Opinion: Unsustainable model of Naya Bharat

By Arun Sinha Old India has been metamorphosing into a New India (Naya Bharat) under the “visionary and dynamic leadership” of Prime Minister Narendra Modi since 2014, so we are told. And Naya Bharat is bringing prosperity to all. Because the spirit that drives the train of New India is Sabka Saath, Sabka Vikas. Nobody is going to […]

By Arun Sinha

Old India has been metamorphosing into a New India (Naya Bharat) under the “visionary and dynamic leadership” of Prime Minister Narendra Modi since 2014, so we are told. And Naya Bharat is bringing prosperity to all. Because the spirit that drives the train of New India is Sabka Saath, Sabka Vikas. Nobody is going to be left on the platform!

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Is that true? Nobody left on the platform? According to the Centre for Monitoring of Indian Economy (CMIE), the number of persons in the working age group (15-59 years) who have a job has significantly declined in the past five years across the country. More than 20% of urban youth in the 15-29 age group have remained unemployed on average every year during the eight years of the Modi government. Are not a large number of Indians, young and middle-aged, males and females, left behind on the platform by the bullet train of New India?

Class Train

And what about those who have got on the train? Sabka Saath, Sabka Vikas may connote prosperity to all, but it does not mean equal prosperity to all. Visionary Modi is not driving a classless train. There are different classes on the train: the top compartments are occupied by the “wealth creators” (industrialists, traders, promoters of startups, app-based aggregators), the middle ones by the consumer classes (high-paid private and public sector executives and rich farmers) and the rear ones by the working classes (skilled and unskilled). The rear compartments are much larger in number than the top and middle compartments.

Modi’s New India differentiates itself from Manmohan’s New India (which it portrays as Old India) on the grounds of being bolder in introducing “economic reforms”. What it means is an economy in which there is a “minimum government” (the government goes on shedding more and more of its powers) and “maximal ease of doing business” (the businesses pay low taxes and enjoy the liberty to hire and fire workers). The businesses are expected to use this liberty to turn themselves into wealth creators. They are expected to create such a huge pie everyone will have a decent piece out of it. Is that happening?

Disappearing Jobs 

The Modi government does not tire of talking of a high GDP growth. But it never talks about how much proportionate growth in employment there has been with the growth in the economy. Because the employment figures are disappointing. A key yardstick of a healthy and prosperous economy is the shift of labour from agriculture to industry and commerce — that is, from the villages to towns. That was the trend that had been going on for years. However, under the Modi government, the trend has been reversed. Not finding jobs in the towns, labourers have gone back to villages to do farm work. Surplus labour in agriculture means lower wages for them, yet they cannot help, for something is better than nothing. Economists have termed it a “structural reversal” in employment.

And what are those that have stayed in the towns getting? Low wages, no paid leave, no paid sick leave, no provident fund, no pension, no medical reimbursements, no support in accidents and emergencies. Modi always speaks of unicorns in glorious terms. However, the quality of employment they have provided is miserable. According to Mint, the unicorns had provided jobs to 28 lakh persons, of which only 2.72 lakh were registered with the Employee Provident Fund Organisation (EPFO). That means more than 90% of workers in the startups were denied the benefits of pension and insurance.

Maximal EoDB

And look at what the “maximal ease of doing business” does in New India. In 2017, technology-based startups in the fields of education, finance, health, food, travel, hospitality, logistics and so on had a 21.3% share in employment in the organised sector. In 2022, their share plunged to 12.9%. Travel and hospitality startup OYO fired 15,000 of its 18,000 employees between 2017 and 2022. Taxi aggregator Ola fired 2,600 of its 4,200 employees during the period. Does it need any more proof why workers are moving from towns to villages to work at low wages in the fields?

Jobless growth in the private sector can only mean that wealth will continue to circulate among the higher and middle classes, while a large section of the population remains out of the consumption market. Can this be celebrated as Sabka Saath, Sabka Vikas?

Left Behind

That our growth is not leading to economic inclusion of all is starkly obvious from the National Family Health Survey-5 (2019-21). The NFHS-5 found that while 7.5% of the population owned cars and 49.7% of the population owned a motorised two-wheeler, as much as 24.7% of the population does not even own a bicycle. Even today, when a television is seen in every home, as much as 32% of the population does not own a TV set.

Recent trade reports say consumption of services and goods, which had plunged due to the pandemic, is witnessing a significant rise. More people are travelling to tourist destinations, eating out, visiting malls and buying cars and two-wheelers and consumer electronics such as refrigerators, washing machines and television. Who are these consumers? They are the “wealth creators” and the well-paid middle classes — the people who occupy the top and middle compartments of Modi’s New India train and not those who occupy the rear compartments.

It is obvious that the economic model of New India will lead to the economic exclusion of a larger and larger section of the population. It is not good for the country, because it could lead to social unrest. The economy cannot just afford to keep growing without creating enough jobs. Economic exclusion of a large section of the population is not good for the economy itself, for that will mean that the demand will remain restricted to the higher and middle-income households and will not expand to cover more of the population.

The New India model needs to be redesigned to create enough jobs and improve the quality of employment and, through these means, improve the quality of life and consumption in order to make itself sustainable.