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Opinion Op Ed 23 Feb 2016 Polinomics: Who care ...
Paranjoy Guha Thakurta is an educator and commentator.

Polinomics: Who cares about the economy?

Published Feb 23, 2016, 12:58 am IST
Updated Feb 23, 2016, 12:58 am IST
Much has been made of the claim that India’s economy is growing by around 7%.
Representational image
 Representational image

Who would have imagined that the presentation of the Union Budget for the 12 months that start from All Fools’ Day is just round the corner? This will be finance minister Arun Jaitley’s third Budget; he will be presenting two more and then an interim Budget in February 2019 before the next general elections. But the economy seems to be the last thing that is occupying the minds of large sections of the population. Just about everything else is.

The agitation by Jats has suddenly disrupted the working of one of the more industrialised parts of northern India. Assembly lines manufacturing vehicles have shut down. Normal life has been disrupted not just in Haryana but in parts of the national capital region. But what has rattled the confidence of many has been the inability of the state government headquartered in Chandigarh, as well as the Central government in New Delhi, to anticipate the scale of the agitation and, more importantly, prevent it from escalating.


The same cannot, however, be said about the students’ agitations, first in Hyderabad and now in New Delhi. The actions — and inaction — of important functionaries in the government make it clear that there have been conscious attempts to further the Hindu nationalist agenda of the Sangh Parivar. The silence of our otherwise loqua-cious Prime Minister when it comes to dividing the country’s population into two categories, “anti-national” and “national”, has had the consequence of uniting all those who are not affiliated to the Bharatiya Janata Party. But that hardly matters to Narendra Modi.

It will certainly suit him immensely to portray all his detractors as “unpatriotic”. In this respect, he will be taking a leaf out of the book of former US President George W. Bush Jr. who famously partitioned 300 million Americans into two groups: either you are with us or you are against us. Like the good pracharak of the Rashtriya Swayamsevak Sangh that he is, Mr Modi is clear that no dissenters should come in the way of his grandiose plans.

The four “angry old men” of the BJP (L.K. Advani, Murli Manohar Joshi, Shanta Kumar and Yashwant Sinha), their friends (Arun Shourie and Govindacharya) and sundry other dissenters (including Shatrughan Sinha and Kirti Azad) have been shown their place, in the margins.

The biggest names in the government too, Mr Jaitley and home minister Rajnath Singh together with party president Amit Shah, have no alternative but to remain abjectly subservient to the Supreme Leader of the Second Republic of India, now on its way towards becoming a Congress-mukt Bharat. They all know who’s the boss. And his game plan is clear.

What is already apparent is that the coming Budget Session of Parliament is likely to be frequently disrupted. Like the Winter Session, it may be a complete washout even if the government is allowed to present both the Railway Budget and the Union Budget.

Mr Modi will then blame his political opponents for acting against the interests of the nation by not allowing the government to put together a common goods and services tax (GST), enact a new bankruptcy law and institute a real estate regulatory authority.

Attempts will certainly be made to convert some of these proposed pieces of legislation into money bills that need not be approved by the Upper House of Parliament since the BJP does not have a majority on the Rajya Sabha — and will probably not for the next three years. Mr Modi’s bhakts will surely hope that the ensuing tamasha will divert attention from the current state of the Indian economy and the fact that jobs are not being created in adequate numbers because, among other reasons, private investments are not forthcoming and the physical infrastructure (bijli, sadak and paani) continues to creak.

For the first time in the history of the country, for the better part of the last year and a half, the wholesale price index has been in negative territory while consumer price indices have been rising, largely led by food prices. This phenomenon is particularly unusual because prices of diesel (used largely for transportation of goods) and petrol have come down in the tenure of the Modi government.

While international prices of crude oil have crashed, the Indian government has passed on barely a fourth of the benefits of the fall in prices to the consumer. By repeatedly hiking excise duties on petroleum products, the government has ensured that collections of indirect taxes have jumped by as much as a third in the April-December 2015 period.

Much has been made of the claim that India is the only large country in the world whose economy is growing by around seven per cent. Still, the fact remains that the credibility of the government’s national income statistics have been called into question by none other than the governor of the Reserve Bank of India, Raghuram Rajan, and the chief economic adviser in the ministry of finance, Arvind Subramanian.

Just like what happened during the 10 years when Manmohan Singh was Prime Minister, the country’s gross domestic product (GDP) can grow at an impressive clip and fiscal deficit targets will be almost always achieved. However, at the same time, few jobs will be created and inequalities of income and wealth will widen.

Mr Jaitley will surely seek to propose more “reforms” to assuage the business community (which is more than a little disappointed with the performance of
Mr Modi’s government for almost two years) that the “ease of doing business” will improve. Corporate taxes will be pruned, as has been assured by him.
But the external economic environment will remain hostile as much of the world moves towards a second dip during the Great Recession that started more than seven years ago.

India’s exports have fallen for 14 months in a row. The value of the rupee vis-a-vis the US dollar could hit its lowest level ever in the near future. A weak rupee is supposed to make the country’s exports less expensive and, hence, more competitive. That is not happening simply because there are few buyers for what we have to sell abroad. So who cares about the economy when it has become more important to ascertain who’s a deshdrohi (traitor) and who is a genuine patriot?