REAL INCOME OF AGRI-DEPENDENT PEOPLE HAS FALLEN

RICH ARE ONLY HAVING GOOD TIMES IN BJP ERA

By C. P. Chandrasekhar

On the economic front, it has indeed been an eventful three years under the Modi-Shah-led BJP government in India. In the policy realm, there have been two marked trends. First, the rapid rush to liberalization, almost as if to prove that this government is more “reformist” than the UPA and Congress governments that were largely responsible for introducing and taking forward the liberalization agenda in the country. An unflinching commitment to fiscal deficit reduction, a relentless pursuit of the GST, the return to the policy of ‘strategic sale’ of public sector enterprises that offers management control through acquisition of a minority stake, and the baseless clamour for labour market flexibility, a,re all indicators of one-upmanship in the neoliberal reform area.

The second has been a reliance on hype as a means of diverting attention from issues and outcomes that matter for the lives and livelihoods of India’s poor and lower middle classes. Slogans such as Skill India, Digital India, Start Up India and Make in India, that are made to parade as programmes though they lack any real substance, are pured into an expensive propaganda machine that is geared to making it appear that there is much the government is doing. When interest in these flag, as happened in the third year of the government’s term, special headline-grabbing manoeuvres are resorted to.

The most dramatic of such moves was the demonetisation exercise ostensibly aimed at doing away with the black economy, the corruption that feeds it and the currency counterfeiting that reportedly sustains terrorism. While demonetisation heaped much suffering on the poor, that suffering was identified as the short-term pain that needs to be borne for the sake of major medium- and long-term gains. The fact of the matter is that there is no logical argument to support the view that the demonetisation of notes of Rs 500 and Rs 1,000 denomination, which nearly froze economic activity, can have any significant effect on black money and wealth, corruption or counterfeiting. But the bizarre move did have the effect of focusing the nation’s attention on these objectives, and diverting it from issues that are more relevant to the everyday lives of people.

To back up this strategy of the government with evidence of positive outcomes, the government has relied on the selective use of suspect data to claim that the boom in India continues, making it the fastest growing economy in the world. In addition, leaks of minor investigations of sundry businessmen and major investigations of opposition politicians is used to establish that economic success is being combined with a return to probity in economic life. On the other hand, neither are major corporate defaulters on humungous loans from public sector banks convicted for their crimes, nor are their names revealed as a means of shaming them and bringing them the disrepute they deserve.

The loserinall this is, of course, the common person. If the rich are to be given the benefit of low taxation and free lunches and the deficit in the central budget is to be sharply curtailed, expenditure must be the casualty. With the government wanting to show that it is building India’s infrastructure, China-style, the axe must fall on social expenditures. The net result has been that programmes, such as the Mahatma Gandhi National Rural Employment Guarantee Scheme and the National Food Security programme, that had been adopted by the UPA government to give neoliberalism a human face, are being deprived of funding. Despite being a programme that must be demand driven and despite large arrears on past wage payments, allocations for the MGNREGS have hardly risen. The ICDS has not been universalized despite intervention by the courts. And the NFS programme has been virtually starved of funds. This combination of deflationary budgets and cuts on important social sector programmes has had extremely adverse effects on a large part of the population. Employment growth has been sluggish, Labour Bureau figures reveal. Farmers hit by falling prices and/or rising costs have become indebted and take to suicide. Reports of deprivation and disease abound, even when the media give such news no priority.

The impact of all this has been particularly severe among those dependent on agriculture. Economist Prabhat Patnaik has estimated that over the three-year period 2014-15 to 2016-17, the income per heard of the agriculture dependent population increased by 16 per cent in nominal terms. Over the same period inflation based on the Consumer Price Index for rural India rose by 16.3 per cent. This implies that the real, inflation-adjusted incomes of the agriculture dependent population, which would be around half of the country’s inhabitants, stagnated. This based on national income statistics which even sections in government are skeptical about.

In sum, three years into the Modi regime it does appear that the good times have arrived only for the already rich, while a large section of Indians still languish and are deprived even of the support that special legislation like the MGNREGA and NFSA had promised them.
(IPA Service)

The writer, a leading economist on the country, teaches at Jawaharlal Nehru University.

<
Share this: More: