We have entered the 13th consecutive quarter of economic slowdown in India
We have entered the 13th consecutive quarter of economic slowdown in India. The Gross Domestic Product, meaning the total value of services and goods produced in this country in the last 12 months, has shrunk in 2020-2021, compared to 2019-2020. We made less than we did in the previous year. To return to where we were in January 2020, it will take perhaps another year. Perhaps longer, we do not know.
The problem did not begin with the Covid-19 pandemic; it existed much before that. Growth began declining from January 2018 and has declined sequentially, meaning every quarter since then. The government has tried to tweak some of the numbers, something that Americans refer to as “putting lipstick on a pig”, but to no avail. It is a sequential decline over three years. The India growth story is over and has been over for a few years now. You can make all the speeches that you want, you cannot argue against 39 straight months of slowing down.
Speaking loudly of competing with China and America but then falling behind even Bangladesh’s per capita GDP does not inspire confidence. The fact is that even without the lockdown we were in a crisis, a word that is used loosely but can be said to be accurate here. The government has no idea why the economy began to stall from January 2018. There are theories from the outside, but they are not discussed or debated in the government -- who will tell the king that his rule is incompetent? Nobody, unless they want to lose their head (or at least their job), and so we continue to bumble on, along the same path that has brought us to this disaster.
The signs of our decay are all around us. Work that has left China because of Donald Trump’s trade war and Covid-19 has not come to India but to Vietnam and Bangladesh. Our neighbour has crept ahead of us in per capita GDP because its exports (powered by high-labour garments manufacturing) are growing, while ours have not grown since 2014. We have six years of zero growth in exports. It is also ahead because it has a much higher participation of women in the labour force. In India, the patriarchy is more concerned about who Indians marry rather than why they are not working. India is the most dangerous place for women in the world. According to the Thomson Reuters Foundation’s World’s Most Dangerous Countries for Women, we were at fourth place in 2011 and then fell to last place in 2018, where presumably we still remain.
The low participation of women in the workforce has many complex reasons, but the failure of the State and indeed the inability of this current government to stop the slide further, is also responsible.
We have more of the same to look forward to in 2021. We will not see the economy pick up, but we will see more bombast from the government about how well we are doing. The enormous hole in the economy that was created in the first quarter of last year (April-June) because of the lockdown will have been filled over the last few months. When results for the same quarter year on year appear sometime in the middle of 2021, Prime Minister Modi will exclaim that we are the world’s fastest-growing economy and pretend that the 25 per cent increase is not just the filing up of a hole he had himself created but some miracle he has delivered to the Indian economy. The Economist has reported that Mukesh Ambani’s wealth rose 350 per cent in 2020 and Gautam Adani’s rose over 700 per cent, but we are at record unemployment, which is hovering around the nine per cent mark. And it is not higher still only because many crore Indians have removed themselves from the job market. Those who are not employed and are not actively looking for work are not considered unemployed. The real figure could be approaching 15 per cent, and perhaps even higher than that. On every conceivable metric that you can think of, from bank credit growth to automobile sales, the revelation is not only that there is no India growth story but there is a decline that has set us back years, perhaps a decade.
And yet the triumphalism carries on. The BJP won almost half the seats in West Bengal in the 2019 Lok Sabha election, and one will be very surprised if they do not win the Assembly election there later this year. The amount of resources they have because of the electoral bonds and because of the broad support that Narendra Modi gets from Corporate India can’t be matched by any other party and in fact can’t be matched by all the other parties put together.
Another state will fall to the BJP, and if it doesn’t this time then certainly it will the next.
Elsewhere, society has been torn apart, most likely in a way that cannot ever be repaired. I am not saying this out of despair, but one has to be realistic. This amount of poison being injected from the top cannot be detoxified without resistance and one sees no resistance to it.
On every parameter, from economic decline to national security failures to unemployment to social tensions, India will continue on the path that it has chosen for itself since 2014. But at least Narendra Modi will continue to be popular, making his daily sermons about how much better things are under him and how bad it was in the past.