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Mainstream, VOL LVI No 39 New Delhi September 15, 2018

Modi in Trouble

Saturday 15 September 2018, by Mahendra Ved

Indians are generally shy of statistics. No election is won or lost on the basis of figures. But, figures are crowding into the otherwise personalities-based discourse as the country prepares for general elections.

Many of these figures are unflattering, and should worry the government of Prime Minister Narendra Modi when he has just won the mandate to lead his Bharatiya Janata Party (BJP) and the ruling National Democratic Alliance (NDA) into these polls.

For, long after he stormed to power in 2014, only one figure was grandly flaunted: his 56-inch chest size. It encompassed his popularity, oratory, promises of “good days”, unceasing denunciation of previous governments and a biting contempt for his critics.

Modi looked invincible until last month’s surveys showed his popularity falling for the first time to 49 per cent. There is ample room for ignoring such surveys, though, months before elections. The larger picture is complex and involves a whopping 800 million voters.

What cannot be ignored, however, is that last week the Indian rupee crossed the unprecedented 70 mark to a US dollar. No matter how other Asian currencies are performing, it has fallen by 10 per cent since January this year. That makes imports costly for an import-dependent economy.

Imports become 10 per cent costlier and exports that much cheaper. Middle class people, among his principal supporters, who send their young to study abroad, have been hit.

Cooking gas and diesel, that run the public transport, are dearer. Petrol costs an unprece-dented INR 80-plus per litre. With its cascading effect, this has hit things of daily needs like milk.

The economy is not generating jobs. “Where are the jobs?” asks Minister Nitin Gadkari, a former BJP chief. State Chief Ministers blame sectarian violence on the growing unemploy-ment.

More worrying is the larger economic perfor-mance. Recent revisions to GDP (gross domestic product) data, backdated to 1993-94, show that growth averaged a record 8.87 per cent during the Manmohan Singh-led UPA coalition’s first term (2004-2009), declining to 7.39 per cent during its second term (2009-10 to 2013-14).

This growth sustained amidst graft scandals and policy paralysis that caused the Manmohan Government’s defeat at the polls in 2014. But, the Modi Government, that pillories Manmohan daily, has, in the last four years, averaged only 7.35 per cent.

The infra-dig at Modi is that the Manmohan Government had crossed the double-digit mark during 2005-06 before global recession hit and even then, India did much better than many other economies.

Fearing political damage, the government has removed the information from its official web-sites. Worse—they are dismissed as “not official”.

Modi’s “56-inch chest” gambit has involved much risk-taking to derive political mileage. The biggest of them is the November 2016 demonetisation of the rupee. Eliminating high value currency notes, that fuelled 86 per cent of the economy, from legal tender caused immense hardship. A hundred lives were lost. For three months cash was unavailable to the public. Some 25 million lost their jobs. Several small business and industrial units closed down. Huge sums were forked out to print new currency notes. The GDP fell by a-half-to-one per cent.

None of the highly advertised goals and claims has materialised. The Reserve Bank of India (RBI), the country’s central bank, took 18 months to count the currency notes declared illegal. It now admits that 99.3 per cent of that currency has been ploughed back into the currency. Demonetisation did not unearth graft or black money. The realty sector, that works on partial cash-down, is thriving. Terror outfits in Jammu and Kashmir simply looted the bank branches to seize the new currency notes.

Allegations abound that select BJP bigwigs with prior knowledge reaped riches. The principal losers were the Opposition politicians. Running their organisations and election campaigns on cash, they went pauper.

Now, members of a parliamentary committee that scrutinised demonetisation are locked in a dog-fight. With elections coming, its report may never be finalised and made public.

Demonetisation has combined with a hastily implemented Goods and Services Tax (GST), billed as one of the largest tax reforms. But, instead of rationalising the tax structure as was intended, it raised prices and complicated commercial dealings.

To be fair, Modi’s government did well in the first 18 or 20 months, improving the economic indicators. Independent analysts say that he fumbled under pressure from party ideologues persistent in their majoritarian religious-political agenda.

In this maze of statistics, one can barely mention the purchase of the French Rafale combat aircraft that, like the Swedish Bofors gun in the 1980s, threatens to grow into a major election-time scam. This political dogfight is not good for the armed forces’ preparedness and morale.

Amidst loud claims of other achievements amplified by a corporate-driven media whose newsrooms are under increasing pressure, Modi is in the unenviable position of being unable to boast about the economy. If he does, it would annoy even those who support him.

For, the 7.3 per cent average growth rate is in realistic terms minimal and not optimal. It is not enough to generate jobs and profits and lead to further investments. A longer period of persistence with reforms would have surely helped Modi’s re-election. He is now facing the headwinds. It is too late for reforms or any correctives to better the economy.

The good news for Modi is the economy registering 8.2 per cent GDP growth in the last quarter. But, that needs to be sustained—India needs a sustained 10 per cent growth if it wants to keep its place in the Asian sun.

(Courtesy: New Strait Times, Malaysia)

Mahendra Ved is the President of the Commonwealth Journalists Association (2016-2018) A senior journalist, he can be reached at mahendraved07[at]gmail.com

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