Is it just me or is the economy facing a slowdown?” asks an entrepreneur friend. It’s curious how little debate, discussion, noise or anxiety there is about the state of India’s economy.
This slowdown is worrisome because it comes from a domestic consumption slowdown, not just from global factors such as rising oil prices. People not consuming enough will mean lower production, which will mean even fewer jobs in a country with a 45-year-high unemployment rate. There can’t be a better indicator of the economy than passenger vehicle sales, which are down by over 20 per cent since last year, and worse may be yet to come.
Make no mistake, this is the most important issue facing India, but you wouldn’t feel that if you followed the national public discourse. Denial is the name of a river in India.
Also read: Goal to make India a $5 trillion economy by 2024 challenging but achievable: PM Modi
A poor, developing country, India needs a very high rate of economic growth to make sure its children don’t go to sleep hungry, they get good education, people get good healthcare, and still have enough disposable income to be happy. Such happiness needs jobs, which needs investment, which needs consumer demand.
The mood of consumers in the economy turned pessimistic around the same time as Indians gave Narendra Modi a thumping mandate last month, bigger than 2014. This paradox isn’t all that inexplicable if you consider the old saying that good economics doesn’t make good politics. This is proof that Modi won the election not because people thought he was great but because they thought the opposition was worse.
Also read: Caught in a slowdown, India’s auto sector sees no hope for growth until festival season
No one left to speak
Modi’s mastery over politics has made sure that development and elections have been de-linked. Oh vikas, we miss thee. Modi’s 2014 election was all about vikas. A limping opposition was unable to make the 2019 election about vikas. As a result, vikas has vanished. Where did vikas go? No one knows. The media could find out perhaps, but it’s too afraid of being called Khan Market gang.
The media and the opposition are supposed to raise uncomfortable questions that the Modi government would rather avoid. The media and the opposition alike are showing no sense of urgency. They don’t seem to care that the government’s own former chief economic adviser has estimated that India’s real economic growth between 2011-12 and 2016-17 was actually 4.5 per cent, the rest 2.5 per cent in the government estimate was bad data. Under ordinary circumstances, this revelation should have been a huge scandal. The opposition should have been screaming blue murder.
Elections over, and the Narendra Modi government officially adopted a report that said India’s unemployment rate is at a 45-year high. Before the elections, as the report was leaked against government efforts to suppress it, the government had rejected its findings. Then finance minister Arun Jaitley had said these numbers couldn’t be true because if they were, there would be street protests.
We saw many street protests over the last five years from farmers and caste groups seeking reservations. These were indirectly about unemployment. But a comatose opposition is unable to give political voice to such sentiments. And a co-opted media just won’t.
Also read: Modi’s suspect GDP numbers have done real damage to India’s economy
Is it really a democracy when people’s issues don’t seem to matter and the ruling party keeps winning elections on auto-pilot? Democracy is when a people ask the most uncomfortable questions. It is only in authoritarian regimes where the government pretends all is well and nobody dares question the government’s claims. So, are we really a democracy anymore?
If India Inc. is worried, it should know the price of cowardice is high. India Inc. has been a mute spectator as the government made one bad policy decision after another over the last five years. After everyone has sealed their lips for fear of government reprisal, there will be no one left to speak.
Also read: RBI to the rescue – Modi govt eyes bank’s Rs 9.6 trillion surplus to beat economy blues
Deflect and rule
Even if we go by the government’s questionable data, India is no longer the world’s fastest-growing large economy. Where did we go wrong? Before we can even ask that question, Narendra Modi will draw our attention elsewhere. Over the last five years, we have seen his masterful use of Deflect and Rule. The government, through its ‘ecosystem’ in social and mainstream media, will make sure we talk about Hindu-Muslim issues, labelling people patriots and anti-national, fighting for basic decency in public life.
The ruling party will make sure it heckles Asaduddin Owaisi with chants of Jai Shri Ram, because insulting a Muslim man with religious majoritarianism will help deflect attention from the nosediving numbers of the economy.
Before you could ask what the government is doing to make private investment pick up, they will create controversy through Godse-loving Pragya Thakur.
Before you could ask what the government is doing to halt the decline in the auto sector, they will shift the political discourse to the hare-brained idea of ‘one nation, one election’. We already have ‘one nation, one GDP’ and it’s going south, but let’s discuss if we can make the BJP win state and central elections together.
The Modi government right now must be spending less time preparing the July Budget and more time coming up with red herrings to counter future bad news on the economic front. As a structural slowdown stares us in the face, all we’ll be left with is Jai Shri Ram.
Views are personal.
Mr Shivam Vij that was one excellent speech full of juicy prevarication and innuendo that the Congress could have used before the election. And maybe they would have paid you handsomely for your pains. Never mind the content still stands good for the Rahul Gandhi style shoot and scoot hectoring. So if you approach the right channels your pains may still bear fruit,
To give credit where it is due, the speech – sorry article – does have two gems which you are artfully saved for the end. The first would put the most accomplished speaker ( and let’s include Modi as well) to shame.
“The Modi government right now must be spending less time preparing the July Budget and more time coming up with red herrings to counter future bad news on the economic front. As a structural slowdown stares us in the face, all we’ll be left with is Jai Shri Ram”
The second one is the proverbial error of ommision as any reader of The Print will testify:-
you say – err write- ” Views are personal.” You could have ended with one sentence of truth by writing :-
“Though I write ‘Views are personal’ they are actually shared by The Print.
I loved your hamming throughout the article though it betrayed some external agenda. Do be more circumspect next time. Remember ‘Little is More’
Excellent!!
