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Corruption thrives, unemployment shoots up, economic growth plunges in Modi's India

By Anuradha Bhasin Jamwal. Dated: 10/15/2017 12:19:50 AM

With demonetisation and GST, Narendra Modi government has been claiming to achieve two things: reforming economy and targeting corruption. Both have been incompatible with economic growth and eliminating corruption. India's economy has drastically faltered with growth falling steadily since early 2016 to a three-year low of 5.7 percent in the second quarter of this year. Unemployment has risen to an all time high. As a Jay Shah story comes tumbling out of the cupboard, the only achievement of the Modi government with respect to corruption has been its ability to quickly sweep under the carpet any such messy affairs coming to public knowledge.
The public unease is rising and cannot be addressed with histrionics, promises of reversing the slide and irrational discourse. The much touted economic reforms have turned out be a disaster. Reflecting on the Reserve Bank of India (RBI) figures which reveal that 99 percent of the banned notes returned to the system, Arun Shourie pointed out that this was the biggest money-laundering scheme that allowed black money to be turned white by bringing it back in circulation. Former finance minister Yashwant Sinha has been equally scathing in his criticism of the Modi government. He criticised the government for mismanaging the economy. He said that demonetisation and GST have led to job losses and sharpened the growth decline to 5.7 percent in the April-June quarter. Digging holes in the way this figure is calculated, he said, the growth as per the old calculation method would be just 3.7 percent. The two BJP leaders have been dismissed by the government functionaries as disgruntled men looking for re-employment. We should be concerned about the country's economy not because these two side-lined men within the BJP are saying so. We need to be concerned because the figures and facts speak for themselves.
The growth is slow and questions are being raised that even the dismal figures are exaggerated for effect. Unemployment has reached its crescendo. If the unorganized sector was badly hit by demonetisation, forcing shut down of small businesses and creating shocking levels of unemployment, the GST crackdown has hit the organized sector, resulting in slow-down of medium businesses with higher taxations on raw material and procurements, forbidding expansions, modernization and maintenance. This slowdown on procurement is obviously likely to impact industrialization deleteriously. This will have long term repercussions. The GST is a failed project, both in terms of content and its implementation. It is not only delayed notifications over fixations of GST that have slowed down businesses and trade but also because high taxations and complicated procedures are intimidating and thus induce the temptation of doing away with the procedure. Celebrations over inflated GST returns are misplaced as the next fiscal quarter is likely to reveal the real impact of the new system. As it is, the government has now admitted that only 70 percent of the assessees under the Goods and Services Tax (GST) had filed detailed sales in July despite extension of deadlines twice. This is not due to teething troubles but the ill-conceived drastic steps which have virtually frozen the economy into a state of shock.
The government's open patronage of lumpen elements indulging in routine hooliganism in the name of Love Jehad, cow vigilantism and ultra-nationalism has discouraged investments from abroad, failing Modi's projects like Make in India. Regular violence and instability in the market has further slowed down industrial growth and obviously adversely hits employment as well. Much against Modi's confidence and optimism to reverse the trend of declining growth, the Economic Advisory Council to the Prime Minister has also expressed concern and called for immediate attention and recognized the worrying situation, while admitting that sufficient data on economic growth and unemployment was not even available and there was need for a scientific assessment first.
Clearly the government remains in denial. The most glaring instance of this comes from railway minister Piyush Goyal who chose to describe the decrease in employment opportunities as a "very good sign". His logic suggests that young people are using the "proverbial lemons life is throwing at them to make not lemonade, but gajar ka halwa". At the World Economic Forum's India Economic Summit last week, reflecting on the country's top 200 companies had making significant reductions in their workforce, while industry executives expressed concern about the country's employment situation, Goyal said that today, the youth of tomorrow is not looking to be a job seeker alone. "He wants to be a job creator. The country today is seeing more and more young people wanting to be entrepreneurs," he said with conviction. His belief that unemployment is leading to high rate of entrepreneurship is insensitive to the gloomy situation and erroneous. There is no evidence to suggest that unemployed youth are being infused with the energy and inspired by dreams of starting their own ventures. Reports have revealed that a total of 212 startups shut down in 2016, 50% higher than the previous year. The figures are expected to be much higher post demonetization and GST.
According to a newspaper report, "While the amount of start-up funding so far this year has already exceeded last year's levels, the volume of deals is lower." The report quoted data from Tracxn. "Start-ups have raised roughly $8 billion in the first nine months of the year, compared with $4.6 billion in all of 2016, Tracxn data shows. The volume of deals, however, has dropped to 700 compared with more than 1,000 in 2016, according to Tracxn," the report added. Yashwant Sinha has already deflated the government claims of Mudra scheme creating millions of jobs through entrepreneurship and self-employment. The scheme that offers a loan of Rs 11,000 hardly offers any realistic entrepreneurship for any youth in an era when inflation is too high.
Though the government is claiming that inflation figures are down, the reality is that prices of essential commodities including food items, medicines and petrol have gone up drastically. The government figures are fudged and based on fallacies that are so easily punctured.
Whether the government's disastrous economic policies are inspired by foolishness or by the idea of hampering economic prospects of millions to suit a few or for electoral gains based on false hopes and promises or to exercise greater control, the problem is not only that there is a slowdown with no signs of improvement but also that corruption is unlikely to be targeted by any of its reforms. While black money has already been brought into circulation with demonetization, the hasty implementation of GST is putting fertile minds to work out ways in which the taxation can be avoided. The surfacing of the Jay Shah scam has put egg on the face of the BJP which had been taking the high moral ground. Jay Shah is the son of Modi's right hand man, Amit Shah and his business saw a steep hike of 16000 times in a year. The Rs 80 crores his company made mysteriously vanished when demonetisation was announced. Instead of investigating the shady deals, the government has gone into denial mode and begun hounding the whistle-blowers. That rich and powerful business magnate Adani is getting a massive loan waiver while poor farmers continue to be pushed towards starvation and suicides are yet other signs of corruption.
The list of BJP's corrupt deals, which it has ably managed to sweep under the carpet with the aid of loyalist media, is already long. Scam after scam has been reported since the bloodiest of all scams, Vyapam, which resulted in over 40 mysterious murders. But whistle-blowers are being silenced and questions are being forbidden through distracting tactics or repressive methods. Despite their chest-thumping about corruption, the BJP top brass has taken no action on corruption charges against its own men. Finance minister Arun Jaitley's name came up in the Delhi and District Cricket Association (DDCA) scam, external affairs minister Sushma Swaraj faced the Opposition's heat in the Lalit Modi scandal. Prominent chief ministers of the BJP attracted corruptions charges. Rajasthan CM Vasundhara Raje's name surfaced in the Lalit Modi and mining scams, Madhya Pradesh CM Shivraj Singh Chouhan was named in the DMAT and Vyapam scams. Anar Patel, the daughter of Gujarat CM Anandiben Patel too was accused of acquiring land for resorts for her partners at discounted prices. The list goes on. The denial betrays a tinge of tacit patronage. This is more than evident in the Jay Shah case where rules have been flouted to allow a government advocate to plead for Jay Shah.
So, if the demonetization and GST policies did not have the capacity to check either corruption or boost India's economy, what was the real motive? It would be worthwhile to investigate.

(In an earlier version of the story, it was inadvertently mentioned that Jay Shah’s business saw a steep hike of 1600 times. It saw a hike of 16000 times.)