State of the economy

Downward spiral

Print edition : October 12, 2018

Workers and farmers at the Mazdoor Kisan Sangharsh Rally in New Delhi on September 5. Photo: Arun Sharma/PTI

Baba Ramdev. He has said he will not campaign for the BJP in 2019. Photo: PTI

The distress in the economy bodes ill for the Bharatiya Janata Party government at the Centre, especially at a time when it finds its “clean” image tarnished by revelations about the Rafale deal.

Mehngai ki aag to Modi sarkar ko bahut mehngi padegi” (The fire of rising prices will prove extremely costly for the Modi government). This statement by the billionaire businessman and yoga guru Baba Ramdev at a discussion hosted by a television channel on September 16 in New Delhi should rate as a categorical indicator of the current state of the Indian economy and the political import it has for the government led by the Bharatiya Janata Party (BJP) at the Centre.

Several factors, social, political and personal, add value to the statement by the yoga-teacher-turned-businessman. For over a decade, Ramdev has been a dedicated supporter of Narendra Modi and his brand of politics. The association that started when Modi was the Chief Minister of Gujarat during the 2002-2014 period grew into sustained and proactive engagement in the course of the 2014 general elections. Ramdev not only campaigned extensively in that election highlighting the “Modi for Prime Minister” slogan, he also helped the BJP in picking its candidates in States like Uttar Pradesh, Haryana and Jharkhand. With the vast following that his yoga practices and the discourses on them command, Ramdev contributed in a big way in building up “Brand Modi” as the panacea for all the problems of India.

Once Modi became Prime Minister, this relationship spread to new realms of mutual facilitation. Ramdev continued to do propaganda for the BJP, with a special focus on States that had Assembly elections after May 2014, and this campaign was acknowledged as important by the BJP leaderships in States like Haryana, Uttar Pradesh and Jharkhand. Newly elected State governments under the BJP smoothened the way for the expansion of Patanjali, Ramdev’s trade brand, in new ventures. Patanjali’s revenue grew by leaps and bounds, literally doubling from year to year during the Modi regime, shooting up from Rs.1,184 crore in 2013-14 to Rs.2,006 crore in 2014-15, Rs.5,000 crore in 2015-16 and Rs.11,526 crore in 2016-17. The brand, which began by selling ayurvedic medicines, moved on to peddling all types of fast moving consumer goods (FMCGs) such as cosmetics, toothpaste, biscuits and instant noodles. In spite of such expansive political and economic symbiosis, here was Ramdev warning the Modi dispensation, and that too from the platform of a telecast interview, about the high political cost it would have to bear because of rising prices.

‘Will not campaign for BJP’

That Ramdev did not stop with a one-line warning is also perceived as significant by political observers, politicians of all hues and even the BJP’s associates in the Sangh Parivar. Ramdev said he would not campaign for the BJP in the 2019 elections:. “Why would I? I will not campaign for them... I have withdrawn politically. I am with all the parties and I am independent.” Striking a supposedly neutral posture, he added that though there were those who “laud the policies of the Modi government”, some of the policies “need correction now”. “Price rise is a big issue and Modi ji will have to take corrective measures soon, starting with immediate steps to bring down the prices of petrol and diesel.” More significantly, Ramdev sidestepped a question on whether his faith in Modi was as strong as it was in 2014. He said he was “a centrist who is neither a rightist nor a leftist” and that no one should “needle” him as he had adopted ‘Maun Yoga’ [silence] on many important issues. Taken as a whole and analysed from a social and political perspective, Ramdev’s observation signifies the intensity of the popular feeling against the ruling dispensation in terms of its economic track record, especially in the matter of price rise.

Ramdev’s virtual indictment of the Modi government on its management of the economy fits in with a larger pattern that was becoming increasingly visible within the NDA framework over the past few months. About a week before Ramdev’s pronouncement, on September 10, opposition parties observed a Bharat bandh in protest against the rising fuel prices. Four allies of the BJP—the Shiv Sena in Maharashtra, the Janata Dal (United ) and the Rashtriya Lok Samata Party (RLSP ) in Bihar and the Suheldev Bhartiya Samaj Party (SBSP) in Uttar Pradesh—supported the demands raised in the agitation, albeit with different modes and levels of organisational involvement.

The Shiv Sena came the closest to joining the bandh organisationally, with party workers putting up posters across Maharashtra ridiculing the Modi government and attacking the fuel price hike and the handling of the economy. They recalled Modi’s pet 2014 slogan “achhe din” (good days) and pointed out how this had become a joke on the people. SBSP president Om Prakash Rajbhar, who is also a Cabinet Minister in the Yogi Adityanath’s government in Uttar Pradesh, held a press conference to discuss the issue and pointedly remarked that there was a history of governments falling because of fuel price hike in the country. . “The people of the country have the real power. Whenever there is a hike in petrol or diesel rates, there is a general price rise of all essential commodities. This affects traders, youths, farmers and most of all, the poor. When all sections of the population are impacted thus, the government of the day too will suffer ultimately, that too in a big way,” he said. JD(U) and RLSP leaders also interacted with the media to raise their concern on the fuel price hike and the hardships it has inflicted on the people of the country.

