Chanakya's View: Indian economy vs the Maya Jaal

Maya hai bhai maya hai! Addressing the Chamber of Commerce in Kolkata recently, I invoked the philosophical concept of Maya to try and understand the state of our country’s economy today. Maya is the cosmic power of illusion, where the veil that it casts both hides the true reality of things (avarana) and distorts it (vikshepa). The result is that truth itself becomes elusive. The state of our economy is something like Maya.

It is not as if nothing has been achieved in the last four years of the rule of the NDA. No government’s record is a black or white polarity. But what exactly has been achieved, and in what quantum, is a matter of debate, occupying a space somewhere between fact and illusion. For instance, the government claims, with statistics to back it, that India has become the fastest growing economy in the world, with the highest GDP growth rates. Others question the statistics themselves and assert that they are fudged by an act of statistical jugglery. GDP growth is not above seven per cent as claimed, but at least two percentage points lower. Besides, critics say, if, indeed, we are the fastest growing economy, why doesn’t some of the dividends of this growth show on the ground? For instance, why are we still, out of 119 countries, at 100th position in the World Hunger Index, slipping three positions further down between 2016 and 2017, and substantially behind even Nepal or Bangladesh?

There are other conundrums. The government claims that the largest number of loans have been disbursed to farmers under a slew of schemes. But, if this is the case, why do farmers continue relentlessly to commit suicides? The government says that agricultural production in many sectors has been very high and we need to be proud of our farmers for this record-breaking output. In part, this is true. But, if so, why are our farmers being driven to throw their produce on the road, because there is no remunerative return for their hard work? The Pradhan Mantri Fasal Bima Yojana was a well-intentioned initiative, but experts say that insurance companies have benefited more in the implementation of the scheme than farmers.

The same shadow play is in evidence with regard to MSP. The government has announced that it will give the promised MSP to farmers. The promise was to pay them 50 per cent over their cost of production. This is a positive step. But has the decision come too late, and is it too little? The promise was made in the lead up to the elections in 2014. In 2015, the government gave an affidavit to the Supreme Court that the promise could not be fulfilled. Now, four years later, the promise is being redeemed, but there are significant questions on how the cost of production will be calculated, and even more importantly, in the absence of an infrastructure for storage and procurement, will the enhanced purchasing prices ever reach the farmer?

The penumbra between truth and reality, claim and counter-claim prevails in many other areas. FDI, the government claims, is at a record high, but the dollar versus rupee rate has plummeted to its lowest level ever; in the initial years of this government oil prices were at a historic low, but the benefits were not passed on to the consumer, and are now at an unacceptable high; inflation is in control at the macro level, but the middle class feels the pinch of rising prices in everyday life; a new record has been set in the opening of Jan Dhan Yojana accounts, but it needs to be established how many of them have still zero balance and zero transactions; the Ujjawala scheme for gas cylinders is, no doubt, a good initiative, but people say that almost half the cylinders given have not been refilled again; the project of the bullet train, when implemented, will indeed make Indians proud, but accidents plague ordinary trains in which ordinary people travel, since not enough money is available to optimally upgrade their safety and maintenance; Swachchh Bharat is a laudable goal, but an honest social audit is required to establish how many of the crores of toilets claimed to have been built are actually working, and why, after four years of this campaign, even in the capital of the nation garbage disposal is so poor that the SC is constrained to comment that garbage accumulating in the Ghazipur landfill will soon overtake the Qutub Minar in height?

The government says that there is no jobless growth. Crores of Mudra loans have been given, and self-employed entrepreneurs have proliferated. However, ordinary citizens claim that the promise of two crore jobs a year has been clearly belied and, in fact, jobs are not only hard to come by, but even those employed are being retrenched. The government asserts that the demonetisation was a bold step to cleanse the nation of black money; the intent was undoubtedly good, but there is little doubt that the implementation was a “monumental blunder”, and has dislocated the economy, particularly the informal sector, in very visible ways; the introduction of GST is without question a needed reform, but the manner of its implementation leaves much to be desired and continues to cause avoidable hardships.

The government was legitimately proud that India has gone up in the scale of Ease of Doing Business. But a perusal of the full report reveals a very mixed picture. Certain steps, such as the passing of the Insolvency and Bankruptcy Code in 2016 are a positive, but we are still very much near the bottom of the list on such an essential thing as the ease of starting a business. Taxation, the government proclaims, has been rationalised, but the ordinary citizen has lost count of the number of additional cesses added on to his tax burden. Corporate leaders are effusive in their praise of the government in front of TV cameras, but speak of a worsening investment climate and erosion of business confidence when conversing in private; corruption levels, it is claimed, have come down, but black money is back with a vengeance, and the list of economic offenders who casually flee the country with thousands of crores of rupees grows longer, while banks grapple with a mountain of NPAs.

Maya hai sab, maya hai! Who can underestimate its illusionary powers? The full truth lies somewhere below the veil. Who will unveil it is the million-dollar question.

H10