Good times? Three years to go...
Editorial: June 2016
Hardnews Bureau Delhi
So how do we judge a government’s performance? In its last phase,the Congress-led United Progressive Alliance (UPA) government was floundering with a 5 percent growth rate and seemed horribly mired in what has now become a well-worn cliché – a ‘policy paralysis’. In these two years, the BJP-led National Democratic Alliance (NDA) government has maintained a similar growth rate — if we do not take into consideration the controversial methodology to compute the Gross Domestic Product (GDP). The average growth rate as presented after the last quarter is 7.6 per cent that has got some heft due to the stunning performance in the past few months when it logged in 7.9 percent. Though the method by which 7.9 percent was arrived at, has come in for much criticism as it has the beefy presence of ‘discrepancies’, without which the growth rate would have ignominiously slid to 3-odd percent, it has been celebrated on the prime minister’s recent trip to Qatar as the outcome of the government’s economic strategy.
Despite the celebrations that ensued after the government completed two years, what is not really clear is how the dismal performance of different sectors of the economy add up to give perhaps the highest growth rate of the past decade. Look at the fall in bank deposits, or in investment, or the sharp fall in the rate of employment – it all gives an impression of slow or falling growth. What is hurting more are the drought conditions in different parts of the country and the external environment that has resulted in a precipitous fall in exports over several quarters. If it had not been for the soft oil prices — evidenced by the fall from a high of $140 a barrel in June, 2014 to around $50 a barrel in June 2016 — the economy would have been on a life support system. Many economists have wondered where all the savings have really disappeared too. Some even estimate a saving of `5 lakh crore, which is phenomenal.
To assess the NDA government’s two years, we have raised certain issues that are worth exploring. Why is it that the PM, who has apparently worked so hard over the past two years in office — as reported by many of his ministers -- not been able to bring about a change in people’s circumstances? A government that had promised ‘good times’ or ‘achche din’ for ordinary citizens has in fact made life hard for those living in rural areas. Owing to economic policies that abhor entitlement of any kind, the poor have seen misery return in their lives with the withdrawal of social schemes. This government has followed policies prescribed by the likes of economist Arvind Panagriya who has evident disdain for providing any welfare policies and who believe that vigorously implementing neo-liberal economic policies they can create jobs. The shift that this government sought to bring about — from investing in the social sector and manufacturing, to creating jobs — has not delivered much. Indeed, it seems to be falling between two stools.
Rightly so, Narendra Modi jettisoned such hare-brained advice from his favoured economists to put in more funds in the social sector during the recent annual Budget. His government has begun to tweak the rural employment guarantee scheme so that the support that he got during the last elections does not erode. The government has realised that the investment in manufacturing is not really going to come easily. There was hope regarding the digital economy, which the PM tried to emphasise by announcing a programme — Digital India. And yet online retail — the face of digital — has begun to look tired and some companies are haemorrhaging. Besides the economy, foreign and social policy has not shown the desired results. Modi needs to revisit the drawing board and realise that there is no merit in fighting and negating India’s post-independence Nehruvian past; instead, he must learn to build on it. Surely, the next three years of his term will benefit India if he is mindful of this important lesson.