Video Editor: Mohd Ibrahim
In the prequel video, I had analysed the four economic reforms that I acknowledge under Modi 1.0, viz Ujjwala, Insolvency and Bankruptcy Code (IBC), Direct Bank Transfer (DBT) and Goods and Services Tax (GST), in that order. Now is the turn to look at the failures. Since Modiji loves to bandy stats, I too shall rattle off a barrage of data points, rat-a-tat-tat. So here goes.
Real Interest Rates: Contrasted against the healthy sub-5 percent mark during almost the entire UPA decade, real interest rates have flashed a bloody red, soaring above the 9-11 percent range, under Modi. This has happened despite a benign inflation situation, proving how this government has chomped at the nation’s dwindling savings, keeping interest rates high and crowding out private investment.
Weak Consumer Demand: It’s no surprise that high interest rates have virtually killed consumer demand. Retail auto sales declined 8 percent in February over last year.
Maruti, the overwhelming market leader, cut production by 27 percent in March. Even two-wheeler manufacturers scaled back by 15 percent, year on year. Tractor and truck sales have plummeted, the latter by over 20 percent.
Domestic air passengers have shrunk by double digits in January. Exports have struggled since 2014; surprisingly, only in its fifth year, the Modi regime is on track to book $330 bn to nose ahead of the $313 bn record set by the UPA in FY14.
Weak Core Sectors’ Growth: Eight key industries – electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilisers – have hit an 18-month low.
Slowest Profit Growth for Corporates in 5 Quarters: Analysts cut their EPS (earnings per share) forecast for 151 out of 253 listed companies after the December quarter results.
Under the UPA, EPS growth got a negative shock in the post-Lehman crisis year of 2008-9; but otherwise, growth was robust, hitting above the 20 percent mark in several years. Under Modi, however, EPS growth was negative over two consecutive years, and only marginally in double digits in other years.
Ravaged Banks: To its credit, the Modi regime allowed RBI to undertake a transparent asset quality review in 2015, which unearthed a shocking mess of bad loans, that quadrupled under Modi’s watch to over Rs 10.6 lakh cr or 11.6 percent of aggregate bank assets. Even after Rs 3.4 lakh crore have been written off, the gross NPAs will hit 10.3 percent this month. Non-food credit is lower than what it was in 2015.
Denuded Public Sector Companies (CPSE): The Modi regime literally forced CPSE’s to aggressively buy back their shares so that cash on their balance sheets could be transferred to the government. Unfortunately, this has resulted in a massive erosion of wealth, with all such shares quoting well below their buyback price by an eye-watering 17-54 percent.
Over the last two years, BSE PSU index has lost 13 percent, while the BSE Sensex has gained 21 percent. Worse, the government has raided their cash surpluses, which are down almost 40 percent, by over Rs 1 lakh crore, since Modi took power.
A “navratna” (immensely valuable) company like BSNL delayed salaries this year!
Anaemic Stock Markets: Before the current short burst, India’s stock markets were in the doldrums. Two-third of the 364 equity mutual fund schemes were in the red; 78 schemes had mauled their investors by over 10 percent in one year. Inflows into pure equity schemes had dropped to their lowest levels in 25 months.
In a real blow to the Modi narrative, the Nifty grew by nearly 29.6 percent pa in UPA-1 and 20.7 percent pa in UPA-2, but an anaemic 11.6 percent every year from 2014-18. Ouch!
Lagging Foreign Direct Investment (FDI): Now this one will hurt too. While the Modi regime goes ballistic on its pro-FDI policies, the UPA scored a 10.7 percent annual growth over its decade, a good two percentage points higher than the 8.7 percent annual growth logged by Modi.
FDI, as a share of GDP, has plummeted from a high of 3.4 percent in FY09 to 2.3 percent in FY19. In fact, for all the fancy talk, FDI has contracted by 7 percent in the current financial year.
Agriculture Distress: This phrase has become a painful cliché’ under Modi. Growth hit 2.7 percent, the lowest in 11 quarters. Worse, since food prices are in deflation, the actual income farmers earned, in rupees and paise, grew only at 2.04 percent, the worst in 14 years! Compared to the UPA-2’s annual average growth of 4.3 percent, Modi has notched a meagre 2.9 percent.
Finally, Jobs! This has been hotly contested by Modi, but the numbers are scary, even if they are massaged down in an “honest” review: nearly 2 crore male workers have gotten so disheartened that they have dropped out of the workforce; and the unemployment rate has gone up to 6.1 percent, the highest in 45 years. Ouch again!
Okay, I am going to stop twisting the knife any further. I will not mention that GDP growth has slipped to a six-quarter low. That we are less healthy than Nepal, Sri Lanka and Bangladesh. That we have fallen on the happiness index … bas. I must stop now.
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