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A road paved with surprises — why Indian economy’s steady course can’t be taken for granted

As the economy recovers from Covid, the lack of employment, a healthcare system in shambles and a poor education system could damage its long-term prospects.

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Two things have started looking like certainties for India. One is its continued rise as an economic power in an otherwise troubled global economy. The second is the continued dominance of the Bharatiya Janata Party (BJP), with assured electoral victories and, failing that, post-election shenanigans to capture power. A sub-set of the second is the growing dependence of the BJP on Narendra Modi as a super-sized vote-getter, almost on an Indira Gandhi scale, and on the election-management expertise of Amit Shah, the no-nonsense home minister.

Sometimes, though, it is just when something looks like a certainty that a surprise catches you unprepared — as Xi Jinping has just discovered in China and the ayatollahs in Iran.

As recently as in October, China’s Communist Party strongman had to all appearances used the National People’s Congress to assert control of both China’s agenda as well as the choice of its top decision-makers. Then about a dozen deaths in a building fire in remote Xinjiang sparked larger flames of protest across the country — in a one-party state that is supposed to have achieved total surveillance and social control.

Some protestors called for Mr Xi to step down. In Iran, similarly, more than four decades of ayatollah rule has been shaken by protests over the death in custody of one woman.

This is different only in scale from the overnight but sustained protests in India against new laws on citizenship and agricultural marketing. Nevertheless, the Modi government was forced to beat a tactical retreat on both. There exists today the potential for other conflicts — over language policy, for instance. And there is tension between the central government and a so-far pliant Supreme Court, and separately with non-BJP ruled state governments, which see few signs of the once-promised “cooperative federalism”.

Such worries are unlikely to deter the Modi government from its goal of subjugating autonomous voices — through, say, a friendly businessman wresting control of that rare specimen, an independent TV news channel. This is even as the regime continues to encode its Hindutva agenda in every sinew of the system (like re-writing history), stitched on to the skeletal framework of a still unchanged Constitution.

Any worries about China- or Iran-style eruptions may be quietened if Mr Xi rides out the storm, as might the ayatollahs despite sustained feminist protests. The point though (and therefore the danger) is that the proximate cause of protests against overweening governments may be different from the reasons for underlying disaffection. The wise would be wary of surprises just when everything seems to be going your way.

Also read: Mean or nice? It’s time for India to decide what kind of economic policy it wants to follow

From that perspective, what could damage the economy’s long-term prospects when they seem so assured? Historically, the economy slipped on an oil slick, or dried up in a drought. Usually, these set off an inflationary spiral accompanied by a growth shock. Creditably, the system developed some resilience against these traditional risks. Then the pandemic hit and extracted a heavy price, not just with its human toll but also economically through two years of stagnation.

As the system emerges from the trauma and the country shifts its sights to long-term targets, attention must turn to the underlying weaknesses that could scupper ambitious aspirations — like the lack of employment for tens of millions, many of them condemned to being poor quality human material.

That is why the finance minister’s statement, that she will focus in her forthcoming Budget on health and education, is welcome.

A broadening of the so-far dual emphasis of investing in the physical infrastructure while keeping the poor quiescent through hand-outs, is overdue. India’s public health care system is mostly in a shambles. Were it not so, the pandemic’s toll would have been smaller. Meanwhile, the public school system creates matriculates and even graduates who are mostly unfit for good jobs. If the sustained under-investment in health and education is about to change, it signals a new awareness of the problem.

What remains then is unemployment among the sadly unemployable, particularly the young. Amidst growing inequality, this carries the risk of a rash breaking out in some unexpected way. So the government had better work out solutions other than what Marx had termed the opium of the people.

By special arrangement with Business Standard

Also read: Optimism in short supply — why India’s economy might win the sprint, but lose the marathon


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