Sunday, January 06, 2019

The Indian economy is growing, but people are not.

In 2014, Prime Minister Modi's party, the BJP won absolute majority in parliament with 282 seats, with the Congress reduced to a paltry 44 seats, which was less than the 10% of seats required to merit the post of Leader of the Opposition. Over the next few years the total number of Congress MLAs in India dropped from 950 to less than 800 but recent victories in the Hindi states of Madhya Pradesh, Rajasthan and Chhattisgarh has rejuvenated the party, wrote P Bhattacharya. "The swing against the BJP has been nearly even across the rural-urban divide with a roughly 4% swing in vote share across the rural and urban parts parts of the four of the five states that went to polls recently (excluding Mizoram)." "While Modi still remains the most popular leader across the country, his popularity is waning, surveys show." "The voter has effectively kicked the so-called TINA (there is no alternative) factor out of the equation in what seems to be an ominous portent for the Modi-led BJP." Why? A study by the Centre for Monitoring Indian Economy (CMIE) found that unemployment stood at 6.9% in October 2018 and the number of people in employment had fallen to 397 million, 2.4% lower than 407 million people employed in October 2017. Along with a lack of jobs growth in wages has been muted. "Between fiscal 2006 and 2009, annual growth in wages averaged a huge 21%. This has declined to a measly 8% over the past four years." The explosion in wage inflation may have led to a surge in average consumer price inflation to 10.83% in 2009 and to 12.11% in 2010, which led to the heavy defeat for Congress in 2014. Retail inflation hit a 17-month low of 2.33% in November 2018. Unfortunately for Modi, the fall in retail inflation is due to a crash in prices of food crops which is leading to severe hardship for the rural population. "Since May 2014 when this government took over, real wages of agricultural labourers have grown at the rate of 0.77% per annum until October 2018, whereas it has grown only at 0.02% per annum for non-agricultural labourers ," wrote Prof Himanshu. "Since November 2016, real wages of casual workers are almost stagnant with almost no growth." "It certainly points towards a trend of increasing impoverishment and rising inequality, both of which are not good for the economy." Modi has spent $640 million on advertising himself and $280 million on photo ops in foreign lands. Civil servants attempt to make up the shortfall by unfair tax demands and then resort to unnecessary appeals to higher courts to cut their losses. There are 4 months left to general elections and many things could happen. But whoever comes to power the same bankrupt policies will continue. India will remain poor. 

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