By Rouhin Deb,
The mandate in the national elections this year put forth an opportunity to decipher what could be the underlying causes that might have led to the fairly unexpected result. But the search for quick answers has often led to preconceived notions and pet theories rather than empirical data and sound economic principles.
One such article correlates the 2024 election results with issues in GDP measurement, arguing that the economic growth has not been as robust as has been officially estimated. Leaving aside the technical problems with such claims, such analyses fail to account for the “marginal” (that is what changed at the margin) or incremental explanation. That is, what changed between the election phenomena in 2024 and 2019 or the state elections in November 2023?
If the election results were correlated with issues in GDP measurement, one has to ask — were these issues not relevant to voters in 2019, or during the five state assembly elections in November 2023? At that time, the alleged uneven GDP growth did not seem to matter. If anything, elections in 2019, which were fresh from the effects of demonetisation and goods and services tax, saw voters giving a better mandate to the National Democratic Alliance (NDA). In December 2023, the NDA swept to power in Madhya Pradesh, Rajasthan, and Chhattisgarh.
Let us assume finding jobs and food prices were the issues that voters were unhappy about in the recent elections. According to the Lokniti-CSDS pre-poll survey in April, around 52% respondents were unhappy with the government, listing unemployment and inflation as their biggest concerns. If we accept that these were the issues, why did they not matter in Andhra Pradesh, Madhya Pradesh, Odisha, Karnataka, Telangana, Himachal Pradesh, Chhattisgarh, Jharkhand, and Uttarakhand?
While voter concerns about unemployment and inflation may be significant, these issues did not uniformly influence voting patterns across India. Explaining a national election result on this basis appears to be more of an unverified hypothesis than rigorous analysis. While criticism on specific policies of the government should always be encouraged, it should be backed by data and sound rationale.
The recent economic growth has been labelled by some critics as “jobless growth”, who then advocate a larger role of the Centre in creating a job-intensive atmosphere. Such criticisms often ignore the roles and responsibilities of different stakeholders in our federal structure, especially other players such as the private sector, state and local governments, and entrepreneurs in creating a job-intensive atmosphere. Critiques which expect the Centre to be able to unilaterally engineer a shift toward a labour-intensive economy — akin to a manufacturing giant like China — while refusing to address the role of regulatory burdens imposed by sub-national governments or the potential of individuals and state governments to foster greater entrepreneurial ambition, are unrealistic.
Moreover, such blind criticisms ignore the improvements that have taken place, usually favouring unreliable private analysis of publicly available and much-scrutinised official data. In a rebuttal of the recent Citi Group report on employment in India, the ministry of labour and employment points out that across indicators, “official data reveals a more optimistic picture of the Indian job market”. The annual Periodic Labour Force Survey reports, for example, depict continually improving trends in labour market indicators since 2017-18. The worker population ratio (i.e. employment) has increased from 46.8% in 2017-18 to 56% in 2022-23, while the unemployment rate has declined from 6% to 3.2%. Simultaneously, formal employment has risen sharply, as more than 6.2 crore net subscribers have joined Employees’ Provident Fund Organisation (between September 2017 and March 2024), while more than 7.75 lakh new subscribers have joined the National Pension System under the central and state governments during 2023-24 alone.
Some experts have even criticised the government’s increased focus on manufacturing and initiatives like the performance-linked incentive scheme, saying the world cannot accept another China-sized economy exporting manufactured goods and that the focus should be on services! At a time when India’s trade imbalance with China is to the tune of $87 billion and the world is looking for alternatives to China, this criticism lacks merit.
Critiques seeking to influence national economic policies through unreliable indicators, discredited hypotheses, and outdated data do a disservice to the discourse. The relentless pace of reforms over the last decade, coupled with fiscal and economic prudence, have made India the world’s fifth-largest economy and the fastest-growing major economy, even as the top four struggle with stagnating growth and recession fears, and global growth stutters.
The last 10 years has seen several hard economic decisions by the government, which is reflecting in the robust fundamentals of the Indian economy. However, there is much that still need to be done to achieve the ambitious targets of becoming the third largest economy and a developed country. Achieving this needs honest criticism and balanced and rigorous analysis. Failing to do so undermines not only the discourse, but also the lives and aspirations of a billion-plus people.
The author is Chief economist at the Chief Minister’s Secretariat, Assam.
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