There was no major argument or newsworthy announcement made by Prime Minister Narendra Modi over two interviews with news channels this weekend. Instead, Modi got a chance to lay out where he believes his government currently stands, with his last full budget expected in 10 days and the 2019 elections on the horizon. Aided in part by softball questions from the interviewers, the prime minister made the argument that his government has done very well for India and that critics are misguided.
“If the people who are disappointed, we can understand if they try to come out of their disappointment,” Modi said. “But if they can’t come out of their disappointment, they should not use language that disappoints others.”
Since the questions and answers in both interviews broadly covered the same territory, Scroll.in took a look at the interview Modi gave to TimesNow, and pulled out the verifiable claims that he made .
Claim: “You would remember that in 2013-’14, what India was known as. India was named in the fragile five in 2013-’14. It was considered as a lost battle. They thought India would not just go down but also pull us down along with them. The world was worried that India was part of the fragile five. This was despite India having a good place in BRICS. Within three years, India has come out from fragile five and mind you that these were reputed people and institutions. And we have come out from there and today India’s economic policy is being seen as a shining star with optimism and expectation.”
Fact-check: True. India was considered one of the “fragile five” in the summer of 2013 when investors pulled out huge amounts of money in anticipation of action from America’s central bank. Since then, India’s macroeconomic fundamentals have improved massively – in part thanks to better oil prices, but aided by the action of the Reserve Bank of India under Raghuram Rajan and moves such as deregulation of fuel prices that were begun by the Congress-run United Progressive Alliance and carried forward under Modi.
Claim: “What was the rate of inflation then? It was more than 10%. Now if you take an average of three years, we have brought it to 3%. The average is 3%. Currently, it is 5% but the average is 3%. So you compare it, 3% to 10% during their time. This is an economic indicator. Secondly FDI – from $30 billion to now more than $62 billion. This is a big jump in itself. This happens when there is trust in economic policies. Fiscal deficit, earlier it was 4.5% or even more in the country, we brought it down to 3.5%. Current account deficit, in comparison to the GDP, was 4%. Today we have got it down to between 1-2%.”
Fact-check: Somewhat true. CPI inflation has come down from double digits in the last few years of the United Progressive Alliance to being in the 3%-5% range, and the Reserve Bank of India is now actively targeting inflation for it to remain around there. The caveat, however, is that Modi’s government has benefited massively from lower oil prices, which has taken away the bulk of inflationary pressures. Similarly, the fiscal and current account deficits were able to be contained because of smaller import bills, although the government did make efforts to stick to a fiscal consolidation target. Some of this is changing now as oil prices start to go back up. The government also told Parliament that India had received $62 billion in Foreign Direct Investment between October 2014 and May 2016, up from $42 billion in the previous 20 months, and not up from $30 billion as Modi claimed.
Claim: “People tried to start a fire, they even attempted to incite riots, they knocked Supreme Court’s door, they tried everything possible, and all of these attempts were just to save those who were hoarding black money, to save corrupt people, to save the dishonest. What all wasn’t done to save them but the nation stood by us. Smaller nations in the world too tried to provoke, but they had to retract. It is a very big success story by India, it’s not just about one note going and another note coming. With that move, India’s federal structure, Indian government’s governance, RBI’s role, all of this was in itself a move that made the world respect India even more.”
Fact check: False. While Modi is right in that there were no riots following demonetisation, the rest of the claims ring a bit hollow, especially because if the measure for success of a policy cannot be that it did not cause riots. The Supreme Court is yet to properly hear the challenge to demonetisation, so that remains an open question. And referring to the matter as a “big success story” is problematic after the Reserve Bank of India admitted that most of the money withdrawn had returned to the system, despite expectations that much of the “black money” would not. At most this claim is still inconclusive, since only a tax base that is much larger and more lucrative for the state would probe the point. As for the world respecting India more, the Economist called demonetisation a “bad idea, badly executed” and the Harvard Business Review wrote on what other countries should not do, based on India’s experience with demonetisation.
