Ten years of the economics of despair

The government has paid lip service to the four ‘castes’ of youth, women, farmers and the poor. With inadequate jobs and skills, young India faces bleak prospects
Express illustration
Express illustration Sourav Roy

When the people of India offered a mandate to the current government in 2014, they did so with the hope that it would fulfil its bloated rhetoric of “Sabka saath, sabka vikas,” the illusory promise of inclusive development for all Indians. Ten years later, the people of this country have been sadly betrayed by a government whose economic mismanagement in this past decade has left them staring at widespread distress, low incomes and unemployment.

The first glimpse of the ruling party’s economic ineptitude came with the reckless decision of demonetisation that broke the back of the Indian economy and resulted in a monumental disaster where poor and middle-class citizens suffered (and in several cases even died) waiting in long lines to convert their notes, even as the wealthy managed to exchange their currency with ease. We must also not forget the sudden no-notice lockdown on March 24, 2020, imposed without warning or planning, which led to lakhs of migrant workers walking hundreds and thousands of kilometres back to their homes.

During that most stringent national lockdown between April and May 2020, individual income in India dropped by approximately 40 percent. The bottom decile of households lost three months’ worth of income. Over its first two terms, this government demonstrated that its specialty was to issue policies marked by haste, incompetence and complete disregard for its own citizens.

If demonetisation was a bad policy badly implemented, the Goods and Services Tax was a good idea badly designed and shabbily implemented. The GST, which has been used to trample over the states’ financial autonomy, when coupled with demonetisation, resulted in finishing off India's job-generating small and medium businesses, caused a 45-year unemployment high.

It ended the economic recovery that had begun in 2013, all while failing to achieve any of its stated objectives. Given the GST tax slabs on basic commodities—like toothpaste (5 percent), footwear (18 percent), pants and shirt (5 percent), rice and wheat (5 percent)—instead of flushing out black money, resulted in concentrating wealth in the hands of the government at the expense of the aam admi.

In her budget speech, the finance minister mentioned four new castes that the government supposedly looks after, namely, gareeb (poor), mahilayein (women), yuva (youth) and annadata (farmers). She said that their needs, aspirations and welfare are the government’s highest priority. However, all four groups are among the worst performing groups in most categories of social and economic policy performance.

Let’s take just one of these, the yuva. There is a tragic irony in the government’s claims of success when desperate young people are queueing up to risk their lives in Israel in the middle of a war because they have no decent work in India. The unprecedented levels of unemployment have left countless citizens, especially our young demographic workforce, with little prospects for a brighter tomorrow.

The unemployment rate among youth aged 20 to 24 stood at 45.4 percent in 2022-23. The Indian economy employed fewer people in 2018 than in 2012, the two dates with data for assessing the early Modi years. Agriculture and manufacturing jobs fell, while financially precarious construction work and low-end service roles grew. Today, about 450 million working-age Indians do not work or look for a job. No wonder so many are prepared to risk dying to make a living.

The Periodic Labour Force Survey data shows that regular salaried employment has stagnated during the last 5 years. Talk of self-employment is a cop-out because most of the employment generated is unpaid family labour, a clear evidence of disguised unemployment. The number of unpaid workers has increased from 40 million in 2017-18 to 95 million in 2022-23. The government calls them self-employed, but unpaid workers are not counted as employed by the International Labour Organisation.

The share of agriculture in total employment is going up, which is an indication that there are not enough jobs available outside of agriculture. To this, the government cites schemes like Skill India as a palliative. The workforce share that was formally vocationally trained in 2012 was 2.3 percent; in 2023 that share had barely moved to 2.4 percent. Though Skill India’s goal was skilling 40 crore workers by 2022, the total trained under the Pradhan Mantri Kaushal Vikas Yojana, in its three versions, was 1.4 crore, not 40, out of which only around 24 lakh were placed in jobs.

For all the hue and cry about yuva shakti or youth power, the truth is that their future looks bleak, facing a double whammy of falling labour participation rates and shockingly high unemployment rates. Even the start-up culture the government boasts of is failing them: fund-starved start-ups fired nearly 18,000 people in 2022. Fundraising is subdued: Indian start-ups raised $1.18 billion in January, down 75 percent in a year.

Micro, small and medium enterprises (MSMEs), which have been the main employment generators in the country, also find themselves shrinking in today’s economy. Many of them had to be permanently closed after the disastrous demonetisation. The country had over 6.25 crore MSMEs in 2016, but the number has dwindled to 3.25 crore (as per Udyam, the government’s MSME registration portal). More than 60 percent of the conventional micro-enterprises that were in business for more than a decade have perished.

Space doesn’t permit us to tackle in similar detail the equally underwhelming situation of the other three ‘castes’ listed by the government.

Annadata: Farmer suicides have increased dramatically to one lakh in the first eight years of this government. During UPA2, real agricultural wages grew at 8.6 percent. In NDA2, the annual growth of real rural wages has become negative. As for mahilayein, India being ranked 127th out of 146 countries in the Global Gender Gap Index 2023 is a searing indictment of our inability to provide the space our women need to thrive, in the labour force or out of it. And finally, the gareeb: since the government claims (without statistical evidence) that it freed 25 crore people from multi-dimensional poverty in the last 10 years, why are 81 crore still receiving free foodgrains?

When this is the state of our country, we must ask the government, “Kiska saath aur kiska vikas?”

Shashi Tharoor

Third-term Lok Sabha member from Thiruvananthapuram, and the Sahitya-Akademi award winning author of 24 books, most recently Ambedkar: A Life

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