Modi government in a ‘jam’
Financial inclusion of the neglected section is alright. So are Swatchh Bharat (Clean India), Clean Ganga, Beti Bachao, Beti Padao (save the girl child, educate your daughter), Make-in-India, Zero -Defect, Zero-Effect, Defeat Poverty, and so on. It is nice to know the Union Government has promised a massive amount of capital to states like Bihar (Rs. 1.25 lakh crore), Andhra Pradesh (more than 1.25 lakh crore), Telangana (close to Rs. 30,000 crore), West Bengal (over Rs. 16,000 crore) and, more lately, Jammu and Kashmir (Rs. 80,000 crore). Unfortunately, the government’s promises have little to do with performance. Not many states have received any money from the Centre than what are normally due to them. Nothing seems to be moving from Prime Minister Narendra Modi’s stable, except probably some catchy slogans, well-coined project names, and acronyms. The latest one being “JAM”, which is an acronym that stands for Modi’s pet combined financial inclusion project under three schemes – Jan Dhan Yojna, Aadhaar, and Mobile connect. Modi, a great wordsmith, has provided another expansion for JAM, which, according to him, stands for “Just Achieving Maximum”. Modi might have been in an expansive mood, less than 48 hours before the Bihar election results started coming out.
It is a “real” JAM for the government and the nation. Modi’s pet sloganeering around “development” is being seen more as political blank fire than anything of much substance. In fact, the Modi government has not been able to release itself from the UPA-time project logjam. Over Rs. 10-lakh-crore worth projects are hanging fire since the UPA government left the office about 18 months ago.
Little has been done to ensure that they took off within a reasonable time after the new government took charge in the May of 2014. In addition, the freshly announced projects as 100 smart cities are yet to take off. There has been little new activity in the employment-intensive organised sectors covering core areas such as steel, coal and power, manufacturing, infrastructure, sanitation, and mass housing since the government has left most of them for implementation by the private sector.
And, in the government’s own admission, the private sector is still going slow in taking up investment projects. There is little progress around commercial corridors connecting Delhi and Mumbai, or Chennai, Bengaluru and Mumbai. There is no new sea port or sea linked port with a big draft facility, which India needs badly, no large acquisition of ocean-going vessels and other concerns, no additional airport, no new roads, and no new steel plants, even old projects with Japan and Korea are not progressing.
Given the circumstances, the economic growth rate as being officially projected by the government may not provide the right picture of growth. Roughly, the agriculture, industry and services sectors contribute to the economic growth. The sum total of the growth figure divided by three provides the growth rate. Therefore, even a negative growth in manufacturing or agriculture can be overwhelmed by the services sector, which may be handling or be connected with imports or imported products. It is interesting to note that India’s services sector during the first half grew by some 22 percent compared to the performance in the corresponding period last year. The outperformance of this sector could outshine the poor performance of both agriculture and industry in the national GDP growth rate calculation. It may not be out of place to mention that India’s export revenue is down for the 10 successive months since the end of last year. Imports are growing in volume and value, barring the cost of the energy import, led by oil, the value of almost all other items is up. The domestic prices of essential items have sky-rocketed, further pinching the pockets of the poor and the lower-middle class. The rich were never happier with uncontrolled gold imports making the country the world’s number one gold importer.
The growth of the economy is in a jam. India is yet to tap new coal block even after the case was out of the legal jam and the government auction. In the first seven months of the year, India imported a record 56 million tonnes of coal, breaking all previous records. The import growth is at 18 percent given the corresponding period. The oil import, which was 40 percent lower in value in the first half of the year, continues to surge substantially. Domestic steel and other manufacturing sector producers are hurt by “dumping” by other countries led by China. Even the micro and small scale sectors, manufacturing mundane items such as earthen lamps, fireworks, candles, decorative plastic flowers, tiny decorative lamps, pots, etc., are finding it tough to exist in the face of unfair competition from exporters from China.
Mobile phones, forming a key to the success of JAM, are almost all imported. The industry is rotting. The private sector is not keen on expansion mainly because of its existing capacity being under utilised and uncertain future. The Foreign Direct Investment (FDI) is hardly taking place in the labour intensive manufacturing, core and infrastructure sectors. A good part of FDI, going into acquisitions of existing assets, may be hardly of immediate value.
The real economy – agriculture and industry – is under severe strain. This is obviously making BJP’s and the government’s rhetorics around development agenda unreliable. The government and the BJP, now exercising power for over 17 months, is fast losing the trust of the country’s youth who helped in elevating Modi and the party to the government. The results of Bihar election and recent municipal elections in several parts of the country are probably influenced substantially by the government’s failure in the development front.
Over seventeen months passed since the BJP-led NDA came to power to rule the country, the government is unable to think and talk about anything other than JAM (Jan Dhan-Aadhaar-Mobile). If words could be a substitute for action, the current BJP-led NDA government at the Centre would certainly score top marks.
(The author is a senior commentator. Views expressed are strictly personal)