year to reap up the benefit of Modi’s much talked demographic dividend for the country. It has to be remembered that jobs were one of his biggest poll promises. India’s unemployment rate has gone up from 3.8 per cent in 2011 to 5 per cent now despite two consecutive years of highest FDI indicating the failure of Make in India in jobs creation. The construction industry which is one of the largest employment generators in the country has suffered a contraction of 3.7 percent in Q4, 2016-17. This implies loss of millions of jobs for the nation’s workplace. The developments in the IT sector is spreading more gloom as it is witnessing layoffs on a major scale for the first time since 2008-10 downturn. As per the World Bank Data, India’s youth employment rate was only 32 per cent in 2015, compared to a healthy 45 per cent in 1991. The total number of jobs created in the first three years of the BJP government, calculated by adding data from the eight major sectors included in the labour ministry’s quarterly employment surveys and data on the PMEGP until October 2016 would be 1.51 million which is nearly 39% less than the 2.47 million created during the three previous years, based on the same data sources. After three years, one can safely conclude that Modi has miserably failed in creating enough jobs in the economy.

The principal appeal of Modi and the Hindutva forces lay in their ability to exploit the sense of insecurity of these unemployed youths and creating a myth of reviving the golden age achhe din. Rising youth unemployment crisis coupled with jingoism of narrow nationalism is going to be a perfect recipe for turning our country highly susceptible to this youth-bulge related civil strife.

Pre-election, the rupee was a major talking point because of the widening current account deficit. The UPA government came under severe criticism from the BJP and Narendra Modi, then Gujarat chief minister. After Modi took over, the currency has not been in the pink of health throughout. From 58.78 against the US dollar on 16 May, the rupee fell to the record low of 68.87 on 24 November 2016.

India which stood second largest world beef exporter, with more than 20 percent share last year, is badly affected due to new cattle trade restrictions which once again has hit India’s poor farmers and the Muslim/Dalit traders in cattle by-products, such as meat, leather, bone ash fertilisers and many others. This, in addition to depriving these communities of their livelihood has exposed them to vandalism by cow vigilantes on one hand and indirect monopolised gain to some favoured one in the trade on the other hand. During the 2014 election campaign, Narenndra Modi promised that he will ensure that farmers get 50 percent profit on the crops they produce, if they come to power which again proved to be a mere ‘jumla’. Farmers distresses are growing despite good monsoon last year causing increased number of suicides. The recent firing on protesting farmers in Madhya Pradesh wherein five farmers were shot dead, is the fallout of BJP’s apathy towards the agrarian community.

Currently, the country is totally caught in the quagmire of headless and autocratic economic policies blended with hollow and narrow nationalism which instead of reaping the benefits of demographic dividend is creating the youth bulge and social disharmony. The economic logic that’s guiding this government is that of xenophobic exclusion, and not one of pluralist and secular inclusion. Hence, even though it wants to mostly reap the dividends of the policies that the UPA government sowed, including the GST despite the flabby current structure, the Modi government is blinded by its antipathy towards those who don’t conform to its political and economic jingoisms.

 

Author is an Assistant Professor in ARSD College, University of Delhi