What will happen when you have a 100 million Indians in the productive age of 14-40 are not working, neither looking for work, neither training or have any hopes that they will get any jobs. This is the India that most Indians are inheriting which has been shared in a recent Govt. report released about a month back.
If you look at the Report, it seems to be a humongous 600 pages + report but it has been buffed up by interspering the hindi translation within the report itself. Now, while I haven’t gone fully through the report the numbers themselves seem to be shocking. There are other numbers related to women participation in labor force which has plummetted which also is a huge cause for worry. It is estimated that the original numbers were 10 million who were disillussioned in 2010-2011 financial year for labor markets or job creation. Mind you, these are all Government figures. So what happened in the past 6-7 years to have such shocking numbers due to which you see divisive steps such as CAA (Citizen Amendment Act) being taken for which protests have been taken place across the country. I believe there are at least 6-7 major issues for which the present Government doesn’t seem to have time to fix and doesn’t even seem to have any ideas or seriousness as to how to fix them.
The first one right there is demonetization which the current Government fails to acknowledge as it mistake. While hindsight is always 20/20 while it didn’t do any of things promised to the citizens, it made sure that rural markets, startups and small businesses went out of business where most of the exchange happens by cash. Ironically just 2 years after demonetization, the amount of money in cash was more than before, which means those who generated black money were still in good business. In fact, as I have shared before, Dr. Arun Kumar who has done lot of work on black money and black economy, been part of 40 odd committees and did generate and use black money as he has confessed especially in real estate in early part of his career, has written two books recently on the topic –
Understanding the Black Economy and Black Money in India – An Enquiry into Causes, Consequences and Remedies – Dr. Arun Kumar , 6 Feb 2017
Demonetization and the Black Economy – Dr. Arun Kumar, 20th December 2017 – this one gives a far larger picture of how Demonetization failed to live upto its promises and what it didn’t take into account.
The Big Reverse: How Demonetization kicked India out : Meera Sanyal – 10th November 2018
There is nothing I can write that what these economists have written about it and in greater detail than anything else I would write hence would suggest you to go through them. I have given the amazon.in links you may use others. In fact, interestingly, just couple of days ago in a business channel, there was talk on commodity markets and one of the big jewellers had shared this on national media that due to Govt. imposition of high GST, there has been gold smuggling and people buying gold in black (i.e. without receipts) . FWIW, this was on CNBC TV 18.
Goods and Services Tax
About this I have covered in the last blog post so nothing much to reiterate here except link back. Although have to say GST is still hurting people, a lot. GST refunds is still an issue as shared by the finance minister. Although nowadays trusting any numbers including the PLFS numbers should be taken with a bucket of salt as the present Government attempts to always present a rosy picture rather than the real picture. So the numbers for people not looking for jobs as well as people whose refunds have not been given would probably be much more than what has been shared. With the Statistical Commission not having enough members of high quality and quantity how good the numbers are anybody’s guess as have shared before. And in fact, now whatever autonomy, the statistical commission had is also being eroded as can be seen in a draft bill. This will only lower India’s stature in global eyes.
I don’t really have to say much in it except the reports by Nithin Sethi . While the Government has sought to placate the masses by its submissions in Rajya Sabha it hasn’t answered any of the questions raised by either Nithin Sethi or any of the findings by the RTI answers received by the Colonel. There is lot more to the story than still meets the eye, but probably this on some other day. This is apart from the fact that India is now funding lobbyists in U.S. so that Americans support India’s actions in Kashmir. This is after Americans found Indi actions baffling in Kashmir and Americans have lot of experience in enemy engagement.
This is perhaps one of the things which I had shared in the last blog post as well. This is what has scared most potential international investors away. In fact, Bloomberg had shared a nice well-written article about the issue and also links to Mr. Harish Salve’s take who has been an unapologetic critic of the move by the then Congress Govt. which the BJP Govt. had promised to fix and since then has done nothing in that regard.
Rural demand and high agricultural prices and middleman
There has been no uptake in rural demand and there is no policy by the Govt to tackle this. Couple of months back the FM gave 1.45 lakh crore or $20 billion dollar tax bonanza to corporate houses which make a measly 3-4% of the total economy and are already swimming in cash, while the other 96% of the economy which actually oils the Indian market which is the small businesses, the farmers who are net loosers in the current regime. Even essential commodities prices have gone up both in retail and wholesale markets with almost all of the profits acruing to the middleman rather than the farmer or the agricultural labor . We are on the path of being England which imports all of its veggies. Last not but not the last exports have been down from India for straight fourth month.
Unless India fixes lot of structural issues for e.g. adherance to legal contracts or fast resolution in case of issues, don’t see India bouncing back anytime soon. Nobody from the other side even comments why economies of Bangladesh, Vietnam, China and even Cambodia are able to ramp up their economies even if the argument is ‘global slowdown’ . Some people have argued for cyclical slowdown but haven’t had any evidence to prove that other than conjecture.