When life offers lemons, Prime Minister Narendra Modi’s government prefers to tell the world it has turned them into limestone deposits.
This is, after all, the government that touts the enormous numbers of downloads of an official contact-tracing app while omitting to say that it had been made nearly mandatory – and hasn’t been particularly useful. It is also the government that, years after everyone else has come to their senses on the matter, still maintains the fiction that the disastrous demonetisation policy of 2016 was a success.
And it is run by a party that used this chart:
So it should surprise no one that, even as India crosses the 1-million mark of total Covid-19 cases with one forecast expecting the economy to contract by nearly double digits, the government is finding ways to spin gold out of, well, haywire.
Commerce Minister Piyush Goyal, the man who said mathematics doesn’t matter when looking at economic growth rates and that they never helped Albert Einstein “discover gravity”, this week tweeted about India registering a trade surplus, of nearly $800 million, for the first time in 18 years.
The Department of Commerce also tomtommed this achievement on Twitter.
This sounds like a good thing. What it means is that, for the first time in 18 years, India has exported more goods than it has imported, at least in terms of value. In normal circumstances, that would mean that India’s import bill is coming down even as its exporters are thriving.
But these are not normal circumstances.
India’s lockdown for Covid-19 was among the most stringent in the world, completely shutting down large parts of the economy for two months. The continued rise of coronavirus cases since have meant that, despite India going into “unlock mode”, cities and states around the nation are going back into lockdown.
This, coupled with the fact that Modi’s big Rs 20-lakh-crore economic package did not include much of a stimulus, has meant that consumer demand is extremely low in India. This shows up in surveys of Chief Executive Officers, in earnings updates from companies and in indicators such as fuel consumption. The Indian public either doesn’t have any money to spend, or wants to put it away into savings at the moment.
As a result, the first interpretation of the trade surplus numbers is not that India’s exports are suddenly roaring – in fact, they have continued to contract for the fourth straight month. It is that demand has been destroyed.
As Hindustan Times’ Roshan Kishore explains:
“Exports are divided into petroleum and non-petroleum exports while imports are classified into petroleum, gold and silver and other imports. The biggest fall in absolute terms is in the non-petroleum and non-gold and silver import category. This, as has been pointed above is most likely a result of a fall in derived demand for intermediate and capital goods arising from a fall in domestic production. This is not good news for the economy.”
Vivek Kaul, the author of Bad Money, told Scroll.in that this trade surplus is “one of the best indicators of how consumer demand is crashing, which the minister has spun into a positive scenario”.
As the government has shown over and over again, it simply refuses to recognise the deep distress that the Indian economy is going through, in the hopes that just insisting “all is well” will be sufficient to lift the country out of this ditch.
But it is narrative-focused politics like that that provokes the government to cut corporate tax cuts right as it is facing one of the largest gaps in tax revenues in years, before Covid-19 hit. And it is a spin-centric approach that seems to have driven the government towards a protectionist strategy, even though Modi himself a few years ago compared such policies to terrorism.
Narrative control may have been extremely successful at winning the BJP multiple elections. But after six years of economic mismanagement including colossal failures like demonetisation and the botched-up Goods and Services Tax rollut, it is time for Modi’s government to acknowledge that citizens can’t make lemonade – or limestone – from imaginary lemons.
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