In a situation where incomes have either steeply declined, or are static, price rise has hit like a whip lash
Euphoria, these days, is a consequence of projection. The ground reality may be grim, but, propaganda, publicity, promotion and manipulation of data, and sometimes plain lies, often combine to project a completely different fiction. The creation of illusion becomes a factor of the size of publicity budgets and the repetition of a post truth that is aimed to lull people into a false complacency of well-being, which has nothing or little to do with the hard truth on the ground.
The state of our economy today is a good example of this deliberate fabrication.
The government would have us believe that economic recovery is proceeding at a remarkable pace, and all is well on heaven on earth. Between Prime Minister Narendra Modi and chief minister Yogi Adityanath we have one of the most vociferous mutual admiration clubs in the world, and both combine to pummel the hapless citizen with statistics of how amazingly the other is doing. But it is sobering to look at the underbelly of this massive propaganda exercise, and remind ourselves of what the state of play actually is.
The truth is that the combined impact of the disastrous demonetisation exercise which wiped out 86 per cent of the cash in circulation, the reality of a hasty and botched up GST implementation, and the consequences of Covid, including the unbelievable hardships suffered by migrant labour, have resulted in a sorely bruised and battered economy, which has left the common citizen reeling under the impact of loss of jobs, high prices, and unprecedented human suffering.
Unemployment at 6.1 per cent as per data available for 2017-18 was at a 45-year high. Since then, the number of the unemployed has almost doubled. In the age group 15-21 it has tripled from six per cent to 18 per cent. Since the beginning of 2021, more than 25 million people have lost their jobs. One consequence of this is the steep increase in poverty. More than 75 million Indians have dipped below the poverty line. The middle class has been badly hit. According to estimates by Pew Research, one-third of the middle class has dipped back into poverty. People can’t get jobs, and those who had them have lost them.
In a situation where incomes have either steeply declined, or are static, price rise has hit like a whip lash. Prices of edible oil have reached an 11-year high, rising from Rs 80 to Rs 180 in 2020. A year ago, petrol was around Rs 80 in New Delhi; today, it is has crossed the Rs 100 mark. In the same period, diesel increased from Rs 80 to Rs 89. If LPG cost Rs 594 in November 2020, today it is over Rs 834. The rise in fuel prices has had a cascading impact on prices across the spectrum.
The macro-economic indicators are not too great either. When Shri Modi came to power in 2014, he inherited GDP growth rates in the range of 7-8 per cent. Even before Covid, in 2017, GDP growth had fallen to around three per cent, and today it has fallen to its lowest rate in a decade, minus 3.1 per cent. Exports, which had never fallen since 1991, have today fallen below the 2013-14 level.
Manufacturing is stuck at 15 per cent of the GDP against the avowed goal of raising it to 25 per cent. Consumption has stagnated. Household savings have fallen. The much touted goal of making India a $5 trillion economy has become a jumla. At best, we could touch $2.6 trillion in 2025, which is half of what was promised. Farm incomes are nowhere close to being doubled. On the contrary, farmers are sitting in protest on the borders of Delhi for months now, asking for the repeal of farm laws brought in without proper discussion and consultation.
In the private sector, the roaring tigers of the economy are being tamed into pussy cats by a predatory state, that is forever willing to unleash the army of government agencies — ED, IT, CBI — against those who are not sufficiently contrite. No wonder, private investment has fallen from 31 per cent in 2014 to 28 per cent in 2019-20. Mahesh Vyas, CEO of Centre for Monitoring of the Indian Economy (CMIE), has gone on record to say that India’s biggest challenge is the slowdown in investments. While the bigger corporates have the staying power to last out the economic decline, an entire swathe of small, micro and medium enterprises, accounting for the bulk of employment, are struggling to survive or have been rendered bankrupt.
There are some positive stories, notably in infrastructure. The laying of highways is proceeding more aggressively. India has also become a leader in digital payments through the Jan Dhan scheme, although an audit needs to be done how many of these accounts are actually being used. However, the increased spending on infrastructure and populist schemes, with tax collections and exports stagnating, also raises the worry of a higher fiscal deficit. The worst part is that in spite of Covid, government spend on health still ranks among the lowest in the world.
The bottomline is that, notwithstanding the government’s propaganda and publicity, most Indians are at the receiving end of an economy in tailspin. That is the harsh truth, juxtaposed to which acchhe din has a very hollow ring. Tulsidas described Ram Rajya in these words: Daihik, daivik, bhautik tapa, Ram raj nahinkahuhibyapa: There are neither spiritual, nor material nor physical afflictions in Ram Rajya. If the economy is one touchstone, we are very far from that promised Ram Rajya.