Modi’s ‘achhe din’ reality check: Pressure builds to deliver on election promise
There is growing pressure on the prime minister to deliver on his emotive election vow.
Rocking the youngest of his five children in his arms, street vendor Daata Ram watches his wife tend to two sick cows whose milk once supplemented their meagre income.
The 66-year-old’s family of seven survives on what he now makes by selling small quantities of puffed rice in Pandra Sikanpur, a one-street, hardscrabble town of 5,000 in Uttar Pradesh.
“I took a loan of Rs 30,000 to buy those cows but I think they are no good now,” says Ram, who uses a fourth of his monthly earnings of Rs5000-6000 to repay the local moneylender.
Across the street from Ram’s thatched hut is the sprawling house of Neeraj Kumar Singh, a well-off sugarcane farmer who lost multiple crops to back-to-back droughts three years ago, and then suffered when farm prices crashed last year.
“It takes two harvesting seasons to recover the loss of one,” says Singh who wants his sons to find jobs outside farming so that their lives wouldn’t be held ransom to the vagaries of nature.
But his four children have found no jobs, and the 60-year-old farmer is angry that he must now divide his 10 acres of cropland to secure their future.
Daata Ram and Singh sit on different points on the country’s income spectrum but, in their collective discontent, the two symbolise the rising pressure on Prime Minister Narendra Modi to deliver on his emotive election vow to bring ‘achhe din’, or good times, to Indians.
The Feb. 1 budget was a chance for Modi to unveil measures that would fulfil his 2014 guarantee of growth and more jobs, a task made all the more tough by his abrupt decision to drain out 86% of all cash in the economy in his fight against illicit wealth.
It’s also a challenge that is urgent, given that Modi has already crossed the halfway point of his tenure.
To his admirers, though, Modi has already made great strides – from reinvigorating the ossified hand of a government system that hobbled progress to biting the bullet on tough decisions needed to pull India’s economy out of a dangerous morass.
Many of his moves on inclusive, accountable governance and a freer hand to bureaucracy have resonated well with Indians tired of a rudderless government mired in corruption scandals and whose indecisiveness had left more than 700 major industry projects in limbo.
Some of that good work is showing.
The country’s annualised retail inflation is below the mid-point of the central bank’s target; public finances are better than before with higher income from taxes, monsoon-sown grain production is the highest in at least 14 years and the economy is more open to business than it has ever been. In its first two years, the government cleared more economic reforms – including deregulating diesel prices, cutting cooking gas subsidy and making it easier for companies to exit business – than in the last five years of the previous government. Millions more have been brought into the country’s banking system and the government has pushed digitisation.
In the latest budget, the government also announced incentives to labour-intensive sectors such as clothing and leather along with spending more on projects like roads, railways, low-cost housing and irrigation.
But Modi’s critics say much of this is old wine in a new bottle, minor cosmetic tweaks that haven’t put India on the path of a paradigm shift the prime minister had promised.
Economic growth hasn’t created enough jobs because of lack of investment, income inequality has grown, farm distress has soared and the cash ban has only worsened the economic outlook in the immediate term. Credit to industry remains flat and, despite higher farm credit target, disbursement levels have dipped as banks seek to avoid bad loans.
Even for some Modi fans like Rambir Rathi, a sugarcane farmer in Uttar Pradesh’s Baghpat, the dream of “achhe din” is coming unstruck.
“I voted for Modi. Farmers like us were promised Rs 500 for a quintal of sugarcane instead of the Rs 315 we were receiving then. I believed in him,” says the father of two.
“They told us our dues would be paid by the sugar mill owners but look what has happened. The rate is the same. Our dues remain unpaid.”
Asked to rate Modi’s governance of more than two years, Rathi gives the prime minister two on 10.
“Do bhi jyada hai. Mann toh nahin karta hai ek bhi dene ko (Even two is too much. I don’t feel like giving him even one),” he says, adding Modi had only done well on dealing with Pakistan.
…But farms in distress
With mounting debt, poverty, increasing health cost and other ballooning farming-related expenses, farm incomes dropped 50%-70% over the past years. And just farmers hoped to claw back from two years of back-to-back drought, the government ordered a disruptive currency ban that squeezed the largely cash-only agriculture sector.
Farm prices crashed as farmers dumped tomatoes and potatoes onto the streets, fed unharvested crop to cattle and farm hands sat idle. A farm loan write-off for two months after “demonetisation” hardly helped, some economists say.
February’s budget raised the farm credit target to by 11.1% to Rs 10-lakh crore in 2017-18 but, in reality, bank lending to farmers has dropped and the distribution of credit has focussed on a handful of relatively better-off states.
Expenditure on agriculture is seen rising marginally to Rs 2.06-lakh crore in 2017/18, but this in real terms might signal a decline.
Signs of distress are clear in cities as well. Sharp rises in education and healthcare costs in the last two years have hit India’s burgeoning middle class hard, denting Modi’s popularity among the relatively well-off.
Today, India stands before a unique moment in history: It could choose to squander its immense potential with its antiquated socio-political system, corruption and flighty business rules or build on its cultural heritage, democratic values and a young demography to transform the lives of its 1.25 billion citizens.
To begin with, two decades on, nothing less than a $10 trillion economy will secure India’s future, says a recent study by Pricewaterhouse Coopers( PwC). It will have to create jobs on a scale that can absorb 10-12 million people who join the workforce every year, including members of the emerging middle class — a billion strong by 2034.
But only 135,000 jobs were created in 2015 -- the lowest total in seven years and 67% lower than the number created in the last year of the previous government. In one quarter of 2016-17, for which official data is available, only 77,000 jobs were created – and of these 50,000 were government jobs.
The gloom is affecting the youth.
“I thought there would be a boom on the job front but despite emphasis on digital India I don’t see many job avenues,” says Subhanshu Sethia, a commerce student in Bhopal.
The “demonetisation” move worsened the plight of the vulnerably placed in the labour market in several ways, the most stress arising out of closure of establishments in the informal sector.
Back in Pandra Sikanpur, Singh says he will think twice about voting for Modi’s Bharatiya Janata Party (BJP) at the next general elections scheduled for 2019.
That view is far from universal, but is already on the radar of a government, which swept to power with promises of economic reforms and pro-business policies that appealed to aspirational Indians living in big towns and cities.
Modi has already started turning his attention to the hinterlands. Finance Minister Arun Jaitley this month said the government will spend a record amount on rural areas and farming to help double farmers’ income by 2022.
But Singh is unimpressed.
“Narendra Modi stressed on jobs during his speeches in general election. Where are those jobs?” he asks.
“I know how I feel is how many many more Indians feel.”
(With inputs from Ranjan Srivastava and Sumanta Ray Chaudhuri)