The sense of anticipation so palpable in India Inc ahead of the 2014 elections has altogether dissipated; businessmen today are stressed and distressed. They may not betray their feelings, but they are feeling betrayed. When an industrialist of the stature of Kumar Mangalam Birla says Vodafone-Idea will shut shop because there is no point throwing good money after bad, we are in trouble. Narendra Modi’s NDA government had promised them and their fellow countrymen achhe din; instead, after six quarters of a decelerating economy, partly due to a debilitating blow from demonetisation, there is no sign of relief. The data and trends are chilling: consumer spending is stagnating, little freight is being ferried, factories are running at sub-optimal capacities, road construction is stalling, credit growth is crawling. And, consumer sentiment is the weakest in a decade. Retail sales of commercial vehicles—a proxy for the economy—fell 8.6% year-on-year (y-o-y) in November on the back of a 23% y-o-y plunge in October. And, that is in addition to a year of flagging sales.

Given nearly 64% of the slowdown has been driven by industry—mainly manufacturing—India’s aspirational electorate should brace for more job losses. If top class companies like Vodafone-Idea are forced to think of shutting down, corporate India must be in dire straits. Profits before tax plummeted 74% y-o-y in Q2FY20 for a sample of close to 2,600 companies as revenues fell 3% y-o-y.

The government’s finances are not doing any better, though, with tax collections for 2019-20 slowing drastically. Rather than taking it on the chin, however, the Centre is delaying states their rightful dues. Meanwhile, the government continues to tweet one new target a day. From doubling farm incomes to raising the share of manufacturing in GDP to getting to a $5-trillion economy, there is no shortage of targets.

To be sure, the NDA inherited an economy that was in a shambles, a near-empty exchequer, a twin-balance-sheet problem, and a high CAD. Also, no economy recovers quickly from a twin balance sheet crisis, especially with a third crisis—NBFC—joining in. But, it could have been handled a lot better. Demonetisation was a bad move; the smarter way to get to tax-evaders is through better surveillance and digitisation. Reform has been neglected in a key area like agriculture, as seen in the complete collapse of food prices and a ruined rural economy. That the government was compelled to roll out a dole-like scheme for farmers before the elections is evidence of this.

Worryingly, wage growth for agricultural labourers slipped to a four-quarter low in Q2FY20, falling sharply from 5% in July to apparently negative territory in September. The growth in rural agri wages, a good proxy for consumption demand, slipped from 6.1% in Q4FY19 to 5.4% in Q1FY20, and further to 4% in Q2FY20. Third, the government failed to reform personal income taxes. Had the slabs and rates been altered to make it more equitable, with all exemptions withdrawn, it would have made for a cleaner structure. Also, the government needed to track professionals—doctors and lawyers—who accept fees in cash and conveniently fail to disclose their real earnings. Net direct tax collections between April and November are up an anaemic 1.6% y-o-y, and the impact of the cut in the corporation tax rates is yet to be seen. That was probably the worst measure of all because all it did was to further enrich the richest companies, most of whom will not invest in new plants, for a revenue loss of close to Rs 1.5 lakh crore. Foreign investment will take its time because it is not enough to have a low tax rate. In the absence of better labour laws and ease of doing business, global corporations will be wary of stepping into India. So far, the Make in India scheme has yielded little.

The economy is slipping fast. The 16-year low in nominal growth seen in Q2FY20 could see bankers reassess credit and turn even more cautious. Today, the government is asking banks to lend. The point is, if there was demand for credit from sound borrowers, why wouldn’t banks lend? The SBI chairman rightly pointed out there is no demand for corporate credit. With revenues weak, the government will be forced to cut back on expenditure, and if GST rates are hiked, consumers will spend less. Reflating meaningfully, in the near term, is difficult without fiscal slippage; also reforms will require political will—for instance, tighter labour laws, and some U-turns on FDI in multi-brand retail. Above all, the government must convince business it will ensure a level-playing field in all industries, and that there will be no biased regulation. None of this is difficult because this government has a strong mandate; as we saw, the abysmal state of the economy made no difference to voters in the elections. But, by 2026, 88% of the population will be below the age of 60, 78% will be below the age of 50, and a good 65% will be below 40 years. Rather than debate about whether the slowdown is cyclical or structural, the government’s advisors need to come up with ideas to find jobs for the 12 million youngsters entering the workforce each year. An aspirational society is an impatient society. Even more so, when it is so young, and getting younger.