Sun. Apr 21st, 2019

The growth of the Indian economy with Modi eclipses the unemployment crisis

The growth of the Indian economy with Modi eclipses the unemployment crisis



Under Narendra Modi's last five years, India has become one of the fastest growing economies - above 7% - but behind the scenes its two major economic reforms have contributed to the highest unemployment rate in the world. half a century

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Modi, who is running for re-election in the general elections to be held in seven phases between April 11 and May 19, withdrew by surprise from circulation the two largest tickets at the end of 2016 to fight against black money and corruption, plunging the nation into a serious liquidity crisis.

However, analyst Jayshree Sengupta, of the Observer Research Foundation (ORF), considers that the measure was "totally unnecessary", did not meet its objectives and caused the loss of jobs.

"90% of the workforce is an informal sector and this was very affected by the 'demonetization', there were many jobs that were lost and have not returned much," he told Efe.

The other major announcement of the legislature was the approval in 2017 of the Goods and Services Tax (GST), a common indirect rate for all Indian regions.

Considered the largest fiscal reform in the history of the country, Sengupta sees the GST as something positive, but warns that it also had a negative impact on job creation due to the complexity of its implementation.

In five years, the Executive has not published any official unemployment rate, but a report from the government's National Survey Sample Office (NSSO), recently leaked to the Business Standard newspaper, places it at 6.1% for the fiscal year 2017-2018. , the highest in 45 years.

On the ecuador of the previous legislature, the unemployment rate estimated by the NSSO was 2.2% and the rise to 6.1% would be even more dramatic than that reached in 1972-1973 amid the hangover from the war that it made Bangladesh independent of Pakistan in 1971, according to the report.

Although lower than in many other countries, the figure is disproportionate in a country accustomed to 3% and also reflects the reality of a very diverse country.

"India is a very big country and this is only an average, if you look at the breakdown of some of the Indian states you will see double-digit unemployment rates like in Jammu and Kashmir (north) .In India some states do not have unemployment and others have it very high, "journalist Goutam Das told Efe.

To this is added, as he defends in his recent work "Jobonomics", that the current crisis is more of underemployment than of unemployment.

Das maintains that the Government did not know how to anticipate the "wave of automotive" that affects the world, in reference to the waste of the so-called 'industry 4.0' with its high technology and robotization, and the consequent loss of employment.

He agrees with the ORF analyst that the withdrawal of tickets and the GST also helped the loss of jobs.

Another "well-intentioned" measure that in his opinion contributed to the crisis was the entry into force in 2016 of the Insolvency and Bankruptcy Code, a law that unifies the process for these cases, and that resulted in bankruptcies and the corresponding dismissals.

Finally, the author highlights the impact of the lack of investment announcements and completed projects of the last three or four years.

On a positive note, the business climate for SMEs has improved as India moved from 100 to 77 in the latest "Making Business 2019" ranking of the World Bank (WB), thanks to several reforms implemented in 2017-2018.

According to the "Doing Business 2019" team, the improvements in the ease of starting a business were key, with a "faster" registration process thanks to the GST or the integration of several application forms in a general one.

However, he acknowledged that they need to improve in the registration of property, the execution of contracts or the resolution of insolvency.

Until the applauded decline in the consumer price index (CPI), which before Modi reached 9.4% compared to 2.57% last February, occurred at the expense of the suffering of farmers, who in the past Months have staged endless protests against the Government.

The fall is, according to Sengupta, a reflection that agriculture is growing "very slowly" and that there is no "adequate" price for agricultural products, since it is food inflation that is driving down the CPI.

Before the arrival of Modi, during the mandate of Manmohan Singh, at the head of the coalition led by the now opposition Congress Party, the economy grew very unevenly, with some years exceeding 8%, others dropping to little more than 5% and leaving an average of 6.67%.

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