The Modi years: A war on many fronts

The five years of Modi Sarkar have drawn to a close. Five years ago, when it came to power after a spectacular victory, we commented,

The new government can be relied upon to take the neoliberal model to an elevated level. This would reiterate a pattern delineated by the history of last 25 years: irrespective of the party in power, same neoliberal policies, with or without the NAC, have been followed…Re-engineering of the social sphere – greater marginalization of Muslim, dalit, liberal, Left, pro-green voices for example – is another certainty in the coming days.

It gives us no pleasure to note that the prognosis has come true. Below, we evaluate the performance of Modi Sarkar in selected areas: agriculture, employment, health and education. We shall conclude by noting certain common themes of these years.


There is an unfortunate perception that Sangh Parivar’s sole aim is to make life difficult for the religious minorities. Nothing can be further from the truth. In the last five years the ruling party has been after the livelihood of the majority (occupation-wise) of the country, namely, the farmers.

The crisis in the agriculture sector predates Modi Sarkar. Economic liberalisaiton in the early 1990s saw a slowing down of agricultural output growth. The period of 1997 to 2003 was particularly harsh. Not surprisingly, the “India Shining” election campaign of the Vajpayee-led NDA government in 2004 did not resonate with the masses. From 2003-04 onwards the growth revived a bit, although farmer suicides subsequently peaked.

There are a number of reasons for the revival after 2003. First, during 2003-04 to 2013-14 the budget allocation for the agricultural ministry rose ten times. From Rs 2,167 crore in 2003-04 it rose to Rs 21,609 crore in 2013-14 [1]. It is recognized that higher public spending crowds in private investment in agriculture. More spending by the government in infrastructure, cold storage, irrigation and the like makes it easier for the farmer to raise farm produce and sell it in the urban market where prices are profitable. As a consequence, private investment gets encouraged which boosts growth. Second, during this phase the Minimum Support Price (MSP) was raised at a fast rate. For paddy and wheat the annual growth of MSP was 8% and 7% respectively. The MSP is the price at which the government buys crops from farmers. A hike in the MSP raises the income of farmers. Third, the agricultural sector cannot be seen in disjunction from the rural economy. If income of rural economy rises it leads to higher demand for agricultural produce, which in turn pushes up farmers’ income. A major initiative of rural development of the UPA government was the Mahatma Gandhi National Rural Employment Guarantee Scheme. One member from every rural family was guaranteed of 100 days of work a year at the specified wage. Due to the massive roll out of the Scheme the wage income of rural labourers rose. Purchasing power rose [2]. This helped the growth of farm output. There were changes in the global economy as well: farm product prices were rising during this time, low interest rate policy was pursued by the US central bank in this period. These boosted income of farmers and raised demand for farm products [3].

Since 2013-14 farmers are not seeing many good days. One way to understand the state of agriculture is to examine the “terms of trade” of the agricultural sector. Terms of trade is a measure of the price that the farmers receive in comparison to the price they pay. If terms of trade rises it is an indication that the economic conditions of farmers are improving. From 2003-04 to 2010-11 terms of trade rose at a quick rate. But it did not rise after that. The terms of trade in 2017-18 is lower compared to 2010-11.

A reason behind the bad days of agriculture is the slow growth of the MSP in the last five years. During 2014-15 to 2018-19 the growth rate of MSP of paddy and wheat was at 5% — recall they were at a higher rate of 8% and 7% during the UPA time. Nature has been harsh as well. There were two successive years of drought in 2014 and 2015. Corrective government policies are required to protect farmers from the uncertainties of nature. But such policies were not evident. During the NDA period the budgetary allocation for agriculture grew at 8.7% — whereas it grew at about 26% during the UPA period.

The BJP appears to be aware of farmers’ difficulties. During the 2014 elections Narendra Modi had announced that they would ensure that farmers get 50% profit over the cost of farming. But the promise has not been kept. In the fag end, in 2018, it was announced that the MSP of crops has been hiked to 1.5 times of the cost. On scrutiny, it was found that the cost that was considered was below the actual cost [4].


On the jobs front as well tall promises were made which remained unfulfilled. The BJP manifesto in 2014 promised to create 250 million jobs in 10 years. This implies about 25 million jobs a year. Fed up with the gloomy employment prospects and corruption scandals of the UPA era the young people voted for the BJP in large number. A major reason for BJP’s spectacular victory in 2014 was the massive support it got from young voters. Did the promised jobs materialise? A way to check is to look at “unemployment rate”. Unemployment rate is the proportion of the people who are ready to work but are not finding work. When unemployment rate rises it indicates that more people are not finding work although they are looking for work. According to the estimates by government agencies in 2018 the unemployment reached its highest level in the last 45 years [5]. Young men and women who voted for the BJP in droves are going through the worst job prospects in last 15 years (see figure 1).


