The Government seems to think that negative inflation in the wholesale price index is a sign of economic good health. It is not. It could mean that demand is sluggish. Besides, it depresses prices for the producers, especially the farmers, leading to distress in the agriculture sector.

The Prime Minister is entitled to choose the place and subject of his speech. But the speech on Independence Day is different. Citizens have a right to expect that the Prime Minister will address issues that are of concern to them. There are other interested listeners as well — foreign governments especially governments of neighbouring countries, global civil society, oppressed people, and those who pioneer change.

At the end of the Prime Minister’s 90-minute speech, most people were underwhelmed. The applause was infrequent and listless, sections of the audience began to leave after the first hour, and the criticism was scathing. Given his extraordinary oratorical skills, the Prime Minister has no one to blame except himself.

Issues ignored

I made a list of issues on which the Prime Minister did not speak: the economy, internal security, national security, neighbours, foreign policy, climate change, discrimination against Dalits and minorities, increase in communal incidents, issues of women and children, and natural calamities.

Of all the issues, my foremost concern is the economy. It is possible that the Prime Minister is not well-versed on macro-economic issues. That is why there is a finance minister, a chief economic adviser, a governor of the Reserve Bank, a NITI Aayog, and a host of officials dealing with different aspects of the economy. It was obvious that the Prime Minister had not taken their inputs for his I-Day speech. If he had thought that the economy was not a subject that deserved to be dealt with at length, that was a pity. If he had thought that the people of India did not care whether he spoke about the economy or not, he was plainly wrong.

Earlier this week, Moody’s, the rating agency, lowered the growth forecast for 2015-16 from 7.5 per cent to 7 per cent. GDP growth, under the new series, was 6.9 per cent in 2013-14 and 7.3 per cent in 2014-15. Given that a recovery was underway, one would have expected that the growth rate would accelerate in 2015-16, the first full year of the Modi government. If Moody’s forecast turns out to be correct, it would mean that the growth rate will decline in 2015-16.

Signs of economic stress

Few will be surprised. The signs of stress have been visible in recent months, yet no one in the government seemed to care or took corrective measures.

Credit growth is a crucial indicator. At 8.4 per cent, non-food credit has recorded the slowest rate of growth in 20 years. Bank chairpersons have confided that many weeks have passed without a major big-ticket proposal for a bank loan. Typically, it is the private sector that should provide the lead in new investments, but the private sector is shying away from new investments because corporate incomes and profits have collapsed in the last 12 months. Total corporate income fell in each of the last three quarters ending December 2014, March 2015 and June 2015. The decline, compared to the corresponding period of the previous year, is captured in the following numbers:

Quarter ending
December 2014 : – 0.14% (6.67%)
March 2015 : – 6.00% (8.72%)
June 2015 : – 4.46% (8.98%)

As for corporate profits, the numbers are just as bad. Corporate profits shrank by 32.86 per cent in the quarter ended December 2014 and 15.20 per cent in the quarter ended March 2015, and increased by a minuscule 0.43 per cent in the quarter ended June 2015.

New investment proposals are announced and dropped. During the period July 2014 to June 2015, the number of private sector projects that were announced increased from 1,030 (in the previous 12-month period) to 1,253 but the number of projects dropped also increased from 392 to 478.

Exports have declined, month on month, for eight successive months from December 2014 to July 2015.

The government seems to think that negative inflation in the wholesale price index is a sign of economic good health. It is not. It could mean that demand is sluggish. Besides, it depresses prices for the producers, especially the farmers, leading to distress in the agriculture sector.

The only silver lining is the increase in public investment. Thanks to an unprecedented fall in oil prices (Brent at less than $50 and WTI at less than $42), the government has got a windfall. It has wisely stepped up capital expenditure. That seems to be the only trick in the government’s bag, but that will hardly be sufficient to boost overall investments and growth. About jobs, the less said the better. The biggest casualty in the first full year of the Modi government is the stagnation in employment. Speak to any group of young men and women — or to their parents — and you will sense their growing anxiety and fear that not enough jobs are being created in the economy.

Duty to speak

Will Prime Minister Modi address these issues? It is unlikely, given his style of communication. He loves one-way communication from a high and distant stage to a large crowd. He avoids speaking in Parliament in the same way that he spoke rarely in the Gujarat state legislature, because that will mean he must engage in debate with the Opposition. He is unwilling to address the media, because that will mean he must answer probing questions.

It is sad that Mr Modi has chosen to be silent on the economy, when the people expect him to speak.

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