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  • Writer's pictureTanya Arya

5 Ws and 5 Ls of the Modi Government

1. Promised to increase farmers’ income, but increased the prices (L)


This chart shows the agriculture gross value-added growth in percentage. We can see that the growth has decreased every quarter, and at the end of FY23, it was the lowest growth in the agricultural sector. It is also interesting to note that growth had been higher in FY20 when the pandemic was in full swing.  The Modi Government promised many things in 2014, one was when he said that they would try to double farmers’ income by 2022, they levied GST on various farm equipment at 12%. 3 years after coming to power, Amit Shah, the then BJP president, made an audacious claim that the 2014 poll promise was nearly fulfilled and MSP (Maximum Support Price) was 43% more than the cost of production if the cost of land is excluded from price calculation. The target farmers’ income at the national level will be Rs. 2,71,378 at current prices of Rs. 22,610 per month. To achieve this target, the committee pointed out, that the required farmers’ income growth should be at a rate of 10.4% per annum. This has not been fulfilled as promised though, due to GST the increase in tax rates on some items led to higher costs for farmers. There has been an increase in compliance requirements or procedures due to the confusion regarding complex procedures. This confusion caused a further surge due to the lack of clarity regarding the applicability of GST on some agricultural products and services.


2. Our Booming GDP (W)



This chart shows the increase in GDP growth for India. We can see that S23 (September, FY23) has a growth of 7.6%, which is the third quarter of 2023. Global growth has been exploded to slow from 2.6% last year to 2.4% in 2024 but our country is booming. Most economists expect annual growth of 6% or more for the rest of this decade. The growth has outpaced most emerging economies, but India’s labour market remains weak and private-sector investment has been disappointing. The poverty rate has fallen from 19% in 2015 to 12% in 2021. The combination of homogenous payments and tax systems like GST has brought India closer to the national single market than ever. The Reserve Bank of India (RBI) has also revised its GDP projection, raising it to 7%, from the earlier estimate of 6.5%.


3. GDP has increased, but so did income inequality (L)



The Consumer Price Index (CPI) shows the purchasing power of the consumer. From this graph we can see that the purchasing power of consumers has gone down a lot over the years. The Indian economy is facing high inflation and income inequality, not just because of the market forces alone, but because of the unequal prioritization of one sector over another by the government. An analysis of consumer prices by ‘The Hindu’ shows that the cost of preparing meals has risen by 65% in five years, while wages have only risen by 28-37%. The price rise has squeezed household budgets to the last rupee, leaving less room for other essential expenditures. This has been reflected in the demand slump in the larger economy. The BJP government periodically raised excise rates on petrol and diesel since assuming power in 2014. The Indian economy in 2023 has proven Keynes right, high inflation is not just the cause of market forces but also due to government intervention.


4. Average income of people has increased



As can be seen in the graph, India’s per capita income and corporate tax collections have increased. India’s per capita income in nominal terms, without adjusting for inflation, almost doubled to Rs. 1.72 Lakh in 2022 – 23 as compared to Rs. 86,647 in 2014 – 15, the year when the government led by Prime Minister Narendra Modi came to power. According to reports, tax collections after adjusting for refunds have grown from Rs. 6.38 Lakh Crore in FY 2013 – 14 to Rs. 16.61 Lakh Crore in FY 2022 – 23. Collections from net direct taxes, including personal income tax and corporate tax, have grown by 20% so far in the current financial year. What an increase in taxes tells us is that the income of people has increased, if income increases, taxes that you have to pay increase. As per the estimates of the National Income and expenditure released by the National Statistical Office (‘NSO’), the per capita net national income at constant 2011 – 12 prices are projected to increase to Rs. 98,118 in 2022 – 23 as compared to Rs. 72,805 in 2014 – 15 which is an increase of 35%.


5. Jobs (L)



The biggest L of the Modi government’s economic performance comes in the form of the periodic labour force survey for July 2022 to July 2023 released by the Department of Statistics. The survey shows a huge increase in the number of self-employed (58% of the total employed in 2022 – 23). The self-employed category was only 52% of the total employed 2017 – 18, which suggests greater growth of low-quality employment in the manufacturing sector, this is evident because the self-employed are unpaid workers who join small family-run units without any wages. The proportion of self-employed and within that ratio of unpaid workers have shot up drastically in the last 5 years, especially after demonetisation and the pandemic. According to economist Santosh Mehrotra, unpaid workers are not treated as per the methodology prescribed by the International Labour Organisation (ILO). which is followed by 92 countries today. This has emerged as the biggest weakness in the economy as the labour force survey also shows the average regular monthly wages have fallen by over 20% in real terms between 2017 – 18 and 2022 – 23. No substantial growth in average wages in 5 years reflects a worsening quality of employment. Senior Indian National Congress (‘INC’) leader P Chidambaram attacked the Centre over the issue of unemployment alleging that the legacy of the Modi government after 8 years is ‘no jobs’. He said that the unemployment rate is 8% which is understated because of the disguised unemployment.


