For Modi government, the glass is half full and the khakhra half-eaten
As Prime Minister Narendra Modi addressed a gathering of company secretaries on the occasion of the golden jubilee celebrations of the Institute of Company Secretaries of India, (ICSI), on October 4, he brushed off the criticism of the Opposition as hollow pessimism. Even senior leaders of the BJP who have been critical of the government's performance weren't spared and were referred to as Shalya - a character in Mahabharata who sided with the "Kauravas".
Nevertheless, given that the economy is in a precarious condition with many people looking at pink slips, it was hard to comprehend how the prime minister expected us to be upbeat and optimistic. Even as industry honchos were lamenting the grim state of the economy at World Economic Forum's India Economic Summit, railway minister Piyush Goyal showed the path to eternal optimism. His bizarre claim that job losses are a "good sign" and will result in the youth taking to entrepreneurship has left most rational people baffled.
In the bid to be optimistic, it would be foolish to not see the reality and opt for course correction. The minister has not explained how the entrepreneurs will be supported and whether the government's policies will be conducive to small businesses. It is common sense that for any business to be established, access to credit is vital.
However, over the past year, credit growth has plunged to a 60-year low and this has been attributed by many to demonetisation. Whatever the reasons, the resultant credit crunch has impacted small and medium enterprises (SMEs) the most. There are upwards of 45 million SMEs in India and they account for close to 40 per cent of the GDP. With this sector being asphyxiated by a lack of credit, the growth prospects of India's economy are in jeopardy.
A few days earlier, on Gandhi Jayanti, the secretary for rural development, in a presentation to a few start-ups, stated that as a part of the Mission Antyodaya, the government is planning to link Panchayats with private firms to boost the rural economy. He elucidated on how the gram panchayats can boost their businesses. He nevertheless clarified that the firms will not receive any subsidies or financial incentives from the government.
With a bruised banking system and no incentives from the government for entrepreneurs, it is hard to see any rationale in the minister's claims. With no job creation, the incomes of people will become meagre and hence they will become frugal in their spending. Low spending translates to a low demand and, therefore, there will be no incentive to produce. As such, the "entrepreneurs" that the minister talks about are unlikely to succeed, even if they overcome the many bottlenecks of the Indian economy.
The tragedy is that much of the problem lies in the leadership which appears clueless about how to handle the economy. And, of course, a tad too optimistic about its own abilities. The Indian economy withstood the global financial crisis, and was even looked up to as an engine of growth that will pull the world economy out of the recession. However, today, as the global economy recovers, India continues to bleed. JP Morgan research estimates that the world unemployment rates are at a low of 5.5 per cent, which is about what it was pre-2008.
Unemployment rates have been falling even in developing countries like Brazil and Russia since 2014, but the converse is true for India. These trends reveal that there is a leadership deficit in the government and it is high time it took criticism seriously to make amends.
Given that India has more than 50 per cent of the population under the age of 25 years and 65 per cent below the age of 35 years, it is extremely important for the government to ensure there are enough jobs available. Else, with a large population that is young, unemployed and frustrated, the government may be looking at possible civil strife. It would be in the interest of the entire nation if the government focussed on pertinent matters rather than looking for petty electoral gains, as it appears to have done with its recent decision regarding the reduction of GST rates.
Meanwhile, as ordinary citizens, we could mull over what the railway minister said once again and try to be optimistic. Let's look at the glass as half full. And when the government of the day becomes jobless, we can go on to say, "losing your jobs was a very good sign".
And treat it to a half-eaten Khakhra.