TOUGH JOB AT HAND
The government gets flak on the economic front on account of high unemployment, rising prices and the slowdown in growth
The India Today Mood of the Nation (MOTN) poll comes amid the Union government preparing to table the budget for 2018-19. There is a general consensus among experts that the priority areas for the government in the budget will be agriculture and rural distress, creation of infrastructure and addressing the slow growth in jobs.
Many of these concerns—unemployment, price rise and corruption—also find a prominent reflection in the findings of the MOTN poll. Alarmingly, job related issues, such as unemployment coupled with the fear of losing one’s job, were a concern for 32 per cent of the respondents. Data from government agencies in the past corroborate this. In May 2017, a quarterly report on employment released by the Labour Bureau had said that 230,000 jobs were created in eight key sectors between April 2016 and December 2016, comparing poorly with Prime Minister Narendra Modi’s 2014 election promise of creating 10 million jobs a year. Some argue the Labour Bureau report does not give a true picture of the employment situation since it neither covers all sectors nor takes into account the jobs being created in the informal sector. However, it is also true that thousands of jobs were lost, mostly in the informal sector, due to demonetisation, and there isn’t enough data to suggest that the jobs lost have been recreated.
A Centre for Monitoring Indian Economy (CMIE) report in July last year said about 1.5 million jobs were lost during January-April 2017. Only a push towards the job intensive sectors, such as construction, and labour-intensive export sectors, such as leather, garments and gems and jewellery, can help create more jobs, says Dharmakirti Joshi, chief economist at Crisil. In the run-up to the budget, finance minister Arun Jaitley too has been hinting at focusing on job creation. However, 53 per cent of the MOTN respondents believe the government is not doing enough to create jobs. As many as 58 per cent of those surveyed said the job situation in the country has worsened in the past threeand-a-half years of the Modi government—up by 5 percentage points since the MOTN in July 2017.
As in the past, unemployment remains a relatively bigger concern for those in the Northeast and among the population in the age group of 18 to 24. This is why states in the Northeast, four of which would be going to polls in 2018, should remain high on the government’s agenda of development.
Inflation stands out as a growing concern. It
was the top worry for 23 per cent of the respondents, up from 10 per cent in the January 2017 MOTN poll. While both droughts and floods in various parts of the country have destroyed crops in equal measure, leading to a shortfall in produce and high prices, the government has not been able to successfully tackle hoarding by traders. The raids by income tax officials on top onion traders in Nashik district in Maharashtra last year exposed how traders were exporting onion to get higher prices while creating a scarcity back home and fuelling a price rise.
Goods inflation has also been attributed to the rising price of crude oil in the international market, hovering at $70 a barrel, compared to $60 a year ago, leading to increased transportation charges. Sixty nine per cent of the MOTN respondents say that the price of essential commodities increased in the past three-and-a-half years, against 62 per cent in the last survey.
Dampened spirits
Given these issues and the drop in growth rate to an estimated 6.5 per cent in 2017-18, compared to 7.1 per cent in the previous year, it is not surprising that the perception that the Modi government has performed better than the Manmohan Singh-led UPA government on the economic front has taken a beating—from 59 per cent in July 2017 and 60 per cent a year ago to 56 per cent now. It is also notable that 21 per cent of the respondents feel the Modi government’s economic performance was worse than the UPA government’s—the highest negative score in the past five surveys.
At the same time, there is equally a feeling of goodwill for the government, perhaps riding on the hope that going forward, it would set the economy right. This is reflected in the fact that 46 per cent of the respondents believe their economic status has improved, up from 44 per cent in the previous survey although it was much higher (53 per cent) a year ago.
The other major issue has been the Goods and Services Tax (GST), which came into effect in July 2017. While there was a general consensus that GST was a key reform and will substantially simplify the taxation structure in the country and subsequently lower tax rates in general, its implementation leaves much to be desired. There were too many complaints regarding the classification of goods under various GST slabs, and about the technical glitches plaguing the GST portal. Almost half the respondents (49 per cent) say the prices of essential commodities and electronics have increased ever since GST was implemented. Just ahead of the Gujarat elections, the government enacted its biggest GST rejig, perhaps to assuage the fears of the state’s large trader community. Tax rates on over 200 items were cut, and as many as 178 items of daily use were shifted from the top tax bracket of 28 per cent to 18 per cent, while a uniform 5 per cent tax was prescribed for all
restaurants. Despite this, the verdict in Gujarat signalled a caution for the Modi government, with the BJP restricted to just 99 seats, much below its 2012 tally of 115. In another move, the GST Council has recommended a rate cut on various items, including used cars and biodiesel. With oil prices rising internationally, it is clear that the government wants people to consider alternative fuels.
Demonetisation blues
The embers of the government’s demonetisation exercise have refused to die down, reflecting in the job losses in the informal sector but, by and large, many believe the exercise has been able to curb black money. This shows how successfully the government has been able to convince the general public about the benefits of demonetisation, despite the fact that most of the money that was demonetised returned to banks as deposits. The government has vowed to investigate the hundreds of thousands of bank accounts where it says black money had flowed in post-demonetisation. But the process is tedious and, already, there is a clamour against the so-called ‘tax terrorism’ unleashed by the government. Thirty-seven per cent of the MOTN respondents say black money has returned to the markets.
Another key finding of the MOTN poll is that the general public still finds corruption a major issue. Neither demonetisation nor the government’s drive against benami property seems to have changed the perception. A whopping 78 per cent of the respondents said corruption encountered in daily life has not come down under the Modi government.
On the reforms front, many want to see public sector banks privatised. Public sector banks have come into sharp focus over their massive non-performing assets (NPAs). As many as 45 per cent of the respondents said privatisation of PSU banks would be a welcome move. But this is not on the immediate radar of the
government. Even the move to privatise Air India is taking its own time as potential investors need clarity on who will bear the airline’s debt burden. While far-reaching reforms, such as the Insolvency and Bankruptcy Code, have been put in place and a Rs 2.11 lakh crore bank recapitalisation plan is being implemented, the woes of the banking sector will continue for some time.
Privacy concerns
One of the key thrusts of the Modi government has been the linking of Aadhaar with bank accounts and mobile phone numbers, in order to prevent fraud and ensure that subsidies reached those they were meant to serve. But the public sentiment has been largely negative. As many as 47 per cent of those polled do not welcome the decision to link Aadhaar with bank accounts and phone numbers. They feel that it either compromises their privacy or will only help the government in collection of taxes—in short, no benefits for the general public. Much of the resentment seems to be against using biometric identification for the most common of services, and questions over how safe the data sourced from the public is.
With enough worries for the government and not much time to address them in depth, the nation will be keenly watching how the government sets its priorities in the run-up to the 2019 general elections. The biggest antidote is likely to be administered in the agriculture and job sectors, but it remains to be seen if the government’s course corrections will be significant or have an enduring impact.