From the mid-1990s to the early 2000s, magazine covers and countless books were warning the West about the rise of China and India. The elephant-dragon metaphors had become banal. China may be zooming ahead, we were helpfully told, but India with its democracy was the long-distance runner. Jairam Ramesh even coined the shorthand ‘Chindia’.
The promise, no matter how thin, held itself out until the end of the 2000s. Now that we are at the end of the second decade of the 21st century, it is worth looking back and admitting that it’s been a wasted decade. The sense of economic stagnation and gloom that began in 2011 continues even today. Until 2014, we thought it was short-term bad luck. But now, it feels like a morass. Nobody talks about China and India in the same breath. We are back to hyphenating with Pakistan.
India remains the land of great potential where the potential remains unrealised. And it’s about to get worse.
The year 2019 is only two months old but is already turning out to be annus horribilis. As the Narendra Modi government uses national security to make us look away from a serious economic slowdown, it is safe to say that nobody will mourn the demise of the ‘India story’. We will keep consoling ourselves by repeatedly saying that India’s economic fundamentals are still strong but that means nothing to the real world, which is not run by finance wizards.
Also read: Bangladesh’s lesson for India-obsessed Pakistan: Transform war economy into a peace economy
Economy? What’s that?
Neither the finance minister nor the Prime Minister has said a word about the October-December GDP data, which shows India growing at 6.6 per cent, slowest in five quarters. India’s growth rate in 2018-19 is likely to be the slowest in five years. The political leadership is instead busy attacking the opposition as usual.
The growth in ongoing quarter will likely be even slower. For India to do a China, to create jobs and end poverty, it needs to grow at 10 per cent in terms of the new GDP series.
There is almost no indicator that does not suggest a serious, endemic slowdown. Automobile sales, airline passenger traffic growth, fertiliser sales, tourist inflows, demand for finished steel, pharmaceuticals, all show that the 6.6 per cent GDP growth rate can only come through a jugglery of numbers.
Farm income growth is at a 14-year low. Core sector growth – coal, steel, natural gas, cement, crude oil, fertilisers, refinery products and electricity – is at a 19-month low.
That’s how the Indian economy is performing after recovering from the shock of demonetisation and GST. Across the world, the introduction of GST causes a temporary increase in inflation. In India, we have low inflation despite the introduction of GST – another indication of how much the economic activity has stalled.
No wonder unemployment rate was at a 45-year high in 2017-18. And no, the massive election spending we are going to see won’t be enough to prevent deceleration.
Also read: India losing trade battle with China — 80% of two-way business last year were imports
Bullshit vs Lies
In his book On Bullshit, Harry Frankfurt delineated the difference between bullshit and lies. When people lie, they do so because they are aware of the gravity of the truth they want to hide. When they bullshit, the truth does not matter to them. It is incidental.
Usually, when the economy or some aspects of it are doing badly, this is how politicians typically lie. Global factors are at work, they say. Things will get better in three months, and this new scheme will solve the problem in the long run, they add. This is how Manmohan Singh’s UPA-2 used to respond.
That’s lying.
Bullshitting is what the Narendra Modi government has been doing about the economy. So the Prime Minister says he gave India the fastest GDP growth rate in five years. Crores of new jobs have been created, he says.
The Economist magazine recently asked a hypothetical question. How would the Indian economy perform if we had UPA-3 instead of NDA-2? Pretty much the same, it concluded, minus the stupidity of demonetisation. The UPA suffered from coalition weakness and party factionalism. Modi, the strongest Prime Minister in 30 years, did not have the vision or the will to get land acquisition going, reverse the stagnation in private investment and so on.
Also read: History has lessons for a BJP banking on Pulwama and Balakot to win Lok Sabha elections
Since the airstrikes on Pakistan, the Modi government has stopped even bullshitting about the economy. It’s not speaking about it at all even as the new GDP numbers turned out to be worse than expected. The economy doesn’t even exist anymore. Modi’s junking of the economy is akin to Nero fiddling while Rome burned.