Narendra Modi's speech on economy: These 3 missing data points reveal the real situation on ground

Prime minister Narendra Modi on Wednesday made an all-out effort to defend the economic situation under his government after the recent criticism from within his party sparked a heated debate over the negative impact of demoentisation and hasty rollout of goods and services tax. After the April-June quarter gross domestic product declined to a 3-year low of 5.7 percent, former finance minister and senior BJP leader Yashwant Sinha wrote in an article in The Indian Express that the economy is unlikely to see a revival before 2019. He severely criticised finance minister Arun Jaitley for mismanagement of economy. Sinha was not the first one from within the BJP to warn about the economy. Earlier, Subramanian Swamy and Swadeshi Jagran Manch functionary S Gurmurthy had also raised the red flag on economy. On Wednesday, the prime minister released data after data to show that the economy under his rule was not as bad it is made out to be. He said the critics were pessimists and were just nitpicking. [caption id=“attachment_4112919” align=“alignleft” width=“380”]  PM Narendra Modi. Image: PIB[/caption] He claimed consumer price index-based inflation and fiscal deficit have declined under the NDA government while forex reserves have surged to an all time high. He also claimed the roads sector has seen better improvement under his regime than the previous Congress government. While under the UPA the highest road construction happened in 2012-13 at 5,732 km. Under the NDA, the corresponding figure stood at 8,231 km in 2016-17. Interestingly, the data that the prime minister showed is not enough to get the true picture of the economy. Here Firstpost does an analysis of three more key data points in an attempt to reveal the reality closer to the ground:

Bank credit growth, YoY in % Infogram

As per data available with the Reserve Bank of India, non-food bank credit growth slipped from 20.7 percent in 2010-11 to multi-year low of 8.4 percent in 2016-17. Bank credit to industry hit the most as it fell from 22.4 percent growth in 2010-11 and went into 1.9 percent contraction in 2016-17. Credit to large corporates crashed from 31.4 percent growth to show a 1.7 percent decline. Similarly, loans to micro and small sectors and medium companies also contracted 0.5 percent in 2016-17 from a growth of 22.5 percent recorded in 2010-11. The data speak volumes about the lack of confidence among corporates and the prevailing demand situation in the economy. Clearly a data set that needs to be overlooked when you paint a rosy picture of the economy.

New investment in Rs billion Infogram

New investment proposals at multi-quarter low in September 2017 according the CMIE reports (read here and here). According to the CMIE report, projects worth Rs 84,500 crore were proposed during the quarter ended September 2017. This is the lowest level of intentions to invest seen in a quarter during the tenure of the Modi government. Only 191 new investment project proposals were made by the private sector. This is the lowest level in over 13 years. Isn’t it clear where the private investment is headed? The shoddy record on this front is already reflecting in the jobs scenario. According to CMIE, about 1.5 million jobs were lost during January-April 2017. “A slowdown hurts the younger new labour force. This is already evident. During January-April 2017, job losses were concentrated in the younger age brackets,” said Mahesh Vyas, MD and CEO, in a report released on 11 July. It remains to be seen how the government will fulfil the promise of creating millions of employment opportunities.

Merchandise exports in $billion Infogram

In 2011-12, the exports were rose 21.9 percent to $306 billion. Next year, they fell marginally to $300.4 billion. Just before Modi came to power in May 2014, the India’s exports were at $313.5 billion in 2013-14, up 4.4 percent. However in 2014-15, the figure remained flat at $310.5 billion. After remaining above $300 billion for the four consecutive four years exports have declined by 15.5 percent to $ 262.3 billion in 2015-2016. It shows just a marginal rise of 4.7 percent in 2016-2017 to $274.6 billion. The reason for the situation is not just the global demand scenario but also that our products are less competitive globally. In short, the situation on the ground is indeed dire. It is high time Modi should take concrete measures to revive the sagging economy.