This will be the Narendra Modi government’s eighth Budget. We are told that the gross domestic product of goods and services in the coming financial year, meaning from April 2021 to March 2022, will be 11 per cent more than it was in the period between April 2020 and March 2021.
The Economic Survey last year had said that growth would be six per cent in the current year. It turned out to be minus 7.7 per cent instead.
In the coming year the government will again get the chance to claim that India is the “fastest growing economy” because from the minus numbers we will have modest growth of about 2.2 per cent over two years, between 2019 and 2022. This shift from negative to positive will come with the illusion that there is record shattering growth, which is simply bogus. The government also said this week that in 2019-20 growth, which it had earlier said was 4.2 per cent, was actually four per cent. This is the actual trajectory on which we are today. Indeed, it is lower than that, but let us leave that for now.
The point is that this is Prime Minister Modi’s eighth Budget. Can we discern, whether we are Modi haters or Modi bhakts, any idea of a grand narrative or a master plan? The fact is that we cannot. We have, in the words of a friend who was responding to Mr Modi’s national security policy, “some catchphrases, acronyms and advertise-able phases strung together”. Who remembers Make in India? This came with a superb logo of a lion striding boldly forward and a series of events. The logic of Make in India was that India was overly reliant on services, which while it contributed well over half of GDP only contributed 25 per cent to employment. By increasing the share of manufacturing, we would have more employment in the formal sector.
Well, manufacturing’s share of GDP since the launch of Make in India has actually gone down from 15 per cent to 14 per cent, and possibly now 13 per cent after the Covid-19 pandemic. Unemployment has naturally followed the opposite trajectory, going from about four per cent before Mr Modi became PM to six per cent, and then nine per cent. And this figure is not really accurate because we are at the lowest historical labour force participation rate. This means that the number of people who have no job and are not looking for work, having given up hope, is at the historical highest.
This is the despondency that is resulting in mass movements all over the country, as we are seeing in the current time. To return to the original point, eight Budgets is a lot. It is more than P.V. Narasimha Rao, the great reformer, got. It is as many, more or less, as Atal Behari Vajpayee, who was seen as the great liberaliser, got. People may not remember that the Jan Sangh, under Vajpayee, once promised to cap the salaries of all Indians at Rs 2,000 and said the government would take all income that came over that (the details of this are in my last book Our Hindu Rashtra). Vajpayee had also said his party would force Indians to build homes only on 1,000 square yards of land or less.
From such a socialist position, the same Vajpayee headed a government that was the most privatisation-oriented of any that came before it. His 2004 campaign was headlined “India Shining” because he believed his economic policies were strong enough and distinct enough for him to run on them. He lost the election, but it was not because he was wrong about his policies. They were of course quite remarkable. Can we say the same about what has happened to India since 2014?
Mr Modi’s first Niti Aayog head was a man who has spent his entire life saying open and unrestricted free trade was the only way for a nation to quickly grow its economy. That man, Arvind Panagariya, was left to lament over today’s policy, which is the opposite of free trade. Atmanirbharta means import substitution, which in turn means cheaper foreign imports are taxed at high rates so that Indian companies can sell to Indians at higher prices. Is this good economics? Mr Panagariya says no, but this is what we are now doing, a 180 degree turn from where Mr Modi had started.
Eight Budgets is sufficient time, more than sufficient, to at least be able to establish a grand narrative. This is where India was, and this is where we are headed, and this is how we will do it. Nobody today, including those inside the government, can fill in the blanks of this sentence. This is not because the policy and narrative are too complicated to describe. It is because there is no grand policy. It is being made up and shifted and changed and even reversed as we go along.
There is the conviction that THIS particular Budget will be the “game changer” that India has always waited for. That is what you will hear again after Nirmala Sitharaman presents a speech that will prove to be meaningless and numbers that will show themselves to be wildly off the mark.
But we will continue bumbling in this fashion, not mindful of what has happened over the last eight Budgets. We will allow this nation’s economy to be governed not by competence and demonstrable numbers but by charisma and charlatanry....