ISLAMABAD – Nonagenarian Bharatiya Janata Party leader LK Advani once saidabout Prime Minister Narendra Modi that he could hold a masterclass inevent management: a rather acidic dig at the latter’s ability to manipulatethe news feed.

But even that dexterity is apparently getting nullified as dark cloudsenvelop the Indian economy in a bear embrace. The headlines said it all:‘October 2019 PMI (Purchasing Managers Index for the manufacturing sector)has crashed to a two-year low, and consumer confidence is lowest in over 30months’.

But that was not all: unemployment peaked at a staggering 3-year high of8.5% (according to Centre for Monitoring Indian Economy) even as coresector output shrank by 5.2% to hit a wretched 14-year low in September2019.

After doing a weekly serial of mini-budget announcements to neutralize thedisastrous repercussions of a dismal budget, Finance Minister NirmalaSitharaman, instead of reviewing the impact of her policy changes, spentconsiderable time doing what the BJP does brilliantly: blame the Congressparty.

It was puerile, and frankly, preposterous. Her pugilistic propensitiesboomeranged when former Governor of the Reserve Bank of India RaghuramRajan had to remind her that he spent two-thirds of his term under the BJP(curiously she accused him for the public sector banks’ NPA mess when he isthe one who shepherded the clean-up).

The Indian economy is headed for a serious stagnation unless the complacentgovernment, that is in a deep sleep like Rip Van Winkle, wakes up. RBIitself has lowered India’s GDP growth forecast for FY 2019-20 to 6.1% whichwill be the lowest in 6 years. The IMF, World Bank, etc. are all equallybearish. Credit rating agencies have downgraded their expectations too asthe once favourite emerging market darling turns sour, effectivelysquashing its rising curve.

While there are several reasons for the virtual recession in India likerising rural distress, record levels of joblessness, falling consumerdemand and comatose private capital investment, flat exports, theunresolved twin balance sheet problems of bank NPAs and large wilfuldefaulters, the collapse of the NBFC sector triggered by ILFS, there arefour distinct red flags that should worry us all Indians.

To say that the Indian economy is gasping for breath on a ventilator willnot be an exaggeration. Resuscitating it will not be easy unless first thegovernment accepts the severity of the dilapidation: it still gives theimpression of living in a fool’s paradise.

Firstly, Indian government’s data integrity has itself become questionable.We are being compared to China’s dodgy data, pregnant with brazenmanipulation. For example, the CAG reported that India’s real fiscaldeficit could be as astonishingly high as 5.8%, while the governmentclaimed it was 3.46%.

For a long time, the government trashed the official unemployment figureswhich are at a record 45-year high. Farmer suicides data has not been madepublicly available for the last couple of years. Why? What is thegovernment trying to hide? This is a pharaonic damage to our globalcredibility among international investors.

The second gigantic problem is that the government seems to have completelyignored the vital role of agriculture, where 50% of our people areemployed. The doubling of farm income by 2022 is a complete sham, literallyimpossible to even fathom, forget its accomplishment. The agriculturalsector grew by a measly 2% over the period of 2014-19 despite excellentmonsoons in the last 3 years, and was almost half of UPA’s 3.85%.

The BJP reneged on its promise of giving Minimum Support Price by tellingthe Supreme Court of India that it would distort market rates.Understandably, farmer protests rose from 628 in 2014 to 4,837 in 2017. Thereal wages of agriculture labour barely rose by 1% in the last few yearscompared to almost 10-15% in the past decade.

In short, a government that seems to be obsessed with inflation-targetingdecided to nonchalantly dump the farmers by the wayside. With farm incomesat an abysmal 14-year low, once can see the decline in rural demand nowdevastating the formal sector as well resulting in the economic slowdown.

The attempt to keep prices low has come at a great cost to those who aremost vulnerable in our ecosystem.

Thirdly, the government seems to have misread the problem confronting theeconomy which is actually a demand contraction created by the voodooeconomics decision of demonetisation and the ham-handed execution of theGST. Instead, they are fixing the supply-side; it is like giving someone afoot massage who is suffering from a migraine headache.

By appropriating Rs 1.76 lakh crore from the RBI and giving it as a taxbonanza to the corporate sector the government missed an opportunity toboost public expenditure and increase MNREGA outlay and help the MSMEsector that would have augmented demand. Instead, most likely industry willabsorb the higher earnings as retained profits given the fact that capacityutilization is at a mere 75%.

Productivity growth does not happen because of mere surpluses, they are aconsequence of technological upgradation, talent enrichment, and creativeinnovation etc. That is why despite the RBI dropping repo rates, it has hadnegligible impact on fresh investments which are at a 16-year low. Thegovernment, both myopic and incompetent, transferred its own obligations tothe business community that is unlikely to have any material impact even inthe medium term.

In the long-term, of course, we are all dead. India’s GST collections areat a 19-month low signalling slumping consumer purchasing power. And byOctober end, India was already at 93% of its fiscal deficit. Unless thereis the dissembling window dressing of data, our fiscal profligacy will onlyexacerbate further.

The National Democratic Alliance has lived up to the jibe of being a ‘SuitBoot Ki Sarkar’. One reason why India lags behind in GDP growth is the highinequality in India where roughly 1% of Indians own 60% of its wealth. Bykeeping GST rates high we have aggravated the woes of the ordinary peopleand the middle class; indirect taxes are regressive in nature.

Our ranking in Global Hunger Index (102 out of 119) and Human DevelopmentIndex (130 out of 189) continues to be deeply alarming. Unemployment meansa humongous waste of human resources; the Modi government has destroyedIndia’s demographic dividend.

Our literacy rate at 71% is lower than that of Rwanda and Congo because newinvestment in education has dwindled. We have thrown away our competitiveadvantage. The cost to society of wasted human resources in the prime oftheir health and absorption of knowledge and skills capacity isimmeasurable.

While Indians have become poorer and are worse-off than before, the BJP hasbecome rich. Look at the money they get in Electoral Bonds, monopolizing95% of the funds received. It is a government of the 1% by the 1% for the1% clearly catering to big business, campaign finance donors andrent-seekers ( one industrialist got a sweeping mandate for severaldomestic airports at one shot) .

The bottomline is that the Indian economy is like sky-diving from a heightof 36,000 feet above sea level without a parachute. It is a free fall. Buta frosty finance minister seems to say half-way to the fall to perditionthat it is ‘so far, so good’. The grass on landing unfortunately will notbe a green shoot. -APP/AFP