Undermined by the cow
Modi's ambition of turning India into an economic powerhouse has been derailed by his party's ideology
DISTRACTED BY his yen to play a leading role on the world stage, Prime Minister Narendra Modi has had little time for the economy and the manifold problems that it is struggling against. These are the kind of problems that require sustained attention and a dynamic leadership. That is missing, and not all the spin that the government excels in can hide the economy’s dismal performance.
For the man who rode to a landslide victory on the promise of better prospects for the young, Modi has been rather remiss in tackling the biggest challenge facing India: too few jobs. India’s demographic bulge means that it needs to create vast employment opportunities for the 12 million young people entering the job market every year in addition to those already in the workforce without gainful employment. Instead, there has been a regression. Latest figures released by industry reveal a worrying new trend. The economy has been shrinking and shedding jobs instead of creating new ones.
One reason is the poor performance on the export front. A sharp drop in merchandise exports has led to massive job cuts across sectors, a situation that is expected to accelerate as some manufacturing units go in for automation—replacing the labour force with robots. This is double whammy. A just released report by industry organisation Assocham says the decline in merchandise exports owing to a slump in global demand has resulted in a loss of 70,000 jobs during the second quarter of the current financial year. That is, in just three months. Of particular concern, it says, are the large-scale retrenchments that have been facilitated by the shift towards contract labour. “….There is a concern because most of the export-oriented units in the economy are dependent on contractual workers. So, massive reduction in contractual jobs in these sectors might as well imply deteriorating conditions in the export units,” the Assocham report warns.
While global conditions might be one reason for the bad news, here is an instructive story of how the Modi government’s ideological pursuits are actively deepening the gloom on the job front. As the PM allows the storm troopers of saffron outfits to run amok with their gau rakshak or cow protection antics, yet another sector of exports, leather and leather goods, is taking a beating.
With cattle trade practically at a standstill and the skinning of even carcasses becoming a life-threatening exercise, the availability of hide and skins has dropped significantly, according to industry reports. The Council for Leather Exports, the apex body for the leather industry, has reported a 10.14 per cent drop in business year-on-year between April and November 2015. And what does it blame for the poor show? The beef ban in Maharashtra which has reduced the flow of raw materials to tanneries across Tamil Nadu, the country’s largest leather-exporting state.
The slowdown came at a time when exporters should have been making a killing because of the stronger dollar. But the government does not appear to be losing any sleep over these developments. Neither Modi, caught up in new foreign policy tangles, nor his chief ministers have tried to rein in the cow protectors whose terror strikes against cattle traders continue.
Meanwhile, there are further signs that the world is not particularly enamoured of India’s flagging growth story. Moody’s Investor Service indicated on September 20 that it is unlikely to upgrade India’s sovereign credit rating—it is the lowest investment grade rating—anytime soon. Global analysts think the sharp dip in growth is putting a question mark over the world’s fastest growing economy to create a significant number of jobs. To create the kind of employment openings that Modi promised voters two years ago, India needs to notch up double digit growth. For that, we might have to wait till the cows come home.