Addressing a large crowd of Indian Americans in Houston last month, US President Donald Trump said, “Unemployment — think of this — unemployment in Texas is currently at the lowest rate ever recorded in the history of our country. [Applause.] And unemployment in the United States has just reached the lowest level in over 51 years, and very soon, we think that will be broken to be a historic number. [Applause.]”
The “Howdy, Modi!” event was held to honour visiting Indian Prime Minister Narendra Modi, but Trump was giving his own 2020 presidential election speech. Modi might have felt a slight tinge of discomfort as Trump went on and on boasting about job creation under his presidency. Job creation is a topic Modi won’t dream of talking about these days. Unemployment in India is at a historic high.
But Trump wouldn’t stop. He said, “Since my election, we have created over six million new jobs. We have created over 750,000 jobs right here in Texas. [Applause.] And very importantly, that includes 70,000 new Texas manufacturing jobs. They said that couldn’t be done. [Applause.]”
It was in this vein that Trump welcomed an investment of $500 million by an Indian company to “to revitalise a shuttered steel plant in the great state of Ohio.”
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Job creation is always among the top issues in US elections. Statistics about how many jobs are created and how many more need to be created are often at the heart of American politics. Politicians seeking votes try to persuade voters that they know best how to create jobs by getting investments and growing the economy.
It’s a political idiom that needs to be at the heart of Indian politics at a time when the unemployment rate in India is supposed to be the highest ever since India started measuring it, 46 years ago.
Also read: Modi govt didn’t address jobs crisis in the first term. India’s progress depends on it now
Inflation, the king-slayer
It has been a while since we heard “mehngai” or inflation in popular political discourse. As onion prices started going up recently, the Modi government immediately banned their export. Visiting Bangladesh Prime Minister Sheikh Hasina said she wished India had given some notice before the abrupt export ban.
Narendra Modi has a one-point economic policy: keep inflation low. Any student of Indian politics knows no government has ever been re-elected despite high inflation (though incumbents have lost despite moderate inflation, such as Atal Bihari Vajpayee in 2004). Two great men who reformed the Indian economy both lost elections to inflation: Narasimha Rao in 1996 and Manmohan Singh in 2014. The highest inflation India has ever seen, 25 per cent, was in 1975. No wonder Indira Gandhi had to impose the Emergency that year. People’s anger against inflation often comes out in the form of anti-corruption sentiment, because people seethe at politicians making money when they can’t afford milk anymore. I have even met people, at the Lokpal movement for instance, who say that high inflation is caused by corruption.
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Naukri is the new mehngai
Low inflation in the Modi era has been influenced by two factors not in his control: global prices of both oil and food have been low and stable for the last few years. Critics say Modi just got lucky, and wasted the opportunity these global factors presented him. On his part, Modi said critics should acknowledge he brought good luck to India.
Low food prices have hurt Indian farmers by reducing export earnings, but at the same time, it has helped the government import food items cheaply to address any sudden inflation. Meanwhile, the Modi government refuses to put too much money in the hands of farmers for the risk of increasing food inflation.
The Congress was able to win the Madhya Pradesh and Chhattisgarh assembly elections in December 2018 by promising farm loan waivers, a formula that worked for it in the 2009 Lok Sabha election as well. Farm loan waivers have now become central to the Congress party’s electioneering, except that the promise of an all-India farm loan waiver did not help it in the 2019 Lok Sabha elections.
Modi is now giving a dole of Rs 6,000 a year to farmers. Besides, farm income is now only one-third of the income in rural areas. Farm loan waivers are not going to be the golden goose the Congress party thinks they are.
Those hoping that global oil prices could suddenly shoot up and cross $100 a barrel, giving the Indian economy shock inflation and making Modi lose the next election, can keep dreaming. Global oil prices have been steady, and will likely remain steady, because the United States is pouring in shale oil in an already over-supplied oil market. That is why even geopolitical tensions in West Asia have not made crude oil prices reach $100 a barrel. It will take a major war for that to happen, and the American public is already weary of war.
In other words, inflation is going to remain low.
Low inflation is the only successful economic metric the Modi government can boast of. But that is also why economic growth, demand and consumption are hurt. By creating a liquidity crunch, demonetisation also contributed to keeping inflation low.
In other words, low inflation means low economic activity, which means low job creation. ‘Naukri’ or jobs is the new ‘mehngai’ (inflation). This is reflected in opinion polls. Opinion polls before the 2014 elections used to rate inflation as the biggest issue (bigger than corruption). Before the 2019 elections, it was unemployment. Just as inflation could make governments fall, today unemployment can do that, if only the opposition campaigned on it.
Also read: BJP govt needs a long view on economy, quick fixes just result in a sugar high
The missing idiom of job creation
Five months after a crushing defeat in the 2019 elections, Congress leader Rahul Gandhi is back on the campaign trail. Having given up the onerous responsibility of being Congress president, having made a few foreign trips to unwind, you’d think he would have learned from his mistakes and come up with fresh ideas.
But it was the same old strategy. Speaking in Latur, he attacked Narendra Modi on every conceivable front, including unemployment, and promised a farm loan waiver. Not once in his speech in Latur (video here) did he say the Congress *would* create jobs if it came to power in Maharashtra, leave alone how. Not once. If Rahul Gandhi so much as cared to read the newspapers, his entire speech would have been about how the Congress would create jobs.
In another rally in Mumbai on the same day, he brought up French Rafale fighter jets. Again. Alleging corruption in their acquisition did not win him the 2019 elections, but he just doesn’t want to admit he misread the public mood. Corruption is a major political issue in India only when inflation is high.
The other state going to the polls is Haryana, which currently has the highest unemployment rate in India, a whopping 28.7 per cent. The Congress is promising an unemployment dole. The promise of creating jobs must be buried somewhere in its manifesto, but it wouldn’t be worth checking. Manifestos don’t win elections, campaigns do.
If the Congress party understood the centrality of naukri as a pressing issue before voters, Rahul Gandhi would have told Latur how many jobs the Congress had created in Latur when it was in power (in both public and private sectors), and how many the BJP has created. He would have told them how the Congress party is creating jobs in Punjab, Madhya Pradesh and Chhattisgarh (or is it?). He would not only have promised jobs but, to sound convincing, explained how the Congress would create jobs. He could have done this research in the run-up to his rallies, but he was busy meditating in Cambodia.
Views are personal.