Staff writer Satyajit Mohanan shares his assessment of India’s current government and its particular relationship with the economy.
On the 16th of May 2014, there arose an atmosphere which seemed promising, innovative, and transformative to most of the youth and the rest of India. Prime Minister Narendra Modi rose to power with a huge mandate on essential promises such as job creation and on innovative slogans such as “ache din aane waale hain” (Good days are coming).
Mr Modi belongs to the Bharathiya Janata Party (BJP), which is a right-wing party with close ideological and organisational links to the Hindu nationalist organisation Rashtriya Swayamsevak Sangh. It is one of India’s largest political parties, The Indian National Congress (or The Congress) being the other. Mr Modi inherited a government that was earlier occupied by The Congress, a centrist party. Its legacy was filled with ups and downs but the BJP, with Modi as its leader, was able to turn the tide by focusing more on the downs and capitalising the situation. He won with a thumping majority. The people of India had many expectations from the new government back in 2014; the youth loved Mr Modi, he won the hearts of many Indians by his Innovative slogans, schemes, his excellent communication skills and his commitment to Indian culture. He portrayed himself as the ‘Crusader against Corruption’. The people of India were impressed, but this optimism was short-lived. Most of the schemes introduced were identical to those of the previous regime’s, and were just re-named. The slogans turned out to be a mere marketing skill, bringing no good to the nation. Soon right-wing elements gained ground, causing communal violence. The line of events was soon a threat to the secular fabric of India. This is the present government. To see just how failing it is, one need only look at India’s economy.
Narendra Modi inherited an economy with a growth rate of 6.4%, which is considered a moderate economic growth rate. He announced a series of initiatives and schemes in the first two years of his government, the most famous ones being ‘MAKE IN INDIA’ which encouraged manufacturers to manufacture in India and ‘START UP INDIA’ which was aimed at easing business for aspiring start ups. The Manufacturing sector, despite ‘Make in India’, had failed to gather momentum and is declining steadily. In the five quarters between Q4 of 2015-16 and Q4 of 2016-17, Gross Fixed Capital Formation (GFCF) as a proportion of GDP had declined—30.8, 31.0, 29.4, 29.4 and 28.5. Private investment is at an all time low, public investment too is declining. Industrial growth has collapsed and exports are falling. There is also a high rate of unemployment in India. Start Up India has failed because of the lack of clarity of the government. Instead of focusing on improving innovation and skill development, the government has gone ahead with simplifying the business structure for startups where the start ups themselves lack innovation and skill. This has been the main reason for the closure of the start up business. “Since 2015, as many as 1,503 start ups have closed down in India. And the major reason is due to the replication of Western business models, and not lack of subsequent funding from the investors,” says Rishabh Lawania, founder of Xeler8, a market intelligence platform.
The government’s recent move to demonetize 86% of the nation’s currency, in order to curb black money, was an unimaginable disaster, which reduced the growth rate from 7% to 5.4% and inflicted heavy damage to the economy as a whole. Eventually the 99% percent of the de-monetized currency came back into circulation, which means the black money was successfully converted into white and this move actually made it easier for the hoarders to convert the currency.
Later this year, the Good and Services Tax (GST) bill was passed. This was a formidable tax reform by the government as it simplified all the indirect taxes into one simple tax. The GST tax bill- though originally introduced by the earlier Congress Government- was finally passed after a decade of attempts. However, this caused heavy damage to the economy, causing distress to businesses and the closure of many firms, adding more misery to the average Indian. This was due to the hurried and poor implementation of the government.
The present government is failing to function effectively. The Prime Minister and his government still believe all is well. I don’t mean to call this government incompetent nor do I doubt the potential of its ministers. However, its ignorance and arrogance to various crucial issues involving the people may eventually lead to its downfall. The Prime Minister and his ministers have not taken responsibility nor have they accepted their failures, which are so evident in the public domain. Elections are due in 2019. The narrative is slowly changing, the tide is against the present regime, and people are fed up with the talk. The Indian people now want a credible and performing government in place, and with the opposition still weary, it will be interesting to see who will take over the reigns of this great nation in 2019.