It’s the economy, stupid!

India has voted. And as we emerge from that occluding corridor of time, there is space to see more clearly. A few grim realities continue to exist. India still has a jobs crisis, households are still struggling to make ends meet, and hate, as we have seen, does not make for good economics.

Three specific lessons from the last 10 years are worth revisiting. The first, demonetisation. In a ham-handed, poorly thought-out move, the Government of India announced in 2016 the demonetisation of all Rs.500 and Rs.1,000 banknotes. The decision crippled India’s cash-dependent economy for many months to follow. But it also left other fatal wounds. The country was already dealing with a jobs drought and by 2017-18, a 6.1 per cent unemployment rate was the highest we had seen in 45 years.

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Other blow-ups were afoot. Manufacturing, a core constituent of jobs, was choking. Prime Minister Narendra Modi’s “Make in India” campaign was launched with much fanfare in 2014. The goal? Increasing manufacturing’s share of the country’s economy from 16 per cent to 25 per cent by 2022. The year is gone, and the target has been reset to 2025. Since then, millions have joined the workforce looking for employment.

Over the months and years, the BJP-led Central government consistently scoffed at data from the Centre for Monitoring Indian Economy, the International Labour Organization (ILO), and others that pointed to fewer and fewer jobs, felt most acutely by India’s youth. ILO’s most recent report noted: “Youth unemployment rates in India are now higher than the global levels.” These are young people with secondary or higher education, who are frustrated about where their prospects lie. No amount of “pakora economics” seems to have worked as ground reports spoke of high stress around jobs and employment.

Time to fix the jobs rot

But the Indian economy had a safety lever, the MSME or medium and small scale industry. Sharp, efficient, and heavily cash-reliant, the MSME sector has been the grease oiling India’s economy, ensuring things move along both with jobs and manufacturing.

Demonetisation however snatched away the MSME sector’s quick turnaround ability. A rushed introduction of GST, for all its benefits, then haemorrhaged any hopes of a recovery and with it, the ability to offer jobs. As private sector jobs kept drying up, unemployment kept ticking higher. Government jobs at a State or Central level simply cannot accommodate the number of citizens looking for work and self-exploding experiments such as the Agniveer schemeless so. It is no wonder that several swathes of the electorate have spoken of their concerns around a lack of jobs. It would be well worth the incumbent government’s time to take a hard and honest look at the reality of this unemployment crisis. It is now time to fix the jobs rot.

A migrant arrives at Habibganj Railway Station in Bhopal, in the midst of the pandemic lockdown in May 2020. | Photo Credit: FARUQUI A.M.

The second lesson came in 2020, when India, like the rest of the world, was hit by COVID. How did the government choose to respond? A complete denial of what death tolls looked like and once again, a poorly thought-through decision to lock down the country. In doing so, favouring the elite and entitled, leaving India’s vast majority to fend for itself. Migrant workers streamed like endless human rivers across the length and breadth of the country, trying to get home to their villages, where there would be some modicum of safety, refuge, and security. It is no wonder that the following years saw a groundswell in the number of people employed in agriculture—from 42.5 per cent in 2018-19 to 45.5 per cent in 2021-22. With no alternative visible, Indians moved to farming.

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And even as their prospects for better jobs kept dwindling, household costs kept rising and real wages kept falling. India’s food inflation has been soaring, across vegetables, pulses, milk, and other staples. Feeding a family has become more expensive and more difficult. This is despite a free food grain scheme for low-income households, which by the way, is a duty—not a favour—by the Government of India. Post-election analysis shows that of the 344 constituencies that can be categorised as rural, one in every two constituencies voted for change. In 2024, the BJP’s vote share dipped in rural areas to 35 per cent from close to 40 per cent in 2019. The images should linger in our collective consciousness; farmers dumping produce that would yield them nothing onto the roads, barricades, and barbed wires blocking them from entering the capital city, even as many were riddled with pellet injuries and blinded by tear gas shells. The Indian farmer has not forgiven and not forgotten.

‘Should everybody be poor?’

And finally, a sentence that may linger in the consciousness of India’s polity for a long time. The Prime Minister sneeringly responding to a question on India’s deep and rising income inequality with this reply: “Should everybody be poor? Everyone should be poor, then there will be no difference. This was the case in the country earlier.” And the answer to that rhetorical question has been cast in India’s votes. Where the ask is not for everyone to be poor, but for everyone to have a say. And for everyone to have opportunities: to work, to study, to practise their own religion, and to have a voice.

A word also for this government’s crown jewel and object of pride, the Indian stock market, where both hubris and profits have crashed. In the last few weeks, both the Prime Minister and the Union Home Minister predicted a massive equity market rally on June 4, when election results would be declared. The Home Minister’s own words were: “You can buy before June 4, it (the market) will shoot up”. On that day, Indian shares posted their worst session in more than four years while the Indian rupee plunged 0.5 per cent against the dollar.

As the day’s bloodbath begins to settle and foreign and domestic buyers come back to survey the wreckage, institutions such as the Election Commission of India and the Securities and Exchange Board of India must ask themselves who should be held accountable here. Imagine the same sentence being uttered by an opposition party leader. Would they not be accused of front-running the market? Equally, ordinary citizens must ask whose interests they believe these institutions uphold. For that matter, which business channel or pink paper has raised any critical questions on the deep fissures in India’s economy and this blatant shilling of the market by political leaders.

Some good economic decisions

Two things stand in favour of the next government. One, a bumper Rs.2.11 trillion dividend from the RBI, which allows space for a reduction in fiscal deficit and more sustained and focussed welfare capex spending. And second, a history lesson that shows us how some of the best economic decisions came from within coalition governments: removal of the licence permit raj by P.V. Narasimha Rao’s government, a complete overhaul of the tax regime in the H.D. Deve Gowda government, hiving off loss-making public sector undertakings in the BJP’s own Atal Bihari Vajpayee-led government.

And the single most defining feature that has underpinned rural India’s survival, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), introduced by the United Progressive Alliance under Manmohan Singh, that promised to provide minimum employment to the rural poor.

Religious hate can fan emotions, but it does not get you jobs. Attacking minorities can rile up your support base, but it does not pay the bills. And fostering business coteries can win you influential friends, but it cannot win you votes. The last voter in the line has spoken. It is time to start listening.

Mitali Mukherjee is Director of the Journalist Programmes at the Reuters Institute for the Study of Journalism, University of Oxford. She is a political economy journalist with more than two decades of experience in TV, print and digital journalism. Mitali has co-founded two start-ups that focussed on civil society and financial literacy and her key areas of interest are gender and climate change.