Let’s begin by looking at the state of the economy in which people have voted for PM Modi. During his election campaign in 2013-14, Modi raised expectations of a great economic revival, high growth and tens of millions of new jobs for the ever-growing workforce. The new government hit the ground running and the first two years were action-packed with new programs and plans. But, at the end of his five-year term, the economic slowdown is visible even through the fog of official statistics. Exports, barring a modest recent pickup, have been stagnant for the last five years, creating pressure on the economy, and reflecting growing lack of global competitiveness. Manufacturing is sluggish. Banking and the power sectors require urgent reform. Further, India’s unemployment rate hit 6.1% in the fiscal year ending 2018; reportedly the country’s highest in over four decades. An estimated 12 million young Indians join the workforce every year, and the country needs to grow much faster in order to provide jobs for all of them. Another set of figures released by the government showed that gross domestic product expanded 5.8% in the quarter ending March, 2019. That’s a sharp decline from 6.6% growth in the previous quarter and the weakest rate in last five years.
As a result, the state of the economy is sharply diminishing living conditions of millions of people in India, a country that is already home to some of the world’s poorest and hungriest people. More than half of India’s population (around 700 million) is still living under ‘multi-dimensional poverty’ compared to 5.2 per cent in China.
But, Modi, who first swept to power in 2014 on promises to revive India’s economy and boost growth and job market, won election again by even bigger margin.
Why did the people repose faith in him? Well, that’s the million-dollar question, isn’t it?
There were no serious corruption charges against the government and inflation was managed well during the first term (but faces upward pressure now). Further, one could attribute BJP’s success to better administration of welfare schemes/projects, and the Balakot strikes just before the election which retaliated against Pakistan’s sponsorship of terror groups and that pushed the spirit of nationalism. While all these factors may have played a role they do not, even in combination, satisfactorily account for the magnitude of BJP’s sweeping victory in the frustrating job market and skidding economy.
What may have worked for BJP is that it succeeded to a large extent in turning this election into a referendum on PM Modi. Opposition parties appear to have helped in this process as their campaigns have primarily been about ousting Modi, rather than offering positive alternative visions of what they will do if elected to power. As the opposition was fragmented and offered no obvious PM candidate, this cemented the TINA (There Is No Alternative) factor in favor of Modi.
But that is not the only reason behind his whopping success. It’s possible some deep structural shifts are taking place in the Indian polity and Modi was smart enough to comprehend these in his favor. Indians, especially the young ones, are in a hurry to move away from ‘Third World’ space it currently occupies. And, they sensed that Modi can do it. India could be second ‘China’ under his leadership! The BJP’s election manifesto, which was released just three days before the general election, aimed to make India a ‘developed’ nation by 2047, on completion of 100 years of Independence. “Our aim (is) to change India from a developing country to a developed country. We want to fight poverty rather than sit inside air conditioned rooms. Nationalism is our inspiration and inclusion and good governance is our mantra”.
Despite many problems people are confident that India’s ‘tryst with destiny’ could be achieved under Modi’s leadership. They consider him as a ‘messiah’ or expected deliverer of achieving the goal of developed and prosperous India. Here, the media played a very active and vital role in promoting that image. In fact, Modi was in virtual reality due to digital excesses. Possibly, voters might have thought that Modi would do wonders in his second term. We have to remember that Indians generally have hope when the situation appears to be hopeless. And, five years later in 2019, India has again placed high hopes in Narendra Modi. Will he deliver?
In 2014, Modi asked the Indians to give him 10 years to transform India. Well, here is his chance. So what should PM Modi do? A top American corporate leader, John Chambers, has asserted, while congratulating him on his election victory that “in the next five years, PM Modi will lay the groundwork for India’s economic growth and prosperity for the next quarter century.” And, there is no reason to doubt his observations.
First of all, two issues need urgent attention: agrarian unrest and the related job crisis. Any durable solution to agrarian crises requires non-farm jobs. The agrarian sector generates less than 15% of GDP but employed around 45% of the workers. It means that output per worker in this sector is less than one-fourth of that in industry and services combined. “With output per worker in industry and services itself low, per-worker output in agriculture is truly tiny”, noted by the economist Arvind Panagariya of Columbia University. One cannot resolve agrarian unrest without absorbing at least two-thirds of those dependent on the farm in non-farm jobs. So, generating non-agrarian jobs that provide adequate wages is the biggest issue.
Secondly, there needs to be a concurrent increase in productivity. India became the fifth largest economy in the world in terms of GDP in 2018 but still it has a very-very low per capita GDP, as per IMF. It is placed at 122nd position among 187 countries.
What is needed now is a new generation of economic reforms which will unleash productive forces and generate jobs.
Modi has to recognize that the export-oriented, low-skill, large-scale manufacturing jobs that developing economies have relied upon (and that was the key to much of China’s success) are on the wane around the world. Automation and AI are reducing the amount of low-skill work that the manufacturing sector requires and is adversely affecting the job market. Thus, there are many reforms that India is required to carry out to attain competitive strength in manufacturing and reducing the level of unemployment and underemployment. These would require changes in labor and land laws, cutting corporate and general taxes, and improving basic infrastructure especially uninterrupted cheap power supply. The availability of the water is another crucial issue.
Most importantly, unlocking the human potential to enhance productivity is a must and it should be India’s priority, since India’s Unique Selling Point (USP) is its people.
Let us consider some facts. India has done well over the past decade or so to get most of its children into school. It has done less well at getting them to learn anything. Analysts are, therefore, already worrying that India’s demographic dividend — its vast pool of young people — will become a curse: Without jobs, all those young people could drag down the country instead of pushing it towards upper-middle income status. The problem is that they are desperately short of preparation for both the old economy and the new. In addition, the population growth is also a worrying factor. The current population growth in India is mainly caused by unwanted fertility. Around five in ten live births are unintended/unplanned or simply unwanted by the women who experience them which trigger continued high population growth. Around 26 million children were born in India in 2018, and out of this about 13 million births could be classified as unwanted. Further, based on the National Family Health Surveys (1 to 4), it is estimated that in 2018 around 445 million people out of 1,350 million in India were a result of unwanted pregnancies. With a large number of people resulting from unwanted pregnancies, how can one think about using them for nation building?
What India does in the next five years will determine not only the destiny of the country but also of PM Modi? A person like Modi knows about it that the people elected him with immense hope that he will change their lives for better. Investments in education, health, living environment and its determinants – the social sector – therefore, should be made a priority in the next five years to lay the foundation for a developed India by 100th birth anniversary of India. For this, PM Modi must use unmatched political capital to make it happen today!
After obtaining formal degrees from Harvard and Australian National universities, Dr. Devendra Kothari has been working on issues pertaining to population and development. He can be contacted at: firstname.lastname@example.org or 09829119868. Last year, his comments on “Population and Climate Change” appeared in the New York Times (Sept. 11, 2018). Also see his Blog at: kotharionindia.blogspot.com