India’s Modi Government – Criticisms and Facts
Narendra Modi has completed four years in office. He is the most popular Prime Minister in the recent times. India’s rankings on the global scale has improved on many parameters. And he has been equally criticized as well. Such criticism, however, fails to have a solid footing. Let’s look at the criticisms as the positives have been documented elsewhere.
Criticism: 7.2 Million jobs lost. Job creation in eight year low.
Fact: Indian economy is at its strongest since 2012 and has been growing at a steady pace. A strong economy would indicate a strong job growth as well. Let’s look at what International Labor Organization – a wing of UNO – states about India’s unemployment data. Here is the 10 year chart :
[You can access this chart at : https://tradingeconomics.com/india/unemployment-rate.]
India’s problem with unemployment was much bigger before Modi government took charge. The situation has actually improved and has not regressed. Employment situation in India is improving – owing to strong growth and economy.
Criticism: Indian Economy is getting irreversibly weaker.
[This estimate is provided by the CIA and the IMF. And can be accessed at https://en.wikipedia.org/wiki/Trillion_dollar_club#Chronological_order_of_current_nations_having_at_least_US$3_trillion_economy]
There was a momentary dip in growth in the quarter following Demonetization. However India has effectively withered the drop and has bounced back again in a cleaner way. The first three months of 2018, Indian economy witnessed a growth rate of 7.7% beating all estimates. India is now the World’s fastest growing Major economy – ahead of China.
The GDP dip in 2017 was owing to Demonetization. India has come a long way since – in a much cleaner manner.
Criticism: Common-man is paying much higher fuel pricing
Fact: The fuel price is almost in the range of 2013 levels. The common argument is that the international crude pricing is much lower now than it was in 2013. The fuel is no longer subsidized.
It is worth noting that the previous Congress Government had not paid the OPEC dues in full. Government owes about US$6 Billions to Iran alone.
Let’s assume two outcomes of low international crude prices :
1) The Government passes on the benefits of low crude to the people. The petrol pricing may reach to Rs.40 levels momentarily before ballooning to Rs.60. As crude is not sustainable at such low levels.
This way the Government would be liked by the people as they have more money in their pockets – at least momentarily.
2) The Government uses this windfall (difference in low crude / consumer pricing) to offset the debts that India owes to Iran and other OPEC nations.
Thus, the Government actually does something good for the country in the long run though it may not please a lot of people.
A responsible Government would focus on getting rid of debts rather than populism. And that’s exactly what happened. The Government is wiping off the debts due to those nations.
It is also true that people now have more money in their pockets owing to lesser inflation (record lows) and due to reduction of Income Tax by 50% in the Rs.2.5 Lakhs to Rs.5 lakhs bracket. Which puts Rs.1,250/- each month in the pockets of all eligible tax paying Indians.
The petrol pricing touched Rs.69 in September 2013. In September 2004 under Vajpayee Government, the petrol price was Rs.37.84 per litre (Delhi). In ten years of UPA rule (I and II), the petrol price has almost doubled. However, in four years of NDA’s rule, the petrol price has gotten up by Re.1.00 (over peak 2013 levels).
[The chart is from Indian Oil Corporation historic pricing. And can be accessed at https://tradingeconomics.com/india/gasoline-prices]
This article talks about Modi’s rule in the Crude Oil crash.
Criticism: The previous Government of MM Singh lifted close to 140 million people above the poverty line between 2004 and 2014. Modi Government did nothing much to eliminate poverty.
Fact: It is an utterly wrong statement that MMS Government lifted 140 million people above poverty line. The truth is, it happened at the stroke of pen – on that moment – when MMS Government decided to reduce the basic minimum amount which decides if a person is below Poverty Line. Until 2011, a combined family income of less than Rs.20,000 per year, with no Refrigerator or Television – was treated as the criteria for defining “Below Poverty Line”.
The Congress government revised this limit in 2012 and fixed the poverty line at Rs.27 per day for rural regions. Which is about Rs.9,855 each year – assuming that the family works for all 365 days a year. By drastically reducing this lower limit by more than 50%, almost 138 million people magically went above the poverty line – within a day.
However, the living conditions and the quality of life of these 138 million remained the same or worsened still.
Modi Government is trying to eliminate poverty through introduction of schemes like MUDRA Yojana (Cheap entrepreneurship loans) and others. Additionally with schemes such as Ujjwala Yojana (Free LPG Cylinders) the quality of life of such families have improved. Modi Government’s schemes may help those who want to help themselves out of Poverty.
Criticism: Modi Government did nothing to improve agriculture and agriculture growth is in negative.
Fact: Various schemes have been introduced for farming sector with an eye on increasing their income two fold by 2020. A small list of schemes can be found here.
Also, India’s agricultural GDP has actually increased over the past 10 year period.
There is a seasonal high in the first quarter of the year and it dip seasonally in the second quarter. Almost all articles blaming the Modi Government will calculate the outcome in the first and second / last quarters which is obviously lower than the first.
The truth remains however – that the agriculture sector has witnessed a great growth and is about to hit Rs.6000 billion for the first time in the history of India.
Modi’s Agricultural success at Gujarat is a case study by itself.
Investments and Credit Rating
Criticism: Investments to India has taken a hit and the rating of the country is perilous.
Fact: India’s credit rating has consistently improved under Modi. Foreign and Domestic investments has made new highs.
[Refer to the data at https://tradingeconomics.com/india/rating]
Foreign Direct Investment is highly volatile while peaking at September of 2017.
Domestic Investments have picked up very good pace. India is no longer dependent on foreign investments as a result. DIIs have posted double digit growth rates.
Banking Scams and NPA
Criticism: Vijay Mallya, Nirav Modi and others have fled. NPAs are swelling.
Fact: It is a matter of fact that these people were comfortable in India before Modi arrived at the scene. Only after Modi’s crackdown on the Banking Loans, these scams of UPA era emerged. And with such information being made public, the perpetrators of the crime have fled India.
Mallya holds a PR equivalent of Britain. Nirav Modi allegedly holds a Belgian / Antigua Passport. How were these people able to get loans of this extent during Congress regime? Why was the previous Government silent when interests were defaulted? Why did nationalized banks lend such money without proper guarantee or procedure during UPA era? These are open questions. A poor farmer had guaranteed Vijay Mallya’s multi-crore loan. http://zeenews.india.com/business/news/companies/a-pilibhit-based-farmer-is-vijay-mallyas-guarantor_1887636.html. How did the bank allow this? All these happened during Congress regime.
Modi Government acted tough and tightened the noose around the bankers holding them accountable. As a result, skeletons started tumbling out of the cupboard. Many bankers were arrested. However – owing to their international contacts, their citizenship and due to the lack of strong law – Mallya and Modi have fled India.
Modi Government has since fixed the legal loophole by introducing the Fugitive Economic Offenders bill. This bill has provision to attach assets of the offenders in appropriation to the loan amount. This bill is now being enforced. As a result Mallya and others are offering to return back to the country and pay off the dues. https://www.thenewsminute.com/article/vijay-mallya-wants-come-back-india-claims-he-ready-repay-bank-loans-83706.
Modi Government had already attached Rs.9,000 crores worth of Mallya’s properties – for his Rs.6,600 crore loan.
Modi Government and the RBI has ordered the banks to come out clean and expose the dirt that they were hiding for so long. That’s the reason for the swelling NPAs. Almost all of these loans were issued more than 5 years back. Hopefully the books are cleared and Banks begin with a fresh and clean book.