In their own way, these BJP allies were signalling that they were not party to the Central government’s economic policy management. Politically, this marked a distancing from the BJP. Though not designated as a formal ally, as an organisational and individual entity Ramdev was no less than a partner to the BJP. Clearly, he too was on the same page as these NDA constituents. On its part, the BJP leadership seemed to have taken note of the growing unrest. However, it sought to divert the attention of the allies to the alleged violence that erupted during the Bharat bandh and recalled the previous Congress government’s failures in managing fuel prices. Union Minister Dharmendra Pradhan led the diversionary counter offensive; he argued that India and its oil companies were yet to recover from the shock of oil bonds worth Rs.1.4 lakh crore issued during the United Progressive Alliance (UPA) regime . He said that the current government had to pay Rs.10,000 crore as interest for this every year and that the oil companies had to sell these bonds at discounted prices as there were no takers for them. “People save for their future generations but our friends in the UPA burdened the future generations for temporary gains and politicking,” he said. Pradhan’s arguments were followed up by the BJP media wing, especially its social media section, which launched a graphics war on comparative oil prices, contending that the hike was steeper during the Congress regime. The Congress social media team joined the combat, generating a widespread impression that the BJP claims were misplaced and hollow.

Responses from the ground also underscored the growing popular perception against the government on economic policy issues (see box). Putting these grass-roots expressions in perspective, Professor Sudhir Panwar, former member of the Uttar Pradesh Planning Commission and leader of the Samajwadi Party (S.P.), said that all analyses of the economic track record of the Modi government on the basis of political parameters exemplified the huge gap between rhetoric and performance. “Right from the early run-up to the 2014 Lok Sabha elections, as Modi emerged as the BJP’s prime ministerial candidate, his thundering appeal to the electorate was to give him 60 months to settle all the maladies of India. He deplored the 60 years of misrule by the previous governments and asserted that he would require only a fraction of that time to bring in ‘achhe din’,” he said.

Evidently, a sizeable section of the voters took this rhetoric as the gospel truth. They formed only 31 per cent of the total electorate, but that was good enough to bestow Modi’s party with 282 out of 543 Lok Sabha seats, helping the BJP reach a majority on its own. It is quite possible that the economic adventurism one witnessed in demonetisation and the ill-thought-out implementation of GST [Goods and Services Tax] were a direct result of the over-confidence bestowed by this huge majority. Whatever that may be, these economic initiatives turned out to be resounding failures contributing to an all-round economic collapse. Put simply, the Modi regime has recorded the biggest downturn in terms of consumer confidence: basic construction activity has come down drastically in spite of the big promises for the manufacturing sector; a large number of factories in different sectors have shut down; new jobs are not getting created adequately and unemployment has gone up. In addition, the agrarian economy is in distress, and the entire population dependent on it is in dire straits. The cumulative effect of all this is reflected in the expressions of caution and disillusionment from people as prosperous as Ramdev or as impoverished as the farmers of Uttar Pradesh.

Sudhir Panwar was also of the view that this sense of disaffection would produce its first electoral manifestations in Rajasthan, Madhya Pradesh and Chhattisgarh, where Assembly elections are due in the last months of 2018, unless communal polarisation played a determining role. Close to 70 per cent of the population is dependent on agriculture in Madhya Pradesh and Rajasthan, and both States have witnessed sporadic movements of farmers and agricultural labourers against the economic policies of the BJP-led State and Central governments.

The Modi factor

However, Pandit Shyam Bihari Baijnath Mishra, a four-time BJP Member of Parliament from Bilhaur constituency in Uttar Pradesh and the national president of the Bharatiya Udyog Vyapar Mandal, the apex body of traders and small industries, said the BJP would beat all the odds to win the 2019 general elections because there was no one in the opposition capable of countering Modi’s political personality. Mishra, who had made bold to criticise demonetisation and point out 62 anomalies in the original GST structure proposed by the Union government, agreed that the economy was in distress. He accepted, too, that avoidable hardships had been thrust on the people, but still felt that the Modi factor would be hard to counter. “This is basically because there is nobody in the opposition ranks who can counter Modi’s political personality. His track record may be poor, may be even worse than poor, but when it comes to choice in the elections, the electorate will finally go back to him, because no leader in the opposition raises hope or represents a promise.” It is an opinion that still resonates with much of the middle class. Mishra added that the TINA (there is no alternative) factor would also come into play in Madhya Pradesh and Chhattisgarh, though the BJP could be forced on the back foot in Rajasthan, where the anti-incumbency rate was reportedly very high.

This contention has many takers in northern India, both within the BJP and among a section of people who claim to be neutral. Many of them feel that the absence of any pointed corruption charges against the Modi government will strengthen the TINA factor. Several advocates of this view told Frontline that the confidence bestowed by this factor had spurred the recent BJP national executive in New Delhi to pass a resolution promising to build a “New India” by 2022. It claimed that the developmental work of the last four years had charted the path for a New India, which would be free from terrorism, casteism and communalism. The resolution also added that in the New India nobody would be homeless. “Whatever the fault lines in the Modi government and the BJP led by Amit Shah, there is little doubt that both are masters of propaganda and are in a position to sell this idea,” Mishra told Frontline.

