It is instructive to note that the much-publicised cabinet reshuffle by Prime Minister Narendra Modi occurred in the shadow of a two-day RSS conclave in Vrindavan where the Sangh leadership led by Mohan Bhagwat expressed grave concern over the deteriorating state of the economy. There was an elaborate discussion about the after-effects of the twin events of demonetisation and GST, both of which are badly hurting the small-and-micro industry, and also debate about the state of the farm sector where mandi prices have sharply fallen across the board post the rabi harvest partly due to a lack of cash in the mandi system.
RSS leaders, in particular, noted that “a lot of negative feedback” was coming from various quarters about deteriorating output and employment in the economy. As the BJP’s ideological mentors were conducting a realistic appraisal of the government’s economic performance, Modi and Amit Shah were working on a big reshuffle to punish those who hadn’t performed and reward the ministers who had done well. But did he really punish those who, at least in the eyes of the public, hadn’t performed well? That, of course, is another story altogether.
Overall, the reshuffle seemed more like a PR exercise to show the NDA was reinventing itself to deliver the promises made in 2014. Inherent in this exercise was a certain admission that it hadn’t done well in many key areas of the economy which the RSS conclave delved upon in detail. The biggest failure has been on the employment front and the NDA knows fully well that we are seeing the worst employment growth in over two decades. Some tokenism was resorted to by dropping the minister for the department of skill development Rajiv Pratap Rudy.
It is true that the skill development ministry had lost its way and had to seemingly abandon the target of skilling 500 million Indians over five years. Further, an internal review has said only 12% of those actually skilled under the Pradhan Mantri Kaushal Vikas Yojna actually got jobs. It was a scathing indictment of the skills programme. The word on the street is that a massive restructuring of the programme is on the cards.
While Rudy is a convenient scapegoat, the responsibility for the massive job losses caused in the small scale sector, post-demonetisation, should be taken by the prime minister himself. Here is where the sheer hypocrisy of the reshuffle exercise is so visible. Economic growth has tanked by 2 percentage points in the past four quarters. Two percentage points deceleration in GDP growth translates to Rs 3 lakh crore getting shaved off from national income. This erosion in people’s incomes works itself into a viscous cycle of falling employment, lower demand and even lower output. Who is responsible for the near-zero growth in rural wages post-demonetisation? There are no answers.
Frankly, in such a backdrop, the leadership itself must take the blame rather than resort to a cosmetic exercise of a reshuffle. What could the railway minister Suresh Prabhu do if the industry is performing at way below capacity, and as a consequence the railways’ freight growth traffic has stagnated over these past few years? Prabhu’s five-year vision, outlined in the first railway budget, of increasing freight traffic from 1 billion tonnes to 1.5 billion tonnes, looks like a distant dream as industrial growth stagnates. This is a larger structural problem that Prabhu is aware of even though he offered to resign due to a spate of accidents in the railways. However, he has been rewarded by the PM possibly for his efforts to restructure the management of the railways. His new assignment, as minister for commerce and industry, might seem equally difficult because the challenge, in Prabhu’s own words, is to “generate manufacturing jobs by giving a boost to the ‘Make in India’ project”. With private investment stagnating, one is yet to see some $1 billion-plus greenfield projects being actually implemented on the ground.
With only 18 months of the NDA tenure remaining, one can only guess how much fresh investment will come under ‘Make in India’, which has largely remained a slogan so far. As commerce and industry minister, Nirmala Sitharaman too could hardly do anything to boost exports that have stagnated badly for the last couple of years. Our annual exports today are over $30 billion less than what they were in 2014-15. India’s uncompetitive exchange rate is making the prospects for exports worse compared to China and other emerging market peers.
Sitharaman has been rewarded with a promotion as cabinet minister with the defence portfolio. The government is saying she is the first full-time woman defence minister India has got. But the Modi government also has the dubious distinction of not having had a full time defence minister for the an abnormally long period of time.
Agriculture minister Radha Mohan Singh has been one of the worst performers. Agriculture distress is deepening by the day and one has seen very little by way of intervention from the ministry. In fact, the government had been rubbing salt in the farmer’s wounds by asserting that the government is ensuring a return of 39% percent on total costs to farmers. Both Shah and Singh have been peddling some bogus cost calculation in the face of unprecedented farm suicides across India.
The agriculture minister was not dropped possibly for fear that it would be tantamount to admitting the failures on the farm front. This government is in total denial about the state of the small industry, employment and the farm sector. Problems don’t go away simply by not recognising them. And a cabinet reshuffle cannot solve them either.