Social disharmony stokes risks to Indian economy

By Azhar Azam

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Op-Ed By Azhar Azam – Mr. Azam works in a private organization as “Market & Business Analyst” and writes on geopolitical issues and regional conflicts.

 

In 2014, the ruling Indian Bharatiya Janata Party (BJP) intoned the slogan “One India, Great India” and won election by disseminating its manifesto that pledged to stabilize economy, control inflation, revive labor-intensive manufacturing sector, purge corruption, create jobs, end violence against women, deliver better public service to neo-middle class and raise spending on education to 6% of GDP.

Though until before 2019 election, Modi government completely or partially fulfilled some of its promises as well as failed to meet a few of those – it was still likely to gain a comfortable majority in the Indian parliament through its BJP-led National Democratic Alliance (NDA).

So, its shift from laying emphasis on socio-economic development to frictional issues – such as revocation of Article 370 in Jammu & Kashmir (J&K), enactment of Citizenship Amendment Act (CAA) to fast-track the naturalization of selective religious minorities and construction of Ram Mandir (Temple) – was increasingly oblivious, rash and unruly.

Indian governing party unequivocally was influenced by the ultra-nationalist Hindutva agenda of Rashtriya Swayamsevak Sangh (RSS) that seeks control in national policies, teaches Hindu scriptures as historical facts in BJP-won states, scuttles unsought legislation and browbeats government to be protectionist about multinational companies’ entrance in the country.

Falling hostage of the country’s largest political party to RSS ideology was replicated in the conflagration of “one-sided and well-planned” riots in northeast Delhi that so far killed more than 50 people, injured over 200 and forced to flee thousands. The fear of RSS hardcore doctrine has infiltrated so much that it even prevented the Speaker Om Birla to allow a debate in the Indian parliament.

While the violence, which originally stemmed from anti-CAA and pro-CAA clashes, seems to remodel into a program after BJP reprehensibly lost Delhi state election – the continuance of raising the incendiary “Shoot the Traitors” slogan in the rally of Union Home Minister Amit Shah is setting a dangerous trend that could be caustic for Indian internal stability, people security and for the country’s plunging economy.

After BJP hostile campaign followed by its divisive moves of striping the autonomy of J&K and Ladakh after cleaning up the rivals in national election –Rajiv Kumar, the vice chairman of state’s policy think tank NITI Aayog, warned government about “unprecedented (Indian economic situation) in the last 70 years” citing 5.8% GDP growth and called for extraordinary steps to tackle the slowdown.

The dramatic reversal in one of the key members of Modi’s economic team came within months of Reserve Bank of India governor Shaktikanta Das’ claim that argued the country would be the fastest growing economy, clocking a growth of 7.2% in 2019-2020 despite global economic risks and financial market and crude price volatility.

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It further stalked former chief economic adviser Arvind Subramanian’s conclusion in his June 2019 paper that found country’s real GDP was overestimated by 2.5% at about 7% between 2011-12 and 2016-17 and reckoned it to be hovering around 4.5%. In his another co-authored December 2019 research, he dubbed the current crisis as “India’s Great Slowdown” where the economy was heading to the intensive care unit.

Kumar’s caveat about looming threats to Indian economy and Subramanian’s revelation over GDP hyperbole stood irrefutable once the global ratings agency Moody’s, in November 2019, downgraded New Delhi’s sovereign rating from stable to negative – pointing out the economic slowdown, financial stress among rural households, weak job creation and liquidity crunch in non-banking financial sector.

Moody’s latest prognoses are even nerve-wracking. In less than a month last week, the agency revised its baseline growth projection for India from 5.4% to 5.3% in 2020 after initial expected downfall from 6.6% to 5.4%. Last month, it said that Indian economic revival will likely to be “shallow” as its economy had decelerated rapidly over the last two years with real GDP grew by a meager 4.5% in the third quarter of 2019.

Taking into consideration that the Indian per capita GDP needs to grow at least 9% a year to reach the half of the level of the US in 15 years – at current pace, it would take no less than 30 years for New Delhi to achieve that. It would thus be stark challenge for India to turn the tide amid forthcoming global economic crisis and growing domestic violence.

Violence in the last week of February that was a week of many firsts – where India, for the first time at the arrival of a US president, saw communal violence in its independent history and for the first time in recent memory , schools and mosques were burnt; ambulances were denied access to the grievously injured and journalists were beaten up, booed and heckled – could propel nationwide riots and further exacerbate Indian chilling economic situation.

Former Indian Prime Minister Manmohan Singh is also skeptical of the economic ruin and worsening communal tensions that are being stoked and fanned by religious and political intolerant sections of the society and could rupture the soul of India and pull down its “global standing as an economic and democratic power in the world.”

After winning election, Modi claimed to have met his objective “Sabka Saath, Sabka Vikas” (development for all) and assured to win “Sabka Vishwas” (trust of everyone) this time. About 10 months of becoming the prime minister, people in India are seeing it otherwise – “Sabka Vinash” (destruction of all). In all, BJP would have regained the power but in due course, Indian economy and people have lost to RSS Hindu-nationalist ideology.

The ongoing social disharmony and the self-inflicted economic extinction, if not handled and tamed through a harmonized politically negotiated dialogue, could make India’s economic resurgence more distant that has already slid the country into a majoritarian state where the tyranny of numbers are in full display.

 

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