“There are three kinds of lies: Lies, Damned Lies, and Statistics” – Mark Twain
The Modi government is howling about the triumph of the Indian economy as the fastest growing major economy of the world. This claim is based on the result of this financial year’s (FY) (2023-24) second quarter. This may be true apparently, but the harsh reality is that economic numbers can be deceptive if seen in isolation and devoid of context or perspective. Selective use of numbers by Finance Minister Nirmala Sitharaman during a Parliamentary debate on the economic situation is deceitful for the common Indian who is forced to buy daily essentials like garlic and onion at exorbitant prices with stagnant income from an unsecured employment.
It is no secret that the Indian economy has shrunk more than the other major economies of the world, due to the unplanned and ill-executed lockdown during the Covid pandemic and the impact of low base continues in GDP numbers. The best way of comparing economic performance is to take pre-Covid numbers to see the actual growth in all these years, rather than relying on usual year on year method. Then we will know the reality behind the ruling party’s narrative that Prime Minister Narendra Modi isn’t a leader who magically pulled out Indian economy from slumber, despite the pandemic and global distress.
Deceptive GDP Numbers
The annual effective growth rate under the BJP government in the last five years (2019-24, current year best estimate included) can best be pegged at 4.4% to 4.6% at constant prices (2011-12)! Let’s understand how.
As per the Ministry of Statistics and Programme Implementation, the absolute annual GDP number for FY 2019-20 at constant prices (2011-12) stands at Rs. 1,45,34,641 crore. During 2020-21, the number shrank to Rs. 1,36,87,118 crore due to Covid. From 2021-22 recovery started, but at a snail’s pace, despite the tall claims of the government. The GDP for last FY year, i.e., 2022-23, stands at Rs. 1,60,06,425 crore. If 7% growth rate is assumed for current FY based on performance in the first two quarters and other available estimates, the projected GDP for FY 2023-24 can be put at around Rs. 1,71,26,875 crore at constant prices. Thus, the average growth rate in the last five years (2019-24) comes at around 4.48%. It doesn’t look as good as it made to be, does it?
If one extends this analysis further to 10 years of Modi rule, even then the government has failed miserably short of the trend of doubling the GDP in ten years. The GDP in 2013-14 at constant prices stood at Rs. 98,01,370 crore, which is now projected to grow to Rs. 1,71,26,875 crore in 2023-24, which is clearly short of the number required to double the GDP in ten years.
Crass Inequality
Besides the absolute growth in GDP, it is important to look at whether growth is inclusive in nature or not. Who are the actual beneficiaries of this growth? The wealth and assets of PM Modi’s cronies – Adani and Ambani – has grown exponentially in this period. As per reports, the wealth of Gautam Adani and Mukesh Ambani has increased three to four-fold in just ten years. It has been achieved with the obvious assistance of government policies willing to offer public sector enterprises and national assets at paltry prices to these two corporates. The share of income of the richest strata of society has also gone up. As per Oxfam Report, 2023, the top 1% in India now owns more than 40.5% of the total wealth in 2021, while the bottom 50% of the population has around only 3% of the total wealth. The richest 21 Indians have more wealth than bottom 70 Crore of the population.
The working class in India has been badly affected by the economic policies of the Modi government, which can be illustrated by the promise he made to double farm income, when he came to power. But, what has happened to the promise now? The government has backtracked from its promise of granting MSP and farm loan waivers. What is at offer is merely Rs, 6,000 annual income support under Kisan Nidhi Scheme, while farming input costs rise exorbitantly. This is especially at a time when a farmer is not getting just prices for their produce, which, for most crops, are less than 1/3rd of the prevailing market prices. Farmers are unable to recover even input costs on crops production.
Majority of the people are being pushed to pauperization and are becoming dependent on precarious jobs euphemized as ‘self-employed’ for survival. This is reflected in India’s position on the Global Hunger Index where the country stands at 111th position amongst 125 countries and 141st on per capita income of countries of world. The number of hungry Indians increased to 35 crore in 2022 from 19 crore in 2018.
Regressive taxation
Economic inequality has increased rapidly and has been facilitated by regressive taxation. The government has reduced tax rates for corporates from 30% to 22%, while levying increased taxation on the poor through GST on items of mass consumption and taxing fuel making transportation which has severe cascading effect. Out of the total taxes collected from GST, 64.3% comes from bottom 50%. Those poor who are at the bottom of the pyramid tend to pay as much as 10 times the higher percentage of their income through taxes, as compared to those on the top. The share of direct taxes in total tax collection has come down by 5% after the inception of GST.
