Retrofit: Hope vs fear in 2019 Jobs may hold the key

In May 2014, the plates of history were shifting before our eyes. The aggregation of the Hindu vote behind BJP prime ministerial candidate Narendra Modi brought him a mandate unprecedented in recent Indian history. The policy of appeasing minorities, practised for years by the Congress, was replaced by a spanking new era of faux nationalism and brute majoritarianism. This flinty germ passed into new carriers over the next few years to see massive wins in Assam and more recently in Uttar Pradesh. Mr Modi, through the power of his demagoguery, exploited the gap between rising expectations and declining opportunities. It was a calculus that an emerging cult plugged and played into.

All this destroyed and brutalised the psyche of the Congress, battling a raft of corruption scandals. The rout led to its abnegation from the political scene, till it began to regroup slowly and steadily, though the tyranny of 44 (now 46) members in the Lok Sabha, consistently derailed legislation. Hope, development and jobs has given way to optics and mindless rhetoric and a frenzy to win elections. Unkept promises have resulted in many more promises being made, leading to a quixotic situation to the utter befuddlement of the hoi polloi. Despite all this, what needs to be considered is that the BJP election machine continues to run seamlessly, crushing all imponderables strewn in its path.

But politics can never be monochromatic. India’s democracy certainly can’t be. Today the BJP, set to fight the next general election as the first among equals, stands at an apogee, distantly removed from all its tall promises, shorn of its epic claims, while the Congress and regional chieftains who had become relics from a deleted timeline have stormed back to centrestage, sensing and sniffing opportunity. Now is the time to dig deep, and if you find you don’t have a big enough shovel, you have to get out and make way. The two strongest suits of a right-wing political formation are the economy and defence/internal security. On reform, the process has been gradual and incremental with a lot of time wasted, initially on pushing legislation and being beaten back by the Opposition’s dominance in the Rajya Sabha. All this led to the dialogue between the two sides malfunctioning.

The government made a few attempts to resume the dialogue with the Opposition by repackaging UPA schemes, but it all came to naught. DeMo was an unmitigated disaster and while it may have successfully neutralised Mayawati’s cash economy in the runup to the UP elections, it threw India out of gear and disrupted lives. One can argue it will ultimately bring about a formalisation of the economy, where the black and white will converge. But the chrysallis is still not visible. Haste turned GST into an imperiled reform, again derailing the lives of exporters and wreaking havoc in the informal economy. Tweaking and rationalising FDI didn’t amount to anything, nor did record disinvestment receipts raised in the last financial year, for it meant shifting government receipts from one pocket to the other while strategic sale of privatisation remained a stillborn child. The insolvency and bankruptcy code is a flawed process, headed for failure, leaving a banking system in death throes.

In the PSU public offers, construed as disinvestment as minority shareholding is offered to institutions and the public, as much as 50 per cent on offer was lapped up by the government’s white-knight LIC (Life Insurance Corporation of India) in some cases. The LIC bailed out at least four initial public offerings (IPOs) from the Government of India in 2017-18. The government-owned companies raised nearly Rs 29,126 crores from the primary market, of which at least 49.3 per cent was provided by LIC, according to stock exchange data compiled by BloombergQuint.

Of seven companies from the government’s stable that hit the primary markets this year, the LIC invested in four. All this convinced me that the Narendra Modi government will not sell anything. Air India remains a test case, and one has to watch whether the ongoing optics will fructify in a sale.

The Kashmir Valley is like a war zone, and it is thanks to the bravery of the Indian Army that we are still holding south Kashmir. Local home-grown militancy, which was stamped out during the chief ministership of Omar Abdullah by then police chief S.M.. Sahai, has returned to bleed India. China openly bullies us, our only articulation comes from the Army Chief, who talks more and acts less, indulging in cheap theatrics. The cold start to front theatre doctrine is a reality even as we prune our defence spending with weapons and armaments at a premium.

Cow vigilantism has entered our lexicon, the jobs sector is debilitated, farm distress is acute, corruption is rampant and the entry of foreign funding for political parties (achieved by subverting and stampeding the Finance Bill in a bipartisan show of brute strength) poleaxes the very concept of a clean polity. This can only be described as a morally hazardous event, something that all of us should be ashamed of.

Repackaging of UPA schemes, revision of modern Indian history and a total collapse of Parliament due to the visceral hatred that the treasury benches and the Opposition have for each other has left an emasculated India, where institutions and individuals have been systematically targeted and their body of work emaciated and eroded.

Perhaps the most grievous blow is on the employment front. CMIE, that does data-crunching, said the unemployment rate reached a 71-week high in the week ended February 25. It is possible that February 2018 will end with the highest unemployment rate in the last 15-16 months. The unemployment rate has been rising steadily since July 2017. Last July, it reached its lowest level of 3.4 per cent. The unemployment rate has fallen steeply and almost steadily since the demonetisation in November 2016. The rate rose in August 2017, and continued to rise till it stabilised around five per cent between October 2017 and January 2018. In February, the rate has been rising steadily, well beyond this five per cent level. It was 5.5 per cent during the week ended February 4. In the next week, it rose to 6.8 per cent and then 6.7 per cent. During the week ending February 25, the unemployment rate was at 7.1 per cent. At 7.1 per cent, the weekly unemployment rate is the highest compared to any week since October 16, 2016. Given that the recent three weeks have consistently shown unemployment rates close to 7 per cent, it is possible to infer now that unemployment is back to the levels just before demonetisation. However, they remain low compared to the 8.5 per cent rate prevalent in February 2016.

February 2018 could end with an unemployment rate of around 6.5 per cent. While the average weekly trends indicate 6.5 per cent, the 30-day moving average indicates 6 per cent. On February 25, the 30-day moving average was 5.98 per cent. A 6 per cent or higher unemployment rate in February would be a huge increase compared to the recent monthly levels of around 5 per cent.
And while a 6 per cent unemployment rate doesn’t appear alarmingly high, the rising trend is alarming. There are signs of a pickup in the labour participation rate (LPR) during February 2018. It is likely that LPR, which was hovering below 44 per cent, may just about breach that level by the end of the month. However, the increase in labour participation seen in the weekly estimates shows up in higher unemployment. The estimated number of persons unemployed who are actively looking for a job almost touched 31 million in the week ended February 25. This is the highest count since October 2016, and seems to suggest that labour that is entering the markets in search of jobs is not finding them in sufficient numbers.

All this translates into two narratives running in the country. The decisive and overwhelming one is associated with the BJP and Prime Minister Modi, while the Opposition picks up the pieces to provide a united front against what it sees as polarising and divisive forces. Sadly, communal forces are making a strong comeback, as evident in the bloodletting in West Bengal and Bihar and now the growing flashpoints over the Scheduled Castes/Scheduled Tribes Act in different parts of the country.

The alarming decline in law and order and mishandling of anarchic situations, be it in Panchkula or Hisar in Haryana, or incendiary clashes in western UP has exposed a weak leadership. India, in 2018, needs to retrofit rapidly for its challenges outnumber positives. Hope versus fear will dominate the next general
election.