President Ram Nath Kovind’s address to Parliament yesterday, which was essentially the Centre’s assessment of various policies, seems to have provided the ‘India Shining moment’ for the Narendra Modi government as it enters the final leg of its five year tenure. The broad message from the president’s address was that the Modi regime had delivered inclusive growth by deepening “economic democracy”.
In particular, he claimed that inequalities have reduced in the last few years, despite a recent Oxfam report that showed wealth concentration got skewed even more in favour of the rich in 2017, with 1% cornering 73% of all newly created wealth that year. The president also cited the opening of 31 crore Jan Dhan bank accounts as proof of economic inclusion and decentralisation.
However, moments after Kovind’s speech, came the Economic Survey which spoke some home truths, even contradicting claims made by the government. The survey candidly put out data showing how farmer’s real incomes were stagnant over the past four years and how rural wages had turned negative in real terms for a good portion of 2016. This clearly did not square with the claims made in the President’s address about reduced inequalities under the Modi regime. How can inequalities reduce if farm incomes and rural wages in general have remained the same over the last few years? You don’t have to be an economist to understand this.
And, all praise for Chief Economic Adviser Arvind Subramanian for not making huge leaps of interpretation on the current jobs scenario. In an indirect reference to recent data and a controversial debate kicked up by the number of additional organised sector workers registered in 2017-18 under the EPFO/NPS/ESIC schemes, the survey (which also uses GST data) merely argues that formal sector employment is possibly being under-counted in this country. Subramanian, however, is careful not to endorse the prime minister’s stupendous claim that 7 million new formal jobs were created in the organised sector in 2017-18 after the devastations caused in the small and micro sector by demonetisation and a messy GST.
By not mentioning any figure for new employment in 2017-18, the chief economic adviser smartly steers clear of the current controversy. He does this simply because he can’t compromise his own professional reputation at the altar of hyperbolic claims by Modi. It is these hyperbolic claims, some of which were made in the President’s address, that makes one wonder whether Modi’s “India shining moment” has arrived.
I choose the term “India shining moment” carefully because economic data during the five years of NDA I (1999-00 to 2003-04) as outlined by the Planning Commission, shows uncanny similarities in the broad macro numbers between then and now. The-then NDA government began with a GDP growth of 8% in its first full year of governance (1999-00). In the subsequent three financial years (2000-01 to 2002-03) there was a sharp decline in GDP growth rates to about 5% or less. This fall in GDP growth was mainly caused by a collapse in agriculture growth rate to zero in this period which is what is also happening with the NDA-II government now.
However, in the final year of NDA-I, GDP growth came back to 8%, giving rise in part to the “India Shining” campaign. Subramanian’s latest Economic Survey also predicts a sunny outlook for India now, projecting 7%-7.5% growth for the coming fiscal.
The India Shining campaign – launched back then by L.K. Advani and Pramod Mahajan and also characterised by improved stock market performance and general contentment amongst the well-off – completely disregarded the distress in the rural and agriculture sector experienced for most of the five years of NDA-I.
One fears a repeat of history may be happening now.
The president’s address clearly indicates that the Modi government is entering the India Shining bubble a year before the start of 2019 Lok Sabha election campaign.