Afia Ambreen
Ironically, Indian Prime Minister Narendra Modi led his National Democratic Alliance (NDA) to power in May 2014 on the promise of restoring India to a path of high economic growth, ending economic mismanagement, creating millions of jobs and rooting out corruption. However, Three years and four months on, it’s the Indian economy and the perceived failure to create a sufficient number of jobs that’s looming as the Achilles’ heel of the Modi government. The current account deficit (CAD) hit a four-year high in the same quarter at 2.4% of gross domestic product (GDP) despite benign oil prices that have cushioned government finances. Congress vice-president Rahul Gandhi said on a visit to Princeton University in the US in September that his party had lost the 2014 election because it had failed to create jobs and the Modi government had failed, too, on the jobs front.
In this context, the heads of two companies that are considered yardsticks of the Indian broader economy have recently spoken out about the problems they are facing. Hindustan Unilever chief executive Sanjiv Mehta said in a presentation to investors that rural demand for its products has been weak because of the lingering effects of demonetization as well as the farm crisis. Larsen & Toubro group executive chairman Anil Naik said that private sector companies are not in a position to launch new projects because of the excess debt they have on their balance sheets. Meanwhile, from within the ruling Bharatiya Janata Party, Subramanian Swamy has warned that the Indian economy could be heading for a crash, while Yashwant Sinha has written a scathing article on Union finance minister Arun Jaitley.
While the Indian 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. However, the socio-economic indicators of Indian society do not allow India to have a huge defence budget. The poor condition of the agriculture, education, unemployment etc has exposes its fake economic progress. Paradoxically, there only a false sense of economic growth is spreading throughout India notwithstanding the reality. According to a survey conducted by ‘BBC World’ almost half of all Indians feel that their country’s economic ‘miracle’ has done nothing to benefit them or their families. The survey revealed the growing sense of division in Indian society between the newly affluent middle classes and the socially disenfranchised rural poor.
On the other hand, 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.
Moreover, the percentage of inflation is much higher than what is projected at the national level by the Indian Government. For common man, inflation means rise in prices of wheat and flour. The poverty stricken people are committing suicides in the country. The Indian Government failed to provide employment to its vast population. According to the Minister of Labour and Employment the enrolment of the unemployed in the Employment Exchange in 2016-17 was 79 Lakhs against the average of 58 Lakhs in the past ten years. The quality of education is also not satisfactory, which is indicative of Indian government’s ignorance towards this sector. According to a study, 38 percent of the children who have completed four years of schooling cannot read a small paragraph with short sentences meant to be read by a student of class II. The number of people living in slums in India has doubled in the past two decades. The ballooning slum population is also an evidence of the Government’s failure to build enough houses and other basic infrastructure for its urban poor, many of whom live without electricity, gas or running water.
It is worth mentioning that India is in negative growth mode. Industrial production is down for the first time in two decades. Export fell by 20 percent and at least 1.5 million officially employed workers are expected to lose their jobs within this quarter. Apart from the industrial sector, the agricultural sector despite being the back bone of Indian economy viewed a decline. The agricultural growth of 3.2 observed from 1980 to 1997 decelerated to two percent subsequently. This was due to low investment, imbalance in fertilizer use, low seeds replacement rate, a distorted incentive system and low post harvest value. There is a need that India should first provide basic amenities such as clean water, food and housing to its citizens in order to become a truly global player which seems not possible in near future.