Hateful lefties, liberals were quiet for barely 3 weeks and now back to their vicious propaganda. Make no mistake, the people of India will be solidly behind Modi and defeat you commies and congies.
Sure, Congies and commies care more about Indian economy than Modi and BJP.
The biggest lie of the century – the UPA govt this author is so fond of cared more about economic development than politics! But agreed that Modi govt needs to undertake more reforms quickly.
This is mostly an ideologically (leftist – illiberal) motivated article.
Since this article is written By Shivam Vij, who, I think as a good journalist must be keeping himself updated on the dynamics of the global economy. But if NOT, then here is a recent New York Times article for his awareness: https://www.nytimes.com/2019/06/06/business/auto-industry-fiat-renault.html
US-China trade war is causing havoc with global trade; gold is almost touching US$ 1400 an ounce, the highest ever in last one year; the imminent Iran-US conflict is a risk for all major economies; India’s population has been growing for a long time now; resource management was not truly above average, let along superlative during the UPA II rule etc etc etc.
Arre baba, you journalist guys have been shouting so much for the past 5 years. Can’t you relax, wait and watch till next year’s budget before questioning the government? It is surprising that despite such negative press for Modi, Sonia’s son was not crowned as the emperor of India in 2019.
Very nice comment.
Now that upper castes are firmly back in power this time under BJP, expect India to go back to a new version of the old Hindu rate of growth, this time it may be around 4% instead of the older 2% level.
Nice article, covers economics and politics around!
“If India Inc. is worried, it should know the price of cowardice is high.”
The author should know better, that most if not all of India Inc. are on (in)famous the NPA (defaulters) list. So, how can they complain when they themselves are the reasons for the liquidity crunch in the economy.
As expected the abuse cycle has started! How can some one who does not understand get it right? Banarein Hato Raaja comes to my mind!
Author seems to be worried by the fall in automobile sales . But isn’t there a positive side to this ? How can our cities with their limited roads and land area accommodate more and more vehicles ? Should we not see this as a natural demand plateau when people take more to public transport and metros , due to our choked and dusty roads ?
The NDA has probably failed in boosting growth, but before acting they should consider seriously in which sectors we want growth which is compatible with our environmental goals.
Electricity to all, LPG to all, tap water ton all, all homes in villages having electricity connections and road and pucca house are all development.
The economy is not about Syria or Afghanistan. It affects all of us, the least well off the most badly. Why the opposition was unable to leverage the comatose state of the economy during the general election remains a mystery. Why so much of the media looks like Sandra Sarah Huckabee is not. The Budget on 5th July will tell us if the second term will be more productive than the first. How long the idyll will last is difficult to judge. There are always a million mutinies bubbling beneath the surface.
Sarah Huckabee Sanders; my apologies.
Every one wants socialism Freebies subsidies reservation loan waivers. No one wants economic development associated with free market capitalism. Left right and centre all say jai Socialism and show flip the bird at capitalism. No one has the guts to privatize Bharat and achieve double digit growth.
Economic slowdown was sudden and sharp in 2008-9, the economy was propped up by artificial inducement followed by indiscriminate loans to business houses, and it’s fallout and recovery during NDA 2, the tightening of monitory policy and sharp recovery through hard methods has just brought back fundamentals in control be it fiscal deficiency, inflation and interest rates…the recovery of banks from bad loans is nearing corner. NBFC space will recover by end of 2019, and if the monsoons are good, we will see consumer interests going up and we may see business cycle picking up by Nov 19. Principal opposition party is responsible for the mess we are in how can we expect them to talk about it and get exposed further!
Vij has lost his credibility long back. A congress mouthpiece must understand a hopeless opposition was never a challenge for Modi.Economic growth can never be guaranteed as it depends on so many internal and external factors.
Get over the whining and crying dude. If your favorite candidate didn’t win the elections it means end of democracy… right? The elections are over and people have rejected those Centrist, Leftist and all such “baseless” parties because you know what, they don’t care for the nation. They only care about their personal wealth numbers. This govt has an agenda while others have only fiefdoms!
Shivam thinks sheer high GDP growth rate can deliver basic needs to the poor of INDIA. This foolishness and shallow policy making led to policy paralysis in 2013. P Chidamabram thought lower interests rates and phone banking will keep GDP growth rates above 7% BUT it came down to 2.7% due this hollow thought process. Shivam thinks without delivery of basic needs MODI returned to power, THIS negligence will make u extinct in NEW INDIA. NEW GDP BOOM must be across the economic class unlike 2004-09 which was mostly for rich and upper middle class. NEO MIDDLE class has to be included and the poor has to brought into mainstream and this takes time. TALKING about jobs , this selective outrage just shows your utter biasness because JOBS in the formal sector became stagnant after 2012. It was the informal economy which was not taken into consideration and was under severe stress in MODI govt due to liquidity crunch due to NPAs (not because of demo dont mislead!). MUDRA loans were given in large scale and has almost made many of employment oppostunities yet lot of work needs to be done.. THIS is a young INSPIRATIONAL India u dare insult it by telling them that they have no concern about their economic condition. Fruits of high GDP were eaten by UPA1 where was foundation was done by AB Vajpayee .
Do u think GDP boom like 2004-09 will solve health crisis in INDIA, infrastructure and social life. First provide basic needs than aim for GDP boom , till 2014 we didnt have toilets in 60% of the country. Wealth creation must be only done when wealth is to be divided equally OR will suffer from inequality of high proportions. Yet i think the slowdown will be gone after mid 2020 and when we reach FY 2022 the GDP growth would be surely 8-9%.