Post-poll concern over Indian economy

Ashim Bhuyan

(The writer can be reached at bhuyanashim@yahoo.com

A report titled UN World Happiness Report released by the Sustainable Development Solutions Network for the United Nations on 20th March this year does not paint a good picture of India. Incidentally, 20th March was declared as World Happiness Day by the UN General Assembly in 2012. The report ranks countries on six key variables that support well-being: income, freedom, trust, healthy life expectancy, social support, and generosity. In this year’s report, which is UN’s 7th annual World Happiness Report, India is placed at a very lowly 140th rank, among 156 countries, and intriguingly, India is behind countries like Pakistan (67th), China (93rd) and Bangladesh (125th). In fact, in the current year, India’s ranking has dropped 7 notches below, compared to 2018. Finland has topped the list for the 2nd time in a row, and war-torn South Sudan is at the bottom of this year’s list. The overall world happiness has fallen over the past few years, mostly fuelled by a sustained drop in happiness in India. The USA, the superpower, is ranked at 19th this time around in the list. This should make all of us in India to take note, and make an assessment of the ground realities, especially in economic, development and growth indices.

The Centre for Monitoring of Indian Economy, CMIE is short, has been releasing a series of data related to the economy, industry and commerce, for decades now. By no means, CMIE is an ordinary organization, and it has been in this business for five decades since 1976, and its data and analysis are normally taken to be very reliable by the industry and the economists. It regularly conducts the largest survey to estimate household incomes in India. In a recent report, it disclosed that in 2018, 11 million jobs were lost in India; women, vulnerable sections and Rural India were hit the hardest. In fact, it states that of the 11 million jobs lost, the share of women was 8.8 million. Loss of jobs in rural India was 9.10 million. Further, it also has challenged the notion that growth in GDP numbers translate into increase in employment opportunities. The back series GDP data, released some time back, gives a brighter colour to the current dispensation in the Central Government, but, by and large, many economists and statisticians feel that these data do not reflect the hard realities.

There is also indication of high unemployment rate, especially among educated Indian youths. For graduates and above, as per CMIE data, the unemployment rate was very high at 13.2% during September-December 2018. Surveys from other sources also indicate high unemployment rate in India in recent years. In fact, the now famous, but unofficial, Periodic Labour Force Survey (PLFS) by the National Sample Survey Organization (NSSO) indicates that the unemployment was at 6.1% in 2017-18, a 45 year high. For reasons best known to the Central Government, it has not released NSSO’s PLFS data, which has raised eyebrows, not only in India, but across the globe.

Recently, about 108 economists and social scientists signed a memorandum expressing concern about veracity of official data, and asking the Government of India to release authentic and dependable data collated by Government Statistical Organizations. The unofficial NSSO data is in line with the CMIE data, though actual numbers vary. In fact, the PLFS data is grimmer than CMIE’s. The Central Government’s defence and arguments are not really supported by hard facts and data, but illusionary to increase in EPFO (Employees Provident Fund Organization) subscriptions, increase in hotel rooms, increase in air travelers, increase in MUDRA loans, construction of highways, etc. If one goes by the multi-fold increase in number of applicants for Government, Municipal, and Public Sector jobs, even for low skilled (rather unskilled) jobs of peons and sweepers, in the recent times, the position does not appear to be encouraging at all.

To its credit, the Central Government has made certain efforts for self-employment generation by pushing schemes like Start-up India, Stand-Up India, MUDRA loans, loans within 59 minutes, etc, and also by holding investor summits in many States (which otherwise were never very keen), but these seem to be more beautiful on paper, rather than getting translated into ground realities. The lack of entrepreneurship zeal and growth is reflective of the social environment that perhaps does not inspire confidence of ability and risk appetite of the youths and current generation. At present, it is more limited to certain sections of the society, even in economically better off states. The Indian youths still aspire to have cushy salaried jobs, especially the Government ones, a fact corroborated by the large number of post-graduate (even PhDs) applicants for entry level unskilled posts that include those of helpers, cleaners, etc.

The capital investments by the industry and business houses have been quite low, as capital investments fuel economic growth and new employment opportunities. As industry reports suggest, the commerce and industry feel that, overall, the existing capacity is sufficient to meet the demand. In the midst of everything, it is reported that Maruti Suzuki, India’s largest car maker, with around 55% market-share in four-wheeler vehicle sales, is cutting down production by about 27% in March 2019, because of slowdown in demand of passenger cars. This news is significant, as sales volume of Maruti Suzuki, sort of, reflects the growth and prosperity of the Indian consumers. Moreover, there are assorted industries, especially those in Micror, Small and Medium Segments, that would also suffer the cut in production. CMIE data shows that investments in December 2018 quarter fell to a 14-year low. An RBI study further paints a gloomy picture because according to this, for the seventh year in a row, there is reduction in capital expenditure plans by the private sector.

Overall, the economic growth story of India does not look good for the immediate and near future. How much of this is impacted adversely by external factors is one aspect; more important are the controllable and internal dynamics of the country that may have become impediments in the economic growth story. Many economists suggest that the Indian economy, by and large, is immune to the Government in power at the Centre, but the fact remains that Central and State Governments and their entities control and impact a very large chunk of economic activities. GST collections are also below the estimated targets, and there are apprehensions about huge shortfall in revenue collections, by way of direct and indirect taxes.

At present, the country is immersed in the festival of democracy (read the general elections), but the economic reality may hit the country hard, sooner than later. The jingoism of the recent times would perhaps be repented when the realities hit the nation. The next Government at the Centre would have its hand full in tackling a very challenging economic scenario, which would also likely to adversely impact the common man.