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PM Narendra Modi faces criticism as India loses ‘fastest-growing major economy’ tag

For the first time in his three-and-a-half year rule, PM Narendra Modi is facing sustained discontent over his economic policies as growth slows, job losses mount and distressed farmers protest.

By: Bloomberg |
Updated: October 12, 2017 2:23:16 pm
Narendra Modi, BJP, GST, Demonetisation, Yashwant Sinha, Congress, 2019 General Elections, Economy, India news, Indian Express Prime Minister Narendra Modi (Express Photo/Renuka Puri/File)

For the first time in his three-and-a-half year rule, Prime Minister Narendra Modi is facing sustained discontent over his economic policies as growth slows, job losses mount and distressed farmers protest.

Four senior members of Modi’s Bharatiya Janata Party (BJP) have hit out at the government, emboldening the country’s weak opposition and challenging the previously unstoppable leader to find quick fixes before the 2019 national polls and a raft of state votes. And as criticism of the Modi’s economic management intensifies, the usually loud voices of his supporters are falling silent.

India lost its “fastest-growing major economy” tag as growth slipped below 6 per cent in the latest quarter. The moderation was partly the result of Modi’s boldest moves — demonetization, as well as the chaotic introduction of the goods and services tax that continues to disrupt supply chains. As talk of a stimulus to boost growth sparked concerns of fiscal slippage, foreign investors went on selling spree and rupee started falling.

“The act of dissenters has the potential of snowballing out of control,” said Sandeep Shastri, a political analyst and pro-vice chancellor at Jain University in Bengaluru. The response of the prime minister and party president Amit Shah “is indicative of the serious attempt at damage control.”

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Narendra Modi, BJP, GST, Demonetisation, Yashwant Sinha, Congress, 2019 General Elections, Economy, India news, Indian Express

War of Words

The criticism of Modi’s handling of the economy is mounting, with Yashwant Sinha, former finance minister under Atal Bihari Vajpayee’s BJP-led-government, writing a strongly-worded piece saying the economy was in a “mess”. In an interview to Bloomberg Sinha said he was the voice of many in the party who wouldn’t speak out of fear.

BJP leader Shatrughan Sinha backed him. Sinha “has shown the mirror on the economic condition of India”, he tweeted, calling it a “matter of grave national importance.” Arun Shourie, also a minister under Vajpayee, equated Modi’s move to ban 86 per cent of the currency in circulation to tackle unaccounted wealth with ‘suicide’. Subramanian Swamy, a former Harvard lecturer and BJP lawmaker, warned the economy was heading for a “major depression”. Congress leader Anand Sharma called it “monumental mismanagement” of the economy.

Modi hit back. A “handful of people” were trying to “spread pessimism” based on the growth numbers for a quarter, Modi said on October 4, in a rare moment on the defensive. He added his government was fully committed to reverse the trend of slowing growth and “ready to take decisions.” And his ministers — including Yashwant Sinha’s son, Jayant Sinha — have fallen in behind their leader.

“If he is able to resolve the immediate economic challenges, then the impact will be minimal,’’ said Ajoy Bose, a Delhi-based author and political analyst. “The government and the BJP are aware that public is slowly getting annoyed with them — there is a general perception that instead of getting better, things are getting worse.”

Jagdish Thakkar, a spokesman in the Prime Minister’s Office, didn’t respond to calls seeking comment.

Expert Advice

Apart from political adversaries and party members who may have an axe to grind with him, Modi’s ardent supporters are also showing disappointment. Rashtriya Swayamsevak Sangh (RSS), the ideological parent of BJP, has expressed concerns on the impact of government policy on small traders.

Modi constituted a five-member panel on September 25 to advise him on economic issues, signalling an awareness of growing concerns about the prospects of the Indian economy. His finance minister, Arun Jaitley, followed it up by reducing sales tax on about two dozen items last weak to ease the GST burden and douse public resentment over a rise in prices.

And while Modi is partly responsible for the dip in growth, he can’t do much to revive it, said D. H. Pai Panandiker, president of New Delhi-based think tank, RPG Foundation. “Some problems will drag on — unemployment is not going to resolve soon and we need correction of exchange rate and reduction in interest rates. The ball is in central bank’s court now.”

Struggling Opposition

Demonetization and growth slippage didn’t affect Modi’s prospects in state polls earlier this year. He got a thumping victory in India’s most populous state, Uttar Pradesh. Yashwant Sinha called it “good marketing” and said Modi would have to rely on it again as there was hardly any time to fix India’s problems before the 2019 polls.

“The extent to which the Modi government embraces expensive welfare programs in the 2017-2018 budget early next year will be one indicator of how worried the party is about its electoral chances,” Sasha Riser-Kositsky, an Asia analyst with the Washington-based Eurasia Group said via email. “While there is still time for a serious challenger to emerge, the opposition is bereft of both leadership and a compelling platform that it can present as a credible alternative.”

Modi may not have the same edge in national polls. He is yet to deliver on his promise of creating enough jobs for the youth in 1.3 billion-strong country. Distressed farmers have hit the streets amid slowing agriculture growth and dwindling incomes.

“At the moment, Modi is the tallest leader and there does not seem to be any clear cut alternative,” Bose said. “But at the same time, if there is public anger, then the larger you are, the harder you fall.”

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