With the tabling of the second volume of the Economic Survey in Parliament, the Finance Minister confirmed the suspicions of most economists on the state of affairs in the Indian economy. This stands particularly true in matters of growth and employment, both macro indicators, that had set warning bells ringing before the 9th of November last year and grew only shriller after.
In terms of growth, the Survey quite frankly admits the downside risks in the near term in achieving 6.75-7.5% growth rate, further accentuated by the distribution of farm loan waivers denting demand by an estimated 0.7% of GDP. The Chief Economic Adviser (CEA) also holds the waiver responsible for creating deflationary pressures that prevent the government from achieving its Consumer Price Index inflation target of 4% and points to the inevitable reduction in capital expenditure that will follow as the inevitable cost of funding such waivers.
Polarisation over issues of religion, nationalism and region has increasingly become the flavour of the times. This must be viewed through the lens of economic failure…
Employment is positioned in the survey as something that continues to be a “great challenge” with specific emphasis being placed on the informal sector that has been “characterised by high levels of under employment and skill shortages”. If this report is then seen in tandem with the recent figures released by Labour Bureau’s Quarterly Economic Survey, the scale of the problem becomes that much more apparent. With job creation for the nine months running up to December 2016 for the eight labour-intensive sectors of the economy (gems and jewellery; automobiles; IT; Textiles; Transport; Metals; apparel; leather and handloom/power loom) at an abysmally low 2.31 lakhs (well short of a target of even 1000 jobs a day) and the government abandoning its goal of training 500 million people by 2022, the crisis in the economy is best summed up by the CEA Arvind Subramanian himself when he says, “There has been an across-the-board deceleration in real activity.”
However, the governments at both national and state levels have chosen to overlook the economic signs and seem to be engaged in any and all endeavours to divert attention from the problem at hand. It is common knowledge in economic circles that unemployment and stagnation of wages often lead to social crises, but quite evidently governments at the national and state levels do not pay heed to such knowledge.
If core issues of employment and growth are left unattended, will we be able to address the social strife that emerges as a by-product? Do we even want to?
Polarisation over issues of religion, nationalism and region has increasingly become the flavour of the times. This must be viewed through the lens of economic failure for one to have some clarity over the correlation between economic under-performance and social conflict. Further accentuating the crisis has been the TV media coverage of the same, with channels pursuing patriotism tests and religion in their race for TRs, instead of addressing state failure in providing employment and economic development (and hence creating grounds ripe for social strife).
The resultant discourse has hence generated more heat than light, with even the most enlightened channels addressing only the symptoms of the problem rather than the problem itself. Perhaps a degree of reflection is in order within the media and political communities—if core issues of employment and growth are left unattended, will we be able to address the social strife that emerges as a by-product? More important however, do we even want to?