But Anil Awasthi, a farmer who otherwise looks up to Mishra as a guardian and father figure, strongly rebutted this view. “The opposition may not have any worthwhile leader at present in the traditional sense, but we are sure somebody will emerge in due course,” he told Frontline. “In any case, anybody would be better than this man called Modi who promises the moon but pushes us into the gutter when we follow his pointed finger to look up at the sky.”

BJP insiders express confidence that the disenchantment of people like Awasthi can be overcome through the systematic work that is on at the level of the government and the party to buttress the TINA perception. Steps have been taken to overcome farmer antipathy, with a special focus on the election-bound States of Rajasthan and Madhya Pradesh. An umbrella scheme consisting of three components, the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), was announced in the third week of September with the proclaimed aim of enhancing the earnings of farmers growing pulses and oilseeds in consonance with the higher minimum support prices (MSPs) that were announced two months ago.

However, farm sector experts like Sudhir Panwar, joint secretary of the All India Kisan Sabha (AIKS) Vijoo Krishnan and president of Swaraj India Yogendra Yadav are of the view that this is a pipe dream. Yogendra Yadav pointed out that the scheme only envisaged procurement of one fourth of the produce by the Centre, and that the burden of procuring the major quantum had been vested with the States. He said that the funds announced for the entire exercise were just a third of the requirement and that this was bound to defeat the very objectives of the scheme right at the beginning. Sudhir Panwar said that the scheme was merely a rehash of an earlier scheme titled “Bhavantar Bhugtan Yojana” which was already operational in Madhya Pradesh. “The only addition to the scheme seems to be the initiation of private players into the procurement sector. Ultimately, this will expose the farmers to the pressures and games of market forces, especially their cartelisation manoeuvres,” he said.

The AIKS is of the view that the BJP government’s move to allow private players to take up procurement is aimed at facilitating corporate profiteering even as the government washes its hands off procurement and public stockholding. “This is in accordance with the Shanta Kumar Commission recommendations and the diktats of the World Trade Organisation. There is no plan for strengthening a network of purchasing centres, storage centres and marketing facilities. The BJP government is only implementing a well-laid-out plan of withdrawal from its responsibilities.”

Sudhir Panwar agreed. He also pointed out that the Modi government had been trying to unleash the agenda of corporate-driven privatisation in the agricultural sector right from its early days. “The government tried this through several executive and legislative moves, including the infamous land acquisition (amendment) Bill that was loaded completely in favour of private corporate interests. The farmers and agricultural labourers of this country have suffered the most on account of these attempts. They will see through these hoodwinking exercises,” he said.

Not so clean?

There is also a growing perception that the Modi government’s so-called clean record in terms of corruption in high places is getting undercut sooner than expected, especially in the light of the recent revelations made by former French President Francois Hollande on the Rafale deal. Aspects of the deal had brought the Modi government under intense opposition attacks over the past three months. The Defence Ministry was found wanting in its responses to questions on the change in price, the dramatic reduction in the number of aircraft to be obtained, the shifting of production centres, and above all, the appointment of the Anil Ambani-led Reliance group as the Indian partner for Dassault Aviation, the French aeronautics company responsible for manufacturing the Rafale jets for India. Indeed, the Defence Ministry repeatedly maintained that the choice of Reliance as partner was made independently by Dassault Aviation. Hollande made it clear through a media interview that the Indian government had suggested Reliance and that the French government had no choice in the matter. Clearly, this is a story that is bound to evolve in the days to come, with more revelations that might have the potential to demolish the “incorruptible” image of the government and its leadership, particularly the Prime Minister (see “Limits of credibility”, page 35).

Notwithstanding all this, the BJP leadership is hopeful that the scheme in the oilseeds sector will mark the beginning of a turnaround for the Modi government vis-a-vis popular perceptions on the state of the economy. This apparently is to be followed up by a widespread waiver of farm loans, including Mudra loans that account for approximately Rs.5.5 lakh crore, just before the 2019 elections. The Sangh Parivar has also launched its Hindutva game plans, which hinge on strengthening and broadening the pan-Hindu electoral constituency that has been built up steadily over the past few decades. The recent manoeuvres of Rashtriya Swayamsewak Sangh (RSS) sarsangchalak Mohan Bhagwat, including his call at the Chicago Hindu meet, followed up by his lecture series in Delhi, are seen as vital components of this game plan. While the Chicago meet laid emphasis on aggressive Hindutva, the Delhi lecture series adopted apparently moderate postures, in line with the doublespeak characteristic of the Sangh Parivar. Clearly, a convoluted game plan is on from the BJP and its associates in the context of the disenchantment it is facing from the people and also from political and electoral allies. As things stand now, the balance of perceptions is certainly against the BJP and its cohorts in the Sangh Parivar, despite the brave face that sections of the Hindutva combine are trying to put on.

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