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The Big Story: Slippery slope

Three weeks since the last edition of the Political Fix, not much seems to have changed in India. Kashmir is still under lockdown. The newspapers are still full of depressing economic news. The Congress leadership remains unsettled. News anchors continue to do ridiculous things. And though the final list of Assam’s National Register of Citizens has come and gone, the fate of million continues to remain uncertain.

We could take a closer look at any one of these items, but as Prime Minister Narendra Modi celebrates the 100-day mark of his second term, it is worth looking at the development that threatens to derail the Indian story globally: the faltering economy.

Of course, in the eyes of the global community, India is more than just an economy. Many also take into account India’s democratic success, its traditional role as an anchor in the region, its potential to offer a narrative counter to China and its massive purchases of foreign arms.

But its seat at the international table is heavily dependent on the presumption that its economy, with a potentially giant consumer economy, will roar along. The heady expectations of being a superpower – which surfaced in the mid 2000s – may be long gone, but people still expect India to be relevant economically.

This may explain why the Modi government, over the last few years, continued to insist that the country’s economy was perfectly fine – even when his own former economic adviser said that the statistics deserve a relook. It is worth remembering that in his first term, Modi admitted to hiding economic data to protect India’s image.

Over the past three weeks, this head-in-the-sand position has become impossible to maintain.

India’s Gross Domestic Product growth slipped to 5% in the April-June quarter, the fourth straight quarter of slower growth, with one analyst saying India had entered a “quasi-recession”. Bad news continued to pour in from across industries, and the government’s own tax collections have fallen dismally short of expectations.

Finance Minister Nirmala Sitharaman, after months of insisting everything was alright, finally decided to make a few announcements intended to steady the ship. Among the bigger decisions was a rollback of a tax surcharge on foreign investors, which had been announced in her Budget barely weeks earlier.

In addition, the government has said it will fold 10 public sector banks into four, use government funds to buy automobiles to prop up that ailing sector and launcha new national infrastructure taskforce.

While there is some hope that the traditionally buoyant festival months up ahead will improve demand, few analysts expect any of these measures to have an immediate impact. Even more worrying is the impression that the economic concerns have been left to Sitharaman, while the rest of the government pours its energies into considerations like the situation in Kashmir and upcoming elections in Maharashtra and Jharkhand.

As commentator Mihir Sharma argues, some of this may be put down to complacency. Indians have for so long been told that the economy will always grow comfortably that it has been taken for granted, even more so by a party that until recently refused to acknowledge any problems.

The bigger fear is that the Bharatiya Janata Party, now comfortable in the afterglow of a second massive victory in the general elections, do not see how crucial a growing economy is for the Indian narrative.

“Over [the] years, India rose as a moderate, predictable and stable continent-sized growth island in a turbulent world, a magnet for global portfolio and direct investment,” wrote Shekhar Gupta. “It gave big powers – including China – and their corporations a stake in India’s stability and security... A growing GDP was now more powerful than all the megatonnage of nuclear weapons.”

Losing that asset could put everything at risk. And with the government’s finances in a shambles, despite a massive transfer of funds from the Reserve Bank of India, it remains unclear whether enough has been done to arrest the slide.

This is important right now because, as the BJP’s political leaders turn their focus on upcoming state elections, Sitharaman will have to begin the process of preparing next year’s Budget – one that will undoubtedly involve making some very tough decisions.

Catch up:

Kashmir remains under lockdown, more than a month after Indian authorities suspended civil liberties. National Security Advisor Ajit Doval says he is “fully convinced” that most Kashmiris support the move, yet the government will not let them actually say so themselves.

The United Nations General Assembly, starting today, could see more sparring between India and Pakistan over Kashmir. Indian diplomats have been trying to reach out to other countries to explain its stance.

India’s first attempt to send a rover to the surface of the moon was unsuccessful. The Indian Space Research Organisation lost contact with the rover just as it was about to touch down.

A BJP leader said the government would have to persuade Bangladesh to take citizens that India believes immigrated illegally. Bangladesh’s position so far makes this seem unlikely, but the comments add to uncertainty over the fallout of Assam’s National Register of Citizens.

Congress leader Shashi Tharoor spoke out against his party trying to push “Hindutva lite” and “majority appeasement.” This comes not long after he received some blowback for supporting fellow Congress leader Jairam Ramesh’s argument that constantly demonising Modi did not help the Opposition’s cause.

Reportage & analysis:

From next week we’ll go back to bringing you the best links from around the web. Today, however, some Scroll.in pieces you may have missed while the Political Fix was away:

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