It is ironic that when Narendra Modi took over as Prime Minister in 2014 he had everything going in his favour, like benign oil prices, low inflation, etc, but now at the fag end of his government and as he seeks a second term, he faces serious headwinds. Industrial growth in February was at a 20-month low of 0.1 per cent, and has been slowing down since December’s 6.6 per cent that was a six-quarter low.
Inflation rose to a five-month high in March, pushed by high food prices. Low industrial production and high inflation make for a toxic report card on the eve of a general election. What is puzzling is that the low growth happened despite the back-to-back lowering of interest rates by the Reserve Bank to spur growth. Unemployment, Mr Modi’s biggest nemesis, is at a 45-year high due to his foolhardy exercise of demonetisation that served no purpose other than cause deaths and chaos, particularly in rural India, which is still reeling under distress.
Mr Modi’s promise of two crore jobs annually has been reduced to a “jumla”, with barely one per cent jobs or a few lakhs created annually. The result is that consumer demand and private investment are at a low. Private investment is cautious, given the political uncertainty ahead. Interestingly, in the last days of Dr Manmohan Singh’s second government, growth was at 6.7 per cent, in contrast to the Modi government’s claim of 7.5 per cent growth, which witnessed the “jobless growth” phenomenon, and has brought these figures under scrutiny by economists and others.
Whoever forms the next government — whether it is Mr Modi or someone else — will have a lot to unravel and set right....