As per data of Petroleum Planning and Analysis Cell (PPAC), of Ministry of Petroleum & Natural Gas, the BJP government has collected a whopping Rs. 28.30 lakh crore as taxes from petroleum sector since 2014. Besides this, the Central Government has collected more than Rs. 5 lakh crore in the form of dividend and tax on income from the petroleum sector. One can add to this, Rs. 21.40 lakh crore collected by the state governments in the form of VAT on fuels which has become the main independent source of revenue for state governments after the GST regime. This gives a pictures to understand the composite burden on the common people.
Food Inflation and Unemployment Hitting People Hard
To a question on inflation, Finance Minister Nirmala Sitharaman responded with “Congress ke samay mahangai nahi tha kya” (whether inflation was not there at the time of the Congress Government) – which is a clear attempt to sidetrack the issue.
The BJP Government is arguing that Whole Sale Price Index (WPI) and Consumer Price Index (CPI) is under control and within the tolerance band set by RBI 4+2%. But this is half-truth. While its true that CPI has eased in the last two months (Oct and Nov, 2023), it has crossed the tolerance limit only as late as July and August, 2023 where it was pegged at 7.54 and 6.91 percent, respectively. After Covid pandemic, food price inflation has dominated aggregate inflation. The contribution of commodities other than food and beverages, and fuel and light, to aggregate consumer price inflation fell from 78% in 2020-21 to only 12% over four months which ended in July 2023. This means that the pain of inflation is now borne more by the bottom half of the population who spends major part of their limited income on these essential necessities for survival.
It can be argued that, of late, relieving a little stress on inflation number may be due to relative falling of incomes of large sections of society post pandemic, which has in turn hit the aggregate demand. This doesn’t have anything to do with improvement in supply side factors due to sustained recovery, nor better inflation management of the government. This shows tendencies towards stagnation in growth due to cyclical trap at play in the medium term. This brings us to the question of whether the growth that is taking place is giving incomes and employment to the ordinary people?
Job Loss growth
As per CMIE data reported in The Wire, the unemployment rate for the month of October 2023 was a record two year high at 10.09%. Even the latest Periodic Labour Force Survey (PLFS) of the government which gives better picture when it comes to unemployment rate tells that Labour Force Participation Rate (LFPR) is just 42.4% in 2022-23 on usual status. That means out of the working age population, only 42.4% are looking for employment. It has touched a low of 36.9 % in 2017-18 under Modi Government. To put this in perspective, the LFPR was 52.5 % in 2013-14, that is last year of UPA Govt. It means almost 10% of the working age population has simply lost hope in finding employment in the last nine years under the Modi government and has withdrawn themselves from the labour market. Things seems to be moving from bad to worse.
If we probe even deeper, it is revealed that the quality of employment is also dwindling. In the absence of dignified employment, the forced ‘self-employed’ mode has to be adopted to meet the crisis, which amounts to as high as 57.3% of all labour force. The corresponding number in 2013-14 was 49.5%. About 8% of the labour force has been pushed under self-employed category in the BJP rule. Though it is conceded that difference in regular employment figures in 2013-14 and 2022-23 is not significant and hovers around 20%, it is worth noting that casual labour percentage has fallen from 30.9% in 2013-14 to 21.8% in 2022-23. The fragile nature of classification between the two makes it difficult for any concrete observation to be made. But, what can be safely said is that the hope of finding employment is falling under Modi’s rule as noted through the falling LFPR. Those in regular wage employment don’t have job and social security. As much as 58.6% of those who are regular wage employees don’t have any written contract, 47.9% don’t have any paid leaves and 53.8% do not have any form of social security as per the PLFS survey for 2022-23.
Way Out from Economic Injustice
The response of the Finance Minister in the Parliament on the economic situation failed to address the underlying structural issues determining economic growth and its distribution. However, it hovers around highlighting cash transfers and free ration schemes of the BJP government. The response is based on selective and dishonest quoting of data. It is apparent that in the present term of Modi, the economic growth was only 4.4% per annum. Employment situation was worrisome as reflected in the falling LFPR, food inflation continues to hit hard the bottom half of the population, inequality is rising while the economic policies of the government continue to favour the rich and corporates. There is a need to galvanize public opinion in favour of an inclusive political narrative that stands for economic justice for the workers, farmers, youth and the toiling people.
