You are here

Modi ignoring the two elephants in the room

It's about jobs and the economy, but the BJP is singing the nationalism tune.

BT_20190508_HMIND_3774903.jpg
A worker in a shop selling election materials in Delhi. India has 845 million people under the age of 35, and about a fifth of them are excluded from education, training or jobs. Unemployment and the rate of economic growth are both worsening.

THE election campaign run by India's Prime Minister Narendra Modi and his ruling Bharatiya Janata Party (BJP) is neglecting the burning issues of massive unemployment and declining economic growth - both of which have worsened in the latest data released this month.

The omission has been noticed by the one constituency the party has alienated - the youth.

It is alarming that many of the 175 million young people - more than 27 per cent of them - are excluded from education, training or jobs. They are publicly asking questions about their future in village and town hall meetings. They have neither received a proper answer to their grievances nor an assurance that help is on the way.

Young Indians, in particular, are anxiously awaiting the election results due to be announced on May 23. Their economic future may depend on it. There are 650 million Indians under 25 years of age, and 845 million youth under 35. They comprise the so-called "demographic dividend" that has not yet been achieved.

sentifi.com

Market voices on:

But politics seems to have intervened to deny them a solution. They will have to wait longer because the re-election prospects of Mr Modi's ruling party have turned gloomier with unemployment and economic growth both worsening in a double whammy to the party, according to the latest data.

The ruling party has carefully avoided engaging in a public debate on the economy or jobs because it is being held accountable for creating these crises.

GOODWILL SQUANDERED

In fact, the BJP has squandered much of the goodwill that brought it to power with a massive majority in the last parliamentary elections in 2014. The current general election is becoming a referendum on Mr Modi, who faces sharp criticism for economic mismanagement.

The most recent unemployment figures released by the influential Centre for Monitoring Indian Economy (CMIE) on May 1 showed that India's jobless rate rose to 7.6 per cent in April, the highest since October 2016, and up from 6.7 per cent in March. The CMIE had described the lower unemployment rate in March as just a blip, but it has begun climbing again.

The unimpressive data signals bad news for Mr Modi, particularly during the ongoing election season ending on May 19. His BJP is being held accountable not only by opposition parties, but also by several senior party leaders such as former ministers Yashwant Sinha and Arun Shourie, who have publicly questioned the prime minister's performance.

Confronted by multiple economic failures, Mr Modi has tried to shift the focus of his campaign away from the economy to issues of nationalism and security, which appear to be playing well with the right-wing Hindu nationalist base of his party.

But young people and loan-strapped farmers are demanding solutions to their economic problems. The massive extent of the jobs crisis was revealed last December, when unemployment figures were leaked to a newspaper; the data put the jobless rate at its highest level in at least 45 years for the financial year 2017-18.

Soon afterwards, the CMIE said in a report released in January that nearly 11 million people lost their jobs last year, after the demonetisation of high-value banknotes in late 2016 and the disorderly rollout of a Goods and Services tax in 2017, which hurt millions of small businesses that still have not recovered today.

On its part, the government defended itself in parliament this year, stating that it did not have data on the impact of demonetisation on jobs.

Then there's the new GDP data that is further damaging the ruling party's image. The Ministry of Finance declared in its monthly report for March, released early this month, that real GDP growth has decelerated, growing at a six-quarter low of 6.6 per cent in the third quarter of the 2019 financial year because of sluggish expansion in agriculture, manufacturing and government spending. Investments, however, continued expanding at a healthy rate.

The government has lowered its estimate of economic growth for the first and second quarters of the 2019 financial year to 8 per cent and 7 per cent respectively, from the earlier estimate of 8.2 per cent and 7.1 per cent respectively. The government's Central Statistics Office (CSO) expects the economy to grow slower at 6.5 per cent in the fourth quarter.

The CSO had revised downwards its forecast for the full year's growth to the lowest in the Modi government's five-year term - 7 per cent in the 2019 financial year because of slow growth in agriculture, mining and services such as hotels and transport.

After the release of depressing growth numbers, the normally reticent former Prime Minister Manmohan Singh declared on May 5 that the Modi government had put the economy in "dire straits" owing to a "lack of economic vision".

Dr Singh - a Cambridge and Oxford University-trained economist and a former governor of the Reserve Bank of India - stated in an interview with an Indian news agency: "The finance ministry's latest monthly report now reflects that the country is headed for a slowdown and it has revised the GDP growth figures for this quarter (January-April) to just 6.5 per cent.

"I have no qualms in saying that the Modi government has left our economy in dire straits," he said.

FDI AT FIVE-YEAR LOW

"The current government boasts of getting investment, but the reality is that FDI (foreign direct investment) growth is at a five-year low. Core (infrastructure) sector growth is at a two-year low. The rupee has become Asia's worst-performing currency. All these are a cause of serious concern," lamented Dr Singh, who ushered in economic reforms in India in 1991 when he was finance minister.

"Had the Modi government followed the path shown by the previous governments of high economic growth and rapid development, the country could have eliminated poverty in the last five years. Instead, the government has inflicted disruptive and unnecessary decisions like demonetisation on the economy. This is born out of a lack of economic vision or understanding the dynamics of our economy," he said.

In contrast to the BJP, Dr Singh noted, the Congress party espoused an open and liberal economy based on sustainable development, and reduction of inequality as well as provision of welfare to poorer people through inclusive growth.

In another setback to the ruling party, industry expanded at its slowest pace in eight months in April as new orders and output plunged just as voting was starting last month. There is growing anxiety among manufacturers over the kinds of policies an incoming government would adopt.

Many Indians find it perplexing that the BJP is persisting with its campaign rhetoric about Hindu nationalism and its plans to build temples instead of telling voters how it will create jobs and repair the economy.

  • The writer is the editor-in-chief of The Calcutta Journal of Global Affairs