Figure 1: Unemployment rate among the youth, source: “The Mirage of Modinomics” – Maitreesh Ghatak, Udayan Mukherjee [6]

Needless to say, such data are not good news for the ruling party. They were therefore suppressed. Only those data would see the light of the day which are convenient. Some of these convenient data have been peddled around by the supporters of the ruling party. Unfortunately, a closer scrutiny reveals that the claims of improved job prospects cannot be made from these data. For example, it has been claimed that millions of people have got enrolled in the Employees Provident Fund, hence it proves millions jobs have been created. This claim is spurious. First, it is possible that the workers who have enrolled were in employment before. The only new thing that has happened is that they have been enrolled in the Provident Fund. Second, new enrollment does not necessary mean that total number of jobs have gone up because in the same period many workers may have lost jobs. If this job loss figure is not accounted for one cannot tell if total jobs have gone up or not.

Figure 2: Agricultural real wage rate did not rise much after 2016, source: “India’s Farm Crisis” – Himanshu

Another argument is, the GDP (aggregate value of goods and services produced in a year) of the country is growing at a decent rate therefore it means that employment is also rising at a fast rate, because, one needs people to produce goods. This argument is not foolproof. Karl Marx observed that due to the force of competition capitalists keep on replacing human labour with machines. That logic is alive and kicking and taking a severe toll. Spectacular development in the field of technology is helping capitalists produce without relying on workers very much. As a consequence as output rises employment is only crawling up. “Elasticity of employment” measures how employment responds to output change. High elasticity would mean that production of output is able to absorb high amount of labour. After the 1980s in the USA the elasticity of employment has gone down by as much as 60% in thirty years. In India the decline has been even faster at 80%. In other words, growth of output can be high, but that is not a proof that people are getting jobs at a fast rate. According to the CMIE (Centre for Monitoring Indian Economy), between 2017 and 2018 the total employment has in fact gone down. Less demand for labourers and unemployment implies that wage rate has not been rising (see figure 2).


A crisis-ridden agricultural sector and vanishing job opportunities were bad enough. To add fuel to the fire, the government has been stingy with social sector welfare expenditures. In 2005 NRHM (National Rural Health Mission) was constituted in a bid to strengthen the rural health infrastructure and services. The primary health centres were revived. Their capacity was enhanced. ASHA (Accredited Social Health Activists) workers were recruited to advise and work with the rural masses. All this had a positive effect on key health indicators. In 2013 the mission was extended to urban areas and was renamed as NHM (National Health Mission). During the NDA government the budgetary allocation of NHM was not raised. It went down at 0.5% per annum on the contrary.

About half of the malnutritioned children all over the world are Indian. Children who suffer from lack of nutrition tend to suffer from “stunting” (attaining less than the average height usual for the age). The 2014 World Bank data show, 39% of Indian children below five years of age were suffering from stunting. In a poor country like Nigeria 33% children, less than India, were stunted. These data do not embarrass the Hindutva-inspired nationalists.

A reason behind poor health outcomes like stunting is poverty. But poverty is not the sole reason. A low income country like Bangladesh has been performing better than India in a number of health indicators. Intervention by the state can act as a mitigating factor. If government hospitals function, if anganwadis (children daycare centres) are staffed and funded, poor children can avail of nutritious food and the healthcare they need. In India ICDS (Integrated Child Development Scheme) looks after children healthcare and anganwadis. In the last five year the budgetary provisions on this count has not gone up, it has declined. Once price rise and population rise are factored in, real per head budgetary allocation went down quite severely.


If neglect plagued health sector, in education the government declared a war. The most debated episode of this war is the orchestrated assault on university students in Jawaharlal Nehru University, Hyderabad Central University and other such places. In the name of a fake brand of nationalism leftist, Dalit and other students who do not toe the Hindutva line were falsely implicated and persecuted.