6. 25 crore people got freedom from multi-dimensional poverty in the last 10 years (W)



The outcome of poverty elimination efforts undertaken by the Modi government establishes that their efforts are not rhetoric like the INC. 135 million Indians are existing in multidimensional poverty, which is more than the population of France and the United Kingdom combined, and more than the population of either Mexico or Japan. There has been a steep decline in the poverty headcount ratio in Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, Assam, Chhattisgarh, Rajasthan and Odisha, these states have contributed to a 75% decline in the number of poor. Rural areas have recorded a decrease in poverty both at the national and sub-national levels, the claim that rural poverty has decreased due to reverse migration to rural areas during lockdown is now proven to be a rhetoric than reality. As per the baseline report of National Multidimensional Poverty Index (MPI), cooking fuel, sanitation, and housing have been the biggest deprivations among the 12 indicators for the multidimensionally poor, these 3 indicators have also shown the best progress, each declining by 10.73%, 11.95% and 8.41% respectively. The NITI Aayog has said in a new report that 24.8 Crore people have been lifted out of multidimensional poverty in the 9 years leading up to 2022 – 23.


7. Amendment to the Land Acquisition Act (L)

Land acquisition is the power of the Union or a State Government in India to take private land for the public, and to compensate the original owners and other persons affected due to such acquisition. The land acquisition schemes, and urbanising agendas of the government have resulted in more than 20 million people being forced from their land in the last 40 years, with people not receiving proper compensation and relocation. Until 2013, the Land Acquisition Act, 1894 (amended in 2013) (‘LAA’) was followed in the country, which provided compensation to landowners but did not provide any compensation to the other people affected by the land acquisition. After many attempts, the government was able to replace the LAA with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 (‘the 2013 Act’). The 2013 Act focuses on not only providing compensation for the land owners but also rehabilitation and resettlement benefits to livelihood which is in addition to minimum compensation. This law stipulates that land acquisition includes a Social Impact Assessment survey, a preliminary notification starting the intent of acquisition, a declaration of acquisition, and compensation to be given by a certain time. Compensation should be 4 times the market value in case of rural areas and twice in case of urban areas. Consent of 80% of the displaced people will be required. The farmers have been protesting against the Land Acquisition Bill, 2013 (LAA) demanding the government either stop land acquisition or pay them compensation at the current market rate. The problem with paying compensation at the current market rates that the prices are always fluid and it would be difficult for the government to pay compensation to the farmers, another issue for the farmers is that they want everybody to be consulted when the land is being taken, which has not been done before.


8. GST has enabled one nation, one market, one tax (W)


The Goods and Services Tax (GST) was introduced so that it could bring India’s population under a single market for the first time since the country’s independence. It came into force in July 2017 after a lengthy parliamentary process. GST ended the confusion between the multiple taxes that India had, it subsumed 17 large taxes and 13 cesses. GST had a lot of benefits an overall reduction in tax incidence, compliance simplification such as a uniform process across the country, a simple registration process, there now is a free flow of goods as it is a fully IT-driven system, and a free flow of goods now that the check post is removed. It ended long queues of trucks and goods carriers at highway toll plazas, allowing free movement across states. Logistics companies have now reported that trucks cover an additional 100-150 km per day after GST, an increase of up to 30%.


9. Failure to conduct decadal census due in 2021 and 14 million Indians would be excluded from their food entitlements due to this (L)

The INC General Secretary (Communications) Jairam Ramesh dubbed the Modi Government as ‘inept and incompetent’ and said that not conducting the census is a failure in the history of the country. He said is a categorical denial of a fundamental right of citizens guaranteed under Article 21 of the Indian Constitution, which is the National Food Security Act, 2013 (‘NFSA’). The Congress leader also noted that the failure to conduct the census has led to an estimated 14 Crore Indians being excluded from their food entitlements, according to a recent ‘Outlook Business’ report. From the first synchronous census in 1881, the decadal census exercise has never been delayed or postponed, until now. Census 2021 has now been postponed more than once. Initially, it was because of the pandemic, but at least three countries that also saw severe COVID outbreaks—the UK, China, and the US—have since completed their census exercises.  The Census data is very important in framing policies and public affairs and it is a globally accepted fact, this will cause Indian policies to be made according to data that was taken 13 years ago, which is not up to date.

10. Infrastructure build-up is being seen in record time (W)

The Union Government has made a huge number of investments in modern infrastructure in the last nine years, taking the country to new heights. Over 55,000 kilometres of highways have been constructed in the last decade. Projects like Bharatmala Pariyojana are not only improving connectivity but also addressing the needs of underserved areas, economic hubs, and tourist destinations. By prioritizing multi-modal connectivity through initiatives like PM Gati Shakti Yojana and the National Infrastructure Pipeline, the government is fostering integrated planning and execution of infrastructure projects and ensuring timely completion of projects. A Rs 10 lakh crore budget for infrastructure shows the seriousness of the government for the development of the country. This aims to boost jobs and keep up with China and other modernising economies. In the road and highways sector, the minister said that highway construct had grown from 37km per day to just 12km per day before 2014.


Notes


About the Author:

Tanya Arya is the Data and Statistical Analysis Sub-Head for the Research Department and second year economics student (UG) at JSGP. She is also the female COGSASH representative for JSGP

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