Soon after Narendra Modi took over as prime minister of India in 2014, he decided to throw away one of the demands his own party had made in the campaign over the previous year: for the government to issue a White Paper that would examine the problems in the Indian economy.
Modi said in 2018 that he had decided not to do so because revealing the actual state of the government’s finances had the “potential to cause a crisis all over”.
In fact he went further.
“The state of the economy was much worse than expected. Things were terrible. Even the Budget figures were suspicious.
“In the midst of this, imagine a White Paper coming out giving intricate details of the extent of damage. Instead of being a mollifier, it would be a multiplier of the distress.”
In other words, Modi decided that he would rather hide the reality of India’s economy – since revealing the truth might make things worse and get around to quietly fixing the mess instead.
Put that way, it sounds like a good thing.
Read it differently, however, and you see that Modi is advocating the suppression of truth and relying on the assumption that he knows what is best for the country, without consulting with experts and stakeholders and the public at large.
Nearly six years after he first took charge, this policy is clearly still in place.
Modi gets to decide what the public should know about the economy, no matter what the reality is. Over the last few years, questions have been raised about how Gross Domestic Product growth has been calculated, political interference in all sorts of economic reports and outright suppression of data that shows the government in a bad light.
But over the course of 2019, even the questionable numbers started reflecting how bad things were. At the start of that year, GDP growth was estimated at more than 7%. By the end, it was at 5%, and possibly even lower.
The fiscal deficit had been projected at 3.3%. In her Budget speech a week ago, Finance Minister Nirmala Sitharaman triggered an “escape clause” so that this could be expanded to 3.8% – with no explanation.
One reason is a gigantic hole in tax collections this year. To make up for the shortfall, the Central government has been grabbing money from wherever it can: the Reserve Bank of India, small savings funds, by reducing its transfers to the states.
Listen to India’s top politicians though, and you would not get the sense that anything is wrong. Sitharaman’s Budget Speech, for example, had no acknowledgment of why things are this bad. Other politicians have claimed all questions about the economy are politically motivated jibes aimed at the prime minister.
Modi himself even explained this approach in a speech in Parliament on Thursday:
“Let me reassure you that India’s economy is strong. India is pursuing a dream of a $5 trillion economy with full speed and full potential...
There is no question of thinking small. Pessimism and gloom do not help us. We talk about a $5-trillion economy. Yes the aim is ambitious, but we have to think big and think ahead.”
By “pessimism and gloom”, of course, Modi means the exact sort of comments that he himself made about the economy when he was taking over.
As many economists have pointed out, Modi’s revelation from 2014 could be repeated word for word today and would be as accurate as it was then: “The state of the economy was much worse than expected. Things were terrible. Even the Budget figures were suspicious.”
What does all this economic denialism get the Indian people? Maybe it will work. Maybe the economy is one big confidence trick, and that fixing things just means selling the right narrative, avoiding “pessimism and gloom.”
But there are two problems with that.
First, it is Modi’s policies over the last half-decade that have brought the Great Indian Slowdown. There is no evidence to suggest he can engineer a turnaround.
Second, even if he could, is that the country we want to live in? Where information is suppressed while one ‘Great Leader’ decides what is best for his subjects? Where economic policies are announced like Tughlaqi firmans, orders from the ruler with no accountability?
Modi is asking India’s 1.3 billion citizens to stick their heads in the sand, while he gets to describe what’s on the horizon. Thankfully, not everyone is doing so – or we wouldn’t be able to see the disaster that is approaching.
Check out Hard Times, a Scroll.in series that explains the Great Indian Slowdown:
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