Ease of Doing Business
Claim: “India has actually jumped 42 places and not 30 in ease of doing business after we came to power. This in itself is a big achievement. This didn’t become possible just like that. The ranking is a result of good governance, clarity and policy framework according to global standards.”
Fact check: Somewhat true. Modi is adding the 12 spots India supposedly jumped between 2015 and 2016 to the 30 jumped in the latest Ease of Doing Business report from the World Bank. But this is incorrect, since the 2016 report used a slightly different methodology, putting India at 134 the year prior, and so moving just four spots. By that measure, India has moved up 34 places under Modi, reaching 100.
But this too is also under question, after recent revelations that the World Bank had changed its methodology for calculating ranks in ways that were unfair and misleading. Experts at the Centre for Global Development recalculated the index based on a fixed set of indicators and found that India would in 2017 be at 147, lower than it had been a few years prior.
Goods & Services Tax
Claim: “Who implements GST? All political parties have come together and created the GST Council. Thirty three people from different states, Union territories and central government are members of the GST Council. In the GST council, the weightage that Puducherry has is similar to the weightage of the Indian government. In the GST council, the weightage that Nagaland has is similar to the weightage of the Indian government. In the GST council, the weightage that Uttar Pradesh has is similar to the weightage of the Indian government. Basically, all 33 members are equal.”
Fact check: Somewhat false. It is accurate to claim that political parties came together to create the GST Council, since it was essentially set up only after a constitutional amendment as well as 2/3rds majorities in more than half of the country’s state assemblies assented to it. But it is false to claim that the weightage of any state in the council is equal to the Indian government, since the Centre actually holds one-third of the vote. Since any proposal in the council needs 75% of votes in the council, the Centre can veto any decision made by all the states combined, which would not be the case if it simply had one vote equivalent to any other state.
Claim: “I took the big step of Ujjwala and provided gas to 3,30,00,000 families. I may even complete the target of 5 crore families before the deadline. This, in itself, is our step in the direction of ease of living.”
Fact check: Somewhat true. The Pradhan Mantri Ujjwala has about 3.2 crore beneficiaries as of December 2017, a little less than what Modi claimed in the interview. But the story is a little more complicated than that, since gas providers claim that Ujjwala beneficiaries aremuch less likely to get refills after the initial cylinder, payment for which is waived under the scheme. This means LPG connections have increased, but LPG usage has not gone up.
Claim: “In one year, EPF accounts of 70 lakh youth between the ages of 18 and 25 have been opened. Seven million new EPF accounts – doesn’t this show new employment?”
Fact check: Somewhat true. A new report last week did claim that there will have been 7 million new accounts of the Employee Provident Fund by March 31, based on an extrapolation of 2017-’18 data taken until November 2017. But analysts have questioned whether this is a reflection of new jobs created, or simply the formalisation of jobs that took place in the aftermath of demonetisation and the Goods and Services Tax. The Labour Bureau’s figures are far lower, showing about 330,000 jobs added over the course of 2016-’17. And The Indian Express’ analysis in October 2017 actually showed a drop in employees across 121 companies that are part of the BSE 500 index.
Claim: “You tell me that if the rate of road construction per day has doubled then it could not have happened without employing more people. The rate of building rail tracks in a day has doubled. Wouldn’t that be creating employment? Electrification is also double of what happened earlier. Wouldn’t that be creating employment? The work on ports has gathered pace. Would that have increased without creating employment?”
Fact check: Somewhat true. According to replies tabled in the Lok Sabha, the rate of construction of roads has nearly doubled between the final full year of the Congress-run United Progressive Alliance government, 2013-’14, when it was at 11.6 km per day to 22.5 km per day in 2016-’17. Railway track laying went up from 4.3 km per day in 2013-’14 to 7.8 in 2016-’17, which is not quite double and doesn’t actually take into account the fact that earlier UPA years actually had comparable numbers. According to the Hindustan Times, the BJP government has electrified on average 4,842 villages per year, which is less than half of the 12,030 villages per year average of the UPA, with the caveat that there are now fewer villages to electrify and the ones that remain are harder to reach.