In the last six months or so, the Modi government has supposedly been paying close attention to the sinking economy, with a flurry of meetings, announcements of freebies to corporates, fervent assurances to markets and budget shenanigans to supposedly keep the deficit in check and make foreign investors happy. What is the result of all this huffing and puffing? Zero, as far as one can make out from the numbers. And, worse, if one ventures out and talks to people in distress.
Combined with rampant joblessness, unbridled price rise is a double whammy for the people. But the Modi government has so far been unable to check either of them. In fact, all other indicators of the economy’s health are in the red: exports have fallen for the sixth month in row and imports for the tenth month; bank credit growth decelerated from 14.8% at end January 2019 to 7.1% in January this year; and the index of industrial production remained more or less stagnant. This is the bottom line for all the “efforts” being made by the government.
Unemployment Continues to Rise
Latest data from Centre for Monitoring Indian Economy (CMIE) says that overall unemployment rate was 7.3% on February 14, according to weekly estimates. It has been running above 7% for about a year now, sometimes crossing over 8%.
But if you break it up into urban and rural, the picture is even more dire. Urban joblessness was at a staggering 9.3% this February, while rural joblessness had improved slightly and stood at 6.6%. See chart below.
From 4.9% in May 2017, urban joblessness has steadily increased to the over 9% range. This is causing immense discontent among urban youth, reflected in, for instance, the bulk of youth voting against BJP in the recent Delhi Assembly elections, according to one survey.
In rural areas, too, joblessness has increased similarly from 3.7% in May 2017 to the present level. In case you think that the rural jobs situation is better – think again. The lower joblessness figures for rural areas is not because there are more productive jobs available there. It is because agriculture has the ability to absorb more people without any increase in production. If a family is working in the fields, one more member joining them doesn’t add to their output. They continue to share the same income, but with smaller shares. A survey will find the additional one person “employed” but actually he/she represents disguised unemployment. It’s a marker of distress, not better employment.
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The same person would have been declared “unemployed” in a city because one cannot get absorbed like that easily in urban occupations, unless it is some self-employed, informal occupation. And, the unconscionable levels of joblessness in urban India are a living testimony for utter failure of Modi’s economic policies.
Prices Are Now Zooming Up
The downward momentum that is pushing more and more families into poverty has another component: inflation or price rise. In the past one year, family budgets have been devastated by galloping prices, especially of food items. See chart below.
In one year, general inflation (all commodities and services) has risen from 2.57% to a painful 7.59%. But note the red line in the Chart – price rise of essential food items has sky rocketed from a mere -0.07% to a deadly 11.79%. All these numbers (available on the Ministry of Statistics site) represent year on year changes – that is, percentage increase over one year. Prices are now at a six-year high.
The effect of this is that without any increase in wages or salaries, higher prices would lead to further immiseration. Families have to cut their spending on food items, and various other things to survive.
Freedom for Rich, Strife & Violence for the Poor
In fact, it seems that they are not really concerned with the people’s condition, their distress. They continue to dogmatically stick to policies of restricting government expenditure, giving huge concessions to corporates (both domestic and foreign), do away with protective labour and other welfare laws, and hollow out the public sector. These are policies meant to fill the coffers of the rich, under the fig leaf of the theory that something will trickle down to the people.
As far as the people are concerned, the only thing Modi and BJP can think of is RSS prescriptions. In a macabre coincidence—or was it a thought out move?—ever since the economy started sinking last year, the Modi government has unleashed a barrage of moves aimed to sow divisions in people. These include abrogation of Article 370 and later, the changes in citizenship laws to discriminate against Muslims, and proposing the hated National Register of Citizens (NRC). That these RSS prescriptions also fulfil the sorely needed diversion from economic devastation is again, not a coincidence.
In short, the Modi government’s solution of choice for the economic crisis is this: aazadi for the rich to exploit and make profits, while the suffering people can fight amongst themselves. But, as Delhi elections showed, the people may be wiser than what Modi and Shah think.
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