Sleepless in Modi’s Economy
By – Latha Jishnu
WHO is sleeping well in India in these days of economic gloom and the terrifying spectre of joblessness that is spreading across the country? It’s an intriguing line of inquiry sparked by Prime Minister Narendra Modi’s astounding response to worries articulated in public by elder members of his Bharatiya Janata Party (BJP) as well as economists and commercial organisations.
“There are some people who sleep well only after they spread a feeling of pessimism. We need to recognise such people,” he declared at a national meeting of company secretaries. He dismissed the doomsayers as just a ‘handful of people’ who were painting a negative image of the economy based on the slowdown experienced during just one financial quarter. As the prime minister put it, the fuss over a decline in growth to 5.7 per cent in the last financial quarter was unwarranted since it had fallen to much lower levels below that during the previous Congress rule. Modi is right about that. But his response is revealing of the way he and the BJP regime deal with criticism even within the party.
Firstly, it uses fudged facts — the decline in the growth has been consistent over six quarters — and neatly sidesteps inconvenient truths (such as the lowering of growth rates by everyone from the IMF to the Reserve Bank of India). However serious the issue, the doctrine of denial and deflection relies on ad hominem attacks and uses the abrasive language of the hustings to demolish critics. Above all, the rhetoric is dangerously delusional and sinks to ludicrous levels as when the BJP party chief claims the dip in growth rate is due to ‘technical reasons’ without explaining what these could be.
As growth rates dip and industries fold up, unemployment remains a terrifying prospect for young India.
The hard truth is that India has slipped badly. From being the poster boy of the big economies in 2015 when it was the world’s fastest-growing big economy India is turning into a laggard, problem child whose fundamental deficiencies are coming into the spotlight. These deficiencies have been made worse by the economic disruption caused by the chaotic demonetisation exercise last November and the near standstill resulting from the GST, a poorly planned and implemented national tax system. If one needed a strong pointer to the consequences one has to look no further than the industrial hub of Surat in Modi’s home state Gujarat where entrepreneurs are pulling the shutters on industry and putting their money into speculative finance.
While the government is now stirring itself to sort out the GST mess it continues to pretend that all is well with economy. The growth rate of 5.7pc in the second quarter of the 2017 financial year is not a bad thing as Modi claims, but as Yashwant Sinha, a former BJP finance minister, reminded Modi uncomfortably in a recent newspaper article, the current figures of growth are all based on statistical fudge by changing the methodology for calculating the GDP. If the earlier method was used, the actual growth rate in the last quarter would be a mere 3.7pc!
Sinha’s article encapsulates what economists have been pointing out over the past year. “Private investment,” he says, “has shrunk as never before in two decades, industrial production has all but collapsed, agriculture is in distress, construction industry, a big employer of the work force, is in the doldrums, exports have dwindled, sector after sector of the economy is in distress.…”
So who is sleeping well in India? Clearly, nobody except the fat cats of business who are close to the ruling regime and whose businesses flourish under official protection. For the rest, it appears to be a nightmare from which there is no escape.
Admittedly, there are deep structure problems in the economy which have resulted in the economic mess. But what is also undeniable is that Modi’s capricious economic policies, such as the pointless demonetisation exercise, coupled with his government’s inability to implement the long planned GST — it has been in the making for 16 years — have come as severe blows to the economy and the hopes of a demographically young country. Joblessness is looming large over India keeping awake millions of desperate young people who are finding jobs disappearing at an alarming rate. In industry after industry, from banking to capital goods, in premium sectors such as IT, the job losses are of staggering proportions.
For the young who naively but genuinely believed that Modi would indeed create 10 million jobs every year as he promised in his 2014 election campaign, the awakening has been specially bitter. India’s demographic bulge means that least 12m young people are added to the workforce every year but the government’s record on job creation has been dismal so far and has touched a six-year low. The experts offer no hope of the nightmare ending soon. CIEL HR, a top staffing services firm, says the current scale of the current disruption in white-collar jobs has not happened in the past whereas Teamlease, the country’s biggest recruitment firm, warns the nightmare is not about to end anytime soon. It forecasts a further 30pc to 40pc reduction of jobs in the manufacturing sector.
And the distress is widespread, encompassing agriculture and service, too. For much of this year, farmers have been kept awake by policies that are positively inimical to their well-being, forcing them to agitate continuously, regardless of the bullets and indifference they have met with.
So while economists, industry experts and government official slug it over the figures of economic decline and job losses, academics, parents of the young and society in general are losing sleep over the fallout: the strains on the social fabric of India which has been rent by Hindutva politics. As violent young men, presumably of no fixed occupation, roam the streets looking for soft targets to vent their rage, cattle traders of the minority community and the untouchables of Hindu society have already seen their livelihood disappear in the name of religion. The official crackdown on abattoirs has had a serious impact on the economy with export of leather goods, an important foreign exchange earner, taking a beating.
If anyone is sleeping well in India, it appears to be the government.
The writer is a journalist based in New Delhi.