(Excerpted from The Great Disappointment by Salman Anees Soz. Salman Anees Soz is an international development expert and an economic and political commentator. He is a former World Bank Group staff member with experience across a range of economic development issues in many countries around the world. He is a member of the Indian National Congress and, as a party spokesperson, appears on television debates, focusing mostly on economic affairs. )
The 2016–17 survey notes that ‘GDP growth slipped from 7.7 per cent in the first half of 2016–17 to 6.5 per cent in the second half. Quarterly real GDP growth also shows a deceleration in the third and fourth quarters relative to the first two quarters. The slowdown in these indicators predated demonetization but intensified in the post-demonetization period.’ What that survey could not have predicted is that in the following quarter, economic activity slowed and the growth rate slumped to 5.7 per cent, the slowest pace in three years.
Early on, the GST’s technology infrastructure could not keep up with the volume of transactions, and the government once again seemed unprepared for the scale of reform. It was demonetization redux and gave another major opportunity to the government’s critics to paint it as incompetent. Yashwant Sinha said that the GST ‘would make a fine Harvard University case study of everything that was wrong with the rollout of a tax reform’.
Agricultural exports declined from US$42 billion in 2013– 14 to US$38 billion in 2017–18. They were lower in the intervening period. Agricultural imports went up by about 50 per cent during this time Interestingly, investment in agriculture (measured by gross capital formation as a share of agricultural GDP) fell from 17.7 per cent in 2013–14 to 15.5 per cent in 2016–17.
An analysis by the Mint newspaper showed that ‘almost the entire reduction of about 0.6% of the gross domestic product (GDP) in India’s fiscal deficit between FY14 and FY16 could be attributed to the sharp fall in crude prices’. The current account balance improved. The government liberalized diesel prices sooner than anticipated on account of this sharp decline. However, instead of passing on the benefits of lower crude prices to consumers,
the government retained much of the gain through progressively higher excise duties on petroleum products.
According to an analysis by the Quint, an online news site, the Modi government renamed nineteen out of twenty three schemes started by its predecessor, the UPA government. For example, the famous Jan Dhan Yojana is the new name of an existing scheme Basic Savings Bank Deposit Account (BSBDA). Swachh Bharat Abhiyan was originally Nirmal Bharat Abhiyan while the RGGVY (rural electrification) became DDUGJY.
There is no concrete evidence to indicate that demonetization led to a significant decline in terrorism. In fact, Prasenjit Bose, an economist, found that ‘total fatalities in terrorism-related violence in India have hardly seen any significant decline in 2017 (data till August 2017) compared to the two previous years, with violence in Jammu and Kashmir actually witnessing an escalation’.
Wilson quotes CBDT (Central Board of Direct Taxes) data to show that ‘there was an 11.6% growth in the number of income taxpayers in 2013–14, without any demonetisation. It then fell to 8.3% and 7.5% in next two years but increased to 12.7% in 2016–17 but again fell to 6.9% in 2017–18. So, the trend shows that there was no dramatic increase in the number of taxpayers.’ Wilson also notes that growth in direct taxes was much higher during the UPA’s ten years (average 20.2 per cent) as opposed to the Modi government’s four-year average growth of only 12 per cent.
Total employment fell from 48.04 crore in 2013–14 to 46.76 crore in 2015–16. The failure to create jobs is becoming the biggest political challenge for the Modi government. There are constant reports in the media about the challenging jobs situation in India. The government’s response has been to latch on to questionable data on job creation to argue that India does not have an employment problem.
However, the Sharada Prasad Committee, set up by the skill development ministry to review the performance of various sector skill councils, came out with negative reviews of the PMKVY. The committee noted that ‘no evaluation was conducted of PMKVY 2015 to find out the outcomes of the scheme and whether it was serving the twin purpose of providing employment to youth and meeting the skill needs of the industry before launching such an ambitious scheme’. In various stakeholder consultations, the committee reported that ‘all of them said in one voice that the targets allocated to them were very high and without regard to any sectoral requirement. Everybody was chasing numbers without providing employment to the youth or meeting sectoral industry needs.’
Having said that, India’s GDP data has been under the scanner ever since the CSO changed the methodology for calculating economic output in 2014–15. Most analysts were surprised after the publication of the new GDP series. Even the government’s chief economic adviser, Arvind Subramanian, and the then Governor of the RBI, Raghuram Rajan, cast doubt on the new CSO data. According to the Economist investors ‘roundly disbelieve India’s growth figures’.