IN its first term, the Modi government had begun its journey on the economic front by dismantling the Planning Commission. The demolition and disruption campaign continued unabated as demonetization happened and took its toll, RBI was stripped of its autonomy, a half-baked and ill-conceived GST was enforced in an arbitrary manner, key economic data were surgically suppressed, maimed and manipulated, and the whims of a surveillance state disrupted and denied welfare benefits to the neediest by indiscriminately linking everything with Aadhaar. Now the second term seems to have begun with the government targeting the annual budgetary exercise, including the economic survey produced by the ministry of economic affairs that precedes the budget.
The government has sought to change the optics of the budget by wrapping the budget papers in a red file instead of the briefcase traditionally used by Finance Ministers. The Chief Economic Adviser even described this as a departure from enslavement to western thought and a return to Indian tradition. One wonders if this enslavement to Western thought would someday also refer to the Constitution and the parliamentary system premised on it. And intriguingly enough, what has been suggested as a return to the Indian 'bahikhata' tradition is in real life not an innocuous symbol of the account books maintained by the ordinary shopkeeper, but something that generations of impoverished and indebted Indians have experienced as the dreaded weapon of the merciless moneylender.
Let us return to the contents of the Economic Survey and the Budget. The Economic Survey is significant insomuch as it records certain key aspects of the comprehensive slowdown of the Indian economy - the deceleration of growth, the decline in savings and investment, the lack of jobs, the fall in consumption, the deepening banking crisis, the widening trade deficit and so on. As of now, it all adds up to a 'vicious cycle', but the Survey hopes it will abruptly give way to a virtuous cycle of recovery and growth which will deliver a 5 trillion dollar economy by 2024-25. And Modi and his team are repeating this goal in such a way as though it has already been achieved!
The hope is based on the projection of 8% growth rate in the coming years fuelled by increased private investment and political stability. There was no less political stability in the last five years. The BJP had its own majority in Modi's first term as well. If rather than leading to increased investment, the first term of the Modi government witnessed declining investment and growth, why should another five years of Modi rule deliver different results? The Survey offers no pointers or clues. It flippantly talks about the mandate igniting 'animal spirits' in the economy, haven't we already seen enough of that in the economy in terms of wholesale decimation of jobs and livelihoods?
At a time when mega corporate defaults are leading to mounting NPAs and the government is busy writing off massive amounts of unpaid loans and injecting periodic capital infusion to keep the banks alive, the Survey invokes religious principles to teach behavioural economics to hardened defaulters. It tells us how every major religion calls for timely debt repayment as if the Vijay Mallyas and Nirav Modis would promptly repay their loans once reminded of these religious principles! It cites the 'Swachh Bharat' and 'Beti Bachao Beti Padhao' campaigns as behavioral economics success stories, without bothering to address ground reports and surveys that do not corroborate these self-congratulatory tall claims. On the economic front, the Modi government remains obsessed with China, either it talks of learning from China or of competing with China. But while China's economic success relies on its strong foundation of land reforms and agrarian modernisation, huge public investment and massive network of small and medium enterprises, Modinomics focuses only on a few big private players and this year's Economic Survey once again repeats this narrow focus on big corporates.
Nirmala Sitharaman's maiden budget is also all about appeasing the big corporates and wooing FDI in the name of promoting investment. FDI norms have been relaxed across the board in single brand retail, insurance, aviation, media and animation sectors (but imported books will attract higher tariff rates), and public sector units are being readied for strategic slaughter for private acquisition. Interestingly, such private acquisitions are usually powered by corporate borrowings from public sector banks, and when overstretched banks tend to go bankrupt, the government jumps to the rescue with generous doses of capital infusion. Budget 2019 has just provided for another such heavy injection of 75,000 crore rupees of the hard-earned money of Indian tax-payers. Elections over, electoral bonds encashed, the payback time has perhaps just begun.
The privatisation drive is not limited to the infrastructure sector, increasingly it is targeting the entire gamut of public services. Transport, energy, education, sanitation and healthcare - the state has begun to abdicate its responsibility in all these key areas. The railways are out to hand over important stations, railway routes and production units to private companies, airports are being leased out to the Adanis and public investment and expenditure on education and health services is facing major cuts. The cruel difference between an insurance-based 'Ayushman Bharat' approach and physical availability of basic healthcare facilities can manifest itself as starkly as witnessed in the tragic toll of encephalitis deaths in Muzaffarpur, but market fundamentalism treats health as business and puts profit over people. The devil in a budget lies in the details and Budget 2019 has just slashed the allocation for doctoral and post-doctoral fellowships for SC and ST students from 602 to 283 crore rupees and 439 to 135 crore rupees respectively.
While the government abdicates its own responsibilities to cater to the basic needs and aspirations of the people, it cannot think of any other way to increase its revenues than once again increasing petrol and diesel prices and thus burdening the people with an across-the-board rise in prices of essential goods and services. The regime may try to mask itself behind big talk of turning India into a 5 trillion dollar economy, but as drought, starvation and joblessness stalk the land there can be no camouflaging the increasingly colossal economic failure of the Modi government. The dirty data games of the government - the macro economic data collected by the state are no longer credible while the micro data identifying the people are being daily stolen by private companies working in tandem with a surveillance state - cannot keep a lid on the explosive economic crisis for long.