The current regime has failed to deliver on its promises of development and clean government

Towards the end of the second term of the United Progressive Alliance government (UPA-II), from 2009 to 2014, the corporate sector (captains of industry) had become thoroughly disappointed with the slow rate of “progress” being made. The reputation of UPA-II had been tarnished by several high-profile corruption scandals. Significant sections of the Indian elite, both urban and rural, were also upset about the government’s modest welfare schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) and also rights and entitlements such as the Right to Information, Right to Education and the Land Acquisition Act, 2013.

The elites and upper middle-income groups were ready to strike back and found in Narendra Modi an able politician who could spearhead their agenda. He was the vikas purush who would restore high profitability for the corporate sector and provide a clean government. There was also a populist appeal of “development for all”.

However, the true meaning and significance of Mr. Modi’s ascent to power was not lost on those who had deep knowledge of India. Writing shortly after the 2014 general election, eminent economist and historian Amiya Kumar Bagchi remarked: “The corporate sector has now secured undisputed control of the commanding heights of the Indian economy and has succeeded in installing a prime minister, of whom they had been vocal supporters.” We are now at the cusp of another national election, so it is pertinent to ask what Mr. Modi has been able to achieve in the last five years.

It has become common now in some circles to describe the world that we live in as “post-truth”. Populism and the rise to prominence of leaders such as Donald Trump (U.S.), Jair Bolsonaro (Brazil), and Viktor Orbán (Hungary) have exposed us to a radically new vocabulary consisting of terms like “alternative facts” and “fake news”. It seems like evidence is far less relevant in influencing opinion than factors like sentiments, emotions or beliefs.

Backdrop of scarce data

While we understand the limits of claims made on behalf of “objectivity”, it is very difficult to imagine how a reasoned debate can occur without adequate evidence. Since Independence, India has carefully built an enviable reputation in terms of the integrity of its statistical organisations and the quality of its economic data. It is perhaps the most remarkable “achievement” of the present government that it has virtually destroyed this reputation by meddling in the work of statistical organisations, changing the methodology of computation of key figures (such as GDP), and by suppressing important data.

Given this, it is a major challenge to evaluate the performance of the present government. Of the various attempts that have been made to put together scarce evidence, a notable one is the very well-researched edited volume, A Quantum Leap in the Wrong Direction? It was Nobel laureate Amartya Sen who used the term “quantum leap” to critically describe the current regime, and the volume does justice to this loaded metaphor. It examines important dimensions of the present National Democratic Alliance government (NDA-II) and the past two regimes, UPA-I and -II, grouping them broadly under the subjects ‘Economy’, ‘Socioeconomic Indicators’ and ‘Governance’.

Key parameters

Two issues that are important in evaluating any regime are economic growth and distribution. India, of course, has been celebrated along with China as the growth engine of the world in recent decades. Has the economy under NDA-II outperformed in comparison to previous governments? Recent changes in methodology by the Central Statistics Office have rendered such comparisons very difficult. From the data in this volume, it is clear that NDA-II has underperformed in comparison with UPA-I and is broadly comparable to UPA-II. Average annual growth rates of GDP under NDA-II are estimated at 7.4% (the corresponding figures for UPA-I and UPA-II are 8.4% and 7.2%, respectively).

In terms of distribution, our own research (for the period 1991-2011) indicates that the Indian economy, after economic liberalisation, was largely driven by inequality-heightening rapid urban growth. Farmers and informal workers in the urban areas have faced acute distress and witnessed losses in their income shares. What has happened to inequality under the Narendra Modi government? This question cannot be easily answered because the latest survey data have not been released. Given this, the volume draws upon other sources of data such as income taxes and the Credit Suisse Global Wealth Database to make a persuasive case that Indian inequality has continued to rise.

The share of the top 10% of income-tax payers has increased at the expense of the bottom half. The wealthiest group (top 1%) owns more than half the nation’s wealth today and has consolidated itself during 2014-2018. What happened to the economic status of the most marginalised social groups, i.e. Muslims, Scheduled Castes and Scheduled Tribes? Unfortunately, relevant survey data have not been released. However, one gets a harrowing picture from the volume from other data. Crimes against Scheduled Castes have increased during the period 2014-16. What is noteworthy is that both overall crimes and crimes registered under the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act have increased in the Bharatiya Janata Party-governed States such as Gujarat, and Haryana. The media is rife with accounts of cow-vigilantism; but to give a statistical picture, Muslims comprised 84% of those killed during 2010-17 across the country. Almost all such attacks (97%) occurred under the present government.

Impact of signature policies

The two major signature policies that the government undertook — demonetisation (ostensibly to root out corruption) and the goods and services tax (GST) — have proved to be colossal disasters for the economy and the vast majority of Indians. Any doubts about the adverse impact of these policies is dispelled by the analysis in the volume. Comparing the periods before and after demonetisation, while the world economy witnessed improved growth (2.6% to 3.1%), the Indian economy suffered a growth decline from 7.8% to 6.8%. We believe that these two policies were launched to serve the long-term interests of the corporate sector at the expense of the vast majority of Indians who reside in cash-dependent informal and agrarian economies. It is unsurprising to read in news reports that the Indian unemployment rate is at a 45-year high (2017-18).

While it is amply clear that the current regime has failed to deliver on its promises of development and clean government, its true objective has always been to usher in a different kind of an economy and polity than the one that the UPA espoused — one that is more corporate and rural elite-friendly. The welfare orientation of the UPA-I (although it did not go far enough in our view) was quite unpalatable to the Indian elites.

A correction and reversal were asked for, and duly executed. It was also widely expected that the Modi regime would use a majoritarian nationalist mobilisation strategy (especially if economic gains were not forthcoming for the masses). This is exactly what has been delivered during the Modi years — a combination of elite-oriented growth and a majoritarian nationalism/Hindutva. Perhaps, in this sense, Mr. Modi’s government has succeeded exactly in what it set out to do.

Several people who voted for Mr. Modi inspired by his promise of development and a corruption-free India must now see the failure of his regime clearly on these fronts. As Rabindranath Tagore reflected, if the choice is between a nation that is fundamentally exclusionary, and a society that stands for basic human values and espouses tolerance among a multiplicity of cultures and identities, the path forward is clear.

Vamsi Vakulabharanam and Sripad Motiram teach Economics at the University of Massachusetts, in Amherst and Boston, U.S., respectively