Table 1: Budgetary allocation on education has been on a downslide, source: Business Standard, 4 Feb 2018

However, changes have been afoot at a fundamental level for some time. In 2005 at the WTO (World Trade Organisation) the Congress-led UPA government agreed to open the domestic education sector to foreign private capital. This treaty is called the GATS (General Agreement on Trade and Services). The NDA government has continued in that policy direction. In the 2015 WTO meeting India was a signatory. It was agreed that in services such as education, healthcare, insurance, research a “level playing field” would be created. In other words, in education, health, etc. private capital, be it domestic or foreign, would be given open access in the domestic economy. Subsidies which exist in government institutions are considered discriminatory, since rival private institutions cannot give those subsidies to their students. Hence such subsidies can be cut to ensure a level playing field. In other words, the education allocation in the budget, much of which goes to subsidise, would be cut. The budget allocation for education has suffered in the NDA years. In 2014-15 6.2% of the union budget was allocated to education. It declined to 3.7% in 2017-18 (see table 1). The total allocation of Ministry of Human Resource and Development, which includes grants to the states, grew at a rate of 3.5% per annum during 2013-14 to 2018-19, from Rs. 714 billion to Rs. 850 billion (Budget Estimate). In per capita real terms therefore education expenditure by the union government has actually came down.

Final Words

Cutting expenditures on agriculture, employment generation, health, education can endear the ruling party to global capitalists. But does it not dent the electoral prospects of the ruling party? Welfare expenditures benefit the poor. A functioning ration system, government-provided subsidised healthcare and education find strong supporters among the needy. Throttling these services can lead to loss of votes from the poor.

Putting it differently, a conflict can appear between neoliberal economic policies and the compulsion of winning elections in a bourgeois democracy. This conflict is being resolved through instigating divisions among communities. In the US or Europe the workers today are in a weak, emasculated position. Their wages are not keeping pace with productivity, their unions are disintegrating. Forces of globalisation and neo-liberal regimes have brought them to their knees. However, their rage is being channelised in a deft manner towards immigrants and Muslims. In India the story is similar. While government schools, hospitals have been rendered fund-less, staff-less, tens of millions of qualified young men and women are job-less. The obvious resolution of recruiting them in schools and hospitals cannot happen. The neo-liberal doctrine forbids that resolution. Simultaneously, government PSUs, mines, factories built with taxpayers’ money are being sold away to cronies. To distract, rifts of religion, language, caste are being created. Cows were a running theme throughout the Modi years. Cow protection was a ploy to instigate violence against Muslims, and Dalits. In the final year, when cows were proving inadequate to the task, good old Ram Temple and anti-Pakistani jingoism were deployed.

The second feature of these five years was that the neo-liberal model was pushed forward. Forests were opened up to corporate plunder, labour rights were diluted, contract labour legislated, corporate taxes and welfare expenditures cut. Expenditure cuts reduced budget deficit. Modi became the darling of the corporate class. Some legislations, such as the land acquisition bill, could not be passed. But that was not because of lack of trying.

Third, the NDA regime pushed for formalisation of the economy at an unprecedented speed. The speed caused unfortunate accidents: demonetisation is a prime example (formalisation of the economy is the most plausible goal of demonetisation among many outlandish goals which we are ignoring). To be sure, the Congress, the party which brought economic liberalisation to India, is not averse to formalisation. The Aadhar project started in the UPA times. The GST also originated from that era. The novelty of the NDA government was to ram them through and brazen it out.

Fourth, the tactics that were put to use for formalisation were in consonance with the ideology of the Sangh. A meddling and muscular state is right up the Sangh’s alley. Aadhaar, Notebandi, GST are the signs that in the name of formalisaiton the power of the state will reach every nook and corner of individual’s life. This manic push for formalisation and sanitisation extended to polity as well. The Sangh strongly backed the NRC (National Register of Citizens), which lists legal citizens, filters out infiltrators and thus sanitises the citizenry.

If Modi Sarkar returns there would be a greater pressure on the dissidents to conform to the Hindu Rashtra agenda. Environmentalists, Dalit-Bahujans, Gandhians, Leftists, religious, linguistic, gender minorities – all kinds of dissenters could be under assault. Corporate capital would be rewarded for their support. While this is a gloomy prospect, electoral arena is not the only place where the battle needs to be fought, because the project of Hindu Rashtra would continue irrespective of a win or loss of the BJP. If that project is not defeated Modi’s will keep on coming back.

[1] “India’s Farm Crisis” – Himanshu, The India Forum
[2] “MNREGA: Populist leaky bucket or successful anti-poverty programme” – Dilip Mookherjee, Ideas for India
[3] “Post-2004 Spell of Growth Over,” Aspect’s of India’s Economy, Research Unit for Political Economy
[4] “Farmers’ struggle forced Centre to hike MSP: Yogendra Yadav” Business Standard, July 4, 2018
[5] “India’s unemployment rate hit 45-year high in 2017-18: Report” Hindustan Times, January 31, 2019
[6] “The Mirage of Modinomics” — Maitreesh Ghatak, Udayan Mukherjee, The India Forum

[I thank Ravi and Shiv without implication for useful comments on an earlier draft.]

Leave a Reply


%d bloggers like this: