The illusion, the reality check

Three years after the Modi government assumed office, the promise of job creation is unmet. The demon of corruption is not yet slayed

Written by Pranab Bardhan | Updated: August 5, 2017 12:40 am
narendra modi, modi government, corruption, modi govt corruption issue, corruption in india, indian express news In general, the PR campaign has succeeded in creating the impression — and the media have gone along with it — that the current regime is much cleaner. (Source: Reuters/File Photo)

As the triumphal march of the Modi-Shah juggernaut continues, smashing the feckless and disorganised Opposition on its way, it is useful to ponder over at least two of the grand hoaxes of the current regime over the last three years that have been impressively successful with the general electorate.

The first one, endlessly repeated in the election campaigns of 2014, was the promise of moving away from the politics of “dole” of the UPA regime, towards that of massive job creation, reproducing the dazzlingly successful “Gujarat model of development” in the rest of India. This appealed to the “aspirational” youth, particularly in north India, where there has been a youth bulge in the demographics. That the Gujarat model of high growth was not really an exemplar in job creation (a substantial part of Gujarat manufacturing growth was in highly capital-intensive activities like petroleum refineries and petro-chemicals) did not deter that appeal.

In the last three years, it is now clear to even the fawning media and politicians that the pace of job creation has not been particularly shining. Some data (for example those of the Labour Bureau for a select number of mainly labour-intensive industries) show even a job decline. In particular, regular formal sector jobs, which is what the aspirational youth hanker after as they leave the low-productivity jobs in agriculture, have remained a tiny proportion of the total employment. The backlog of “surplus workers” (as estimated in the India Employment Report 2016 on the basis of National Sample Survey data) exceeds 50 million workers. As the glittering job promises by the “vikas purush” fade, inevitably the diversionary tactics on the way to 2019 increasingly involve the polarising, majoritarian, poison-fuming Hindutva machinery of the ruling party going into overdrive.

If the supreme leader cannot give you good jobs, he can at least impress you with his valiant fight against the demon of corruption. Even if you dismiss the election promise of getting Rs 15 lakh in everybody’s bank account from the foreign-stashed corrupt money as what BJP president Amit Shah called “jumla”, you cannot ignore the bold launching of the “brahmastra” of demonetisation in November 2016. This has turned out to be one of the grandest hoaxes in Indian political history.

First, the objective was to vapourise the corrupt cash hoarded by the rich, then to eliminate counterfeit money, then the source of terrorists’ finance, and finally to stimulate the use of digital money. Now as the Reserve Bank keeps on counting the returned notes for eternity, it is clear to everybody that either the hoarded cash was puny or was deftly returned with impunity by the hoarders.

(Some people even suspect that maybe the Reserve Bank does not want to admit that they have got back more notes than they had circulated, possibly because demonetisation has provided an opportunity to legalise even some of the counterfeit money). As for encouraging the use of digital money, many other countries have done that without anywhere near the enormous hardship of demonetisation.

We now have plenty of evidence of the hardship, and not just from the bank queues that the urban middle classes experienced. Primary survey data from wholesale and retail traders around Bengaluru suggest an average fall of 20 per cent in sales in December-January (about one-fifth of the respondents reporting more than a 40 per cent drop in sales). A survey in December-January (EPW, May 6) showed that in Panipat, a textile hub of north India, there was a collapse of domestic business sales of 40 per cent to 80 per cent — as a result, about half of 3,50,000 workers employed there were laid off, and there was no cash to pay wages.

The prime minister cited GDP data to taunt “Harvard” academics; his economic advisers did not dare tell him that those short-term GDP calculations, based mainly on projections from formal sector data, are meaningless in capturing the real GDP changes in the vast informal sector in times of economic shocks like demonetisation.

Yet, and this is the political magic of the hoax, people thought — and we have survey evidence to back it — that all this hardship was worth bearing for the greater cause of fighting corruption and punishing the dishonest rich, even as the latter actually got off quite well.

