Those who supported Modi prior to his election in 2014 imagining that he would lead India away from populist economics must be kicking themselves now that’s he turned out to be an arch-populist himself. The question is: Why? Why did a politician who during his campaign and his first days in office insisted that he would transform India’s economy return instead to the old vote-buying formula he had once mocked?
Perhaps because, when judged by his own promises, Modi’s term has been a failure. The government may claim that India’s economy is growing faster than it ever has, but there isn’t exactly a lot of optimism on the ground. Worst of all, his political foot-soldiers, the under-employed young men who fill India’s northern states, haven’t seen their lives change appreciably.
Just a couple of days before the budget, India got convincing proof of this failure. The government had long argued that unemployment wasn’t a problem. There wasn’t any data in the public domain to settle the question one way or another. But, it turned out that India’s most comprehensive jobs survey had indeed been completed and signed off on by the country’s highest statistical body. After the government tried to bury the data, the statisticians resigned — and the data leaked anyway, revealing that unemployment was at a 45-year high. It was worst for young people: The unemployment rate for rural males between 15 and 29 soared from five percent in 2011-12 to 17.4 percent in 2017-18. Rather than curing India’s jobs problem, Modi’s government had made it worse than ever.
That’s why the new giveaways were both necessary and revealing. Modi’s promise of a new political economy, one oriented around the private sector, productivity and growth was illusory. Now India is faced with the choice of one giant welfare scheme or another in this year’s elections — alongside a treasury that will struggle to finance politicians’ demands. This is a familiar position for India’s voters, but one that many of us had hoped we had left behind.
And the worst part, perhaps, is that Modi’s giveaways show that he’s learned nothing from his mistakes. The reason farmers need support is that there are so many of them that land-holdings are too small and they struggle to make a living. The reason that there are so many of them is that there are no other places to work. If you want India’s farmers to prosper, you need to focus on creating a more vibrant industrial sector. But, in the budget there was little talk of manufacturing. Modi’s government began its tenure promising to reduce corporate taxation to Southeast Asian levels so as to render Indian industry competitive globally. There wasn’t a peep about that in this last budget. Modi seems to have given up on his plan to transform India.