The nation has undergone a dramatic turnaround in its perception of economic prospects in the space of a year, mirroring the string of gloomy news emerging from official statistics. The latest survey by Pew Research Centre, a US think-tank, finds Indians have led the decline among major economies in the percentage of people who consider current and future conditions favourable. This is in contrast to China and Brazil, which are also part of the BRICS grouping of frontline emerging markets, where the significant majority of respondents feel their economies are chugging along just fine, and will continue to do so over the next 12 months. The Indian mood is on expected lines when the growth in gross domestic product has plummeted from 7% to 5%. The latest monthly data from factories, mines and power plants shows output has barely changed from a year ago.
The Pew study takes the mood of the nation a step further by asking people what keeps them from improving their lot. The Indian responses echo headlines over the recent past: joblessness, price rise, income inequality and corruption. The majority have more faith in the market than in State intervention, the emphasis becoming more pronounced as incomes grow and less in states with widespread poverty such as West Bengal, Orissa and Jharkhand. This makes a case for State intervention at the bottom of the pyramid without constraining the forces that lead to wealth creation in the rest of the economy. The concern over the rich-poor divide is fairly widespread which suggests Indians are coming to grips with the unfairness of freely flowing capital. The UPA, if it reads these findings, should take comfort from the fact that its broad focus on free-market reforms with proactive income transfers is in on the right track. Where things have gone wrong is in the execution of this vision, and it shows up in the national preoccupation with corruption and inflation. The government as the biggest facilitator naturally takes most of the blame in the survey when prosperity and social welfare gets locked up in the delivery.
A government headed for elections in less than two years must be asking itself whether the people are better off now than when it assumed office. The Pew survey, even discounting for its urban bias, is yet another pointer that the UPA must dust the cobwebs in its reforms and welfare machinery. Reviving the economy is critical to draw in voters from both ends of the income scale. The ruling coalition must rise above its internal contradictions that mistakenly place welfare before growth.