In general, the PR campaign has succeeded in creating the impression — and the media have gone along with it — that the current regime is much cleaner. Let us ignore the gigantic Vyapam scam or the Lalit Modi scandal in BJP-run states. The auctions for natural resources are now much cleaner, people say. Actually they started being cleaner, under Supreme Court orders, in the last years of the UPA regime.

Also, with the international mining boom over, there is now less money to be made in these sectors. No action has been reported to be taken on the findings of the Directorate of Revenue Intelligence on the cases of large over-invoicing of power equipment and coal imports by some of the big corporate houses. Many stories about continuing corruption in government procurement and land grabs continue, but the CBI and ED are not overly active in pursuing them if they involve ruling party politicians, and the intimidated NGOs and media largely keep quiet.

Then there is the elephant in the room, the matter of large election funding, particularly for the ruling party. Political parties have been exempt from RTI and retrospectively from FCRA (a blunt instrument regularly used to harass NGOs). The attempts at so-called reform in the form of “election bonds” have made matters even less transparent.

Meanwhile, the Whistle-blowers Act is being diluted, and the authority for tax raids given even to junior officers has multiplied opportunities for extortion. But people believe — and the hired trolls will go on screaming — that the spectacular slaying of the demon of corruption is continuing and that’s what counts in our leaders’ triumphal march towards an Opposition-mukt majoritarian semi-authoritarianism.

The writer is professor of graduate school at the department of economics, University of California, Berkeley

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  1. Ravin Shanker
    Aug 12, 2017 at 5:23 pm
    This newspaper is an illusion ha ha ha ha
    1. J
      Aug 12, 2017 at 11:03 am
      I think the author needs to first realise that the country was well below the drain. There have been sweeping changes in eliminating babudom by performance measurement. We have basic amenities reach the rural diaspora. There has been virtually not a single corruption that has been discussed in the question hour. The morality is up by foreign investors. Yes there are hurdles and will continue till at least we get out and close the drain lest we fall back into it.
      1. B
        Aug 7, 2017 at 5:59 pm
        The only excuse this article has for its ridiculous content is that the author is sitting in an ivory tower in far off Berkeley. Does he honestly believe that joblessness in India and corruption in India can be solved in 3 years? If he does, it is not just naiveity but dementia.
        1. S
          Aug 7, 2017 at 2:09 pm
          Very Nice and insightful article! Gives the picture of real India! 75 of the population lives in the rural India and most of them are in the unorganized sector of employment. Current Government is full of slogans without catering to the ground reality!! No positive development have happened for the Common People either by Make In India or Demonetization!!
          1. J
            Aug 12, 2017 at 11:05 am
            Read bkumars reply. Very apt and get your facts right
            1. T
              Aug 12, 2017 at 11:11 am
              If you think unemployment and corruption can be solved within a matter of 3 years, with such a vast population, your utopian dreams will definitely be shattered. My question is, What are you doing to improve India as a citizen? Stop being so querulous. The author has clearly shown his hatred toward Narendra Modi and this is not a proper way of critical analysis. The current Government is being realistic with its goals and let's respect that. It takes time to reach the goals. We need to understand that. If you cannot contribute something to the country, then you're just a baby depending on its parents to help your growth. We all need to work together with the Government and build a great future!
            2. I
              Aug 7, 2017 at 11:03 am
              1. The current govt started off by changing the GDP measurement, now is changing the jobs statistics - what other definitions will change to show off its 'achievements'? The govt has only done u-turns on its pronouncements and continued with the UPA programs (incl GST) by marketing them with or without new names. 2. The govt has messed up the telecom sector which now has only three players against the earlier 8-10 players per circle - guess who gains from this. Through the current GST, the govt has messed up the small businesses (no one will buy their goods or services since the credit would be unavailable or their costs go up due to GST compliance). In any case, by making exceptions, the compliance has not been simplified but increased - businesses have to maintain GST and local tax compliance.
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