Prime Minister Narendra Modi is increasingly getting trapped in paradoxes which unravel by the day as electoral politics gets more intense.In a campaign speech in Chhattisgarh, Modi made the grand announcement that the scheme to distribute free food grains to 80 crore poor Indians, which was launched to mitigate the impact of COVID, will be extended for another five years. As is his wont, the PM boasted this was “Modi’s guarantee to the people of India”.There is another guarantee that Modi has been tom tomming in his speeches lately – that India would become the third largest economy during his third term as prime minister. Needless to say in all his messaging to the people Modi talks about his third term as if it is divinely ordained.Now, here is the political economy paradox.PM Modi cannot explain why the fastest growing economy which is poised to become the third largest by 2028 should distribute free food to 80 crore people. Is free ration to be provided for another five years because India is rapidly prospering and entering the Amrit Kaal?On another note, if India is growing fast, why is it slipping further in the Global Hunger Index? The 2023 Global Hunger Index saw India slip four places to rank 111 out of 125 countries. The Modi government pooh poohs the global hunger report but implicitly endorses it by extending the free food grains scheme under the Prime Minister Garib Kalyan Anna Yojana (PMGKY) for another five years.Indeed, it is such stark contradictions which characterise the political economy under PM Modi for close to 10 years now. Ten years is a long time to produce some real outcomes on the ground, whether it be growth, employment, savings rate, private investment, increased foreign investment, exports and so on. On all these counts hard data shows poor performance. But this does not deter the PM and his PR machinery from making astounding claims such as India being the brightest spot in the world economy. In an election season this narrative is blasted via multiple media channels including the social media.But every now and then the paradoxes reveal themselves in all their glory as in the case of extending free food for another five years as a ‘Modi Guarantee’. Another scheme Modi outrightly rejected when he came to power was MGNREGA, the rural employment guarantee scheme which he characterised as a monument of Congress’s failure to produce real economic growth, employment and incomes. Today, sheer irony stares at Modi and his government as 93% of the rural employment guarantee budget has got spent in the first six months of the fiscal itself. Since it is a demand-driven programme, the spending will likely far exceed the budgeted Rs 60,000 crore. Is this the real testimony of Modinomics after 10 years of BJP rule?In 10 years Modi could not guarantee high GDP growth – it is about 5.7% for the past nine years. He miserably failed to deliver 2 crore jobs annually that he promised in 2014. He failed to double farmers’ incomes which is evident when you simply compare the increase in cost of farm inputs with the MSP hikes over 10 years.So he is now guaranteeing free food grains for another five years.The most devastating proof of Modi government’s economic performance or lack of it came last month in the periodic labour force survey for July 2022 to July 2023 released by the department of statistics. The Survey shows a huge increase in the number of self employed which is 58% of the total employed in 2022-23. The total employed in the economy is roughly 500 million plus. The self employed category, largely small vendors and individual service providers mostly in rural India, was only 52% of the total employed in 2017-18.The big increase in the self employed suggests greater growth of low quality employment in the non manufacturing sector. This is evident because one third of the self employed are unpaid workers who join small family run units without any wages. So the proportion of self-employed and within that the ratio of unpaid workers have shot up dramatically in the last 5 years, especially after demonetisation and the pandemic.According to economist Santosh Mehrotra, the number of unpaid workers in the self-employed category has shot up from about 40 million in 2017-18 to 95 million in 2022-23. Mehrotra says such unpaid workers are not treated as employed as per the methodology prescribed by the International Labour Organisation (ILO) which is followed by 92 countries today.This has possibly emerged as the biggest structural weakness in the economy as the labour force survey also shows the average regular monthly wages have fallen by over 20% in real terms between 2017-18 and 2022-23. For self-employed and casual categories, also, the real wages show a fall in real terms.Virtually no growth in average wages in five years clearly reflects a worsening quality of employment. This can be verified even anecdotally when you ask self-employed people like individual service providers in construction or in transport (Uber or Ola drivers) who will tell you their wages are stagnant in real terms even as cost of living has gone up.Stagnant wages also reflect in the lack of purchasing power, especially in rural areas, which is, in turn, manifested in the lack of growth in rural demand for consumer companies like Hindustan Lever, Bajaj Auto, etc. in recent years. Two-wheeler manufacturers like Bajaj Auto selling 30 to 40% less units today than they did five or six years ago is something never experienced before. There is robust consumption in the luxury segments – SUVs, jewellery, electronics, hotels, air travel, etc. – and companies which cater to that segment seem to be doing well.Lower middle class consumption seems at an all time low.The wage stagnation in the labour force survey largely represents the bottom 60 to 70% of the population. It will be interesting to see how PM Modi convinces this lot about his grand narrative of India having entered its golden period of Amrit Kaal. One can put a simple, common sensical question to Modi – how can 80 crore people not be able to afford food grains in Amrit Kaal?
