Economic growth and employment

A significant effort was made by Modi and his team to project him as the ‘development person’. To that effect, a strong narrative was made and propagated in the media about the developmental model of the state of Gujarat, of which he had been the chief minister for over a decade. The popular belief among the common people is that the strong economic growth of the state of Gujarat was due to the policies of Modi; however, data show that this was far from the truth (Mishra, 2019; Pandya-Wagh, 2017). According to sociologist Dipankar Gupta, Gujarat had always been an economically progressive state; it ranked third and still holds that rank among the states in India (Mishra, 2019). Dr. Nikita Sud of the University of Oxford seems to resonate the thoughts of Dipankar Gupta (Pandya-Wagh, 2017). Prof. Maitreesh Ghatak of the London School of Economics categorically states that Modi, as the chief minister of Gujarat, never had a decisive influence on the economic performance of Gujarat (Pandya-Wagh, 2017). At the very best, Modi should be seen as a leader who did not squander what he inherited and kept it intact, according to Dipankar Gupta (Mishra, 2019).

‘Vibrant Gujarat’was the brainchild of Narendra Modi to attract investments into Gujarat and showcase himself as a business-friendly and pro-development leader. This biennial summit was highly publicized and sought to attract industrialists and business delegates not just from India but across the globe as well. The event made a significant contribution to brand building of Modi as a progressive leader (Bhattacharya, 2013). The incident in which Tata Motors had to terminate its initiatives of establishing a manufacturing facility for its small cars in West Bengal but was swiftly granted permission and land in Gujarat by Modi further buttressed his clout among industrialists as a business-friendly leader who gets work done (BS Reporters, 2013). In short, the impact of‘Vibrant Gujarat’in the making of Modi’s image was so significant and substantive that ‘Brand Modi’ is intrinsically linked to it. The result is that Vibrant Gujarat presently seems to draw its success from Brand Modi, a widely popular international leader now (Mohan, 2016).

For the preceding reasons, it is not surprising that Dharmakirti Joshi, chief economist of CRISIL, a subsidiary of a major American credit rating agency - S&P Global, applauds Modi for his business-friendly approach and a report by CRISIL suggests that Gujarat’s manufacturing sector has grown significantly under Modi’s leadership (Pandya-Wagh, 2017). Hence, for these obvious reasons when Modi wanted to keep the narrative of ‘business-friendly’ and ‘industry-led growth’ alive when he took centre stage in national politics.

In order to continue projecting himself as a progressive leader to the global community, Modi needed to take measures that would reform the institution. An International Monetary Fund (IMF, 2014) survey had raised concerns about slow growth, high inflation and ineffective management of fiscal deficit. Modi sought to build confidence among investors by seeking to do specific things that would improve the global ranking of India on the Ease of Doing Business Index published by the World Bank. He embarked on the audacious task of raising India to rank among the top 50 countries on the Ease of Doing Business Index. Surprisingly, this dream has almost been achieved as in 2019 India ranked 63rd among 190 nations -a massive jump from 142nd position in 2014 (Sharma, 2019). Several institutional reforms contributed to this success.

Another major initiative led by Modi was to widely publicize and institutionalize the slogan ‘Make in India’ to galvanize industrial productivity and give a boost to manufacturing in India. This policy initiative included 19 sectors to begin with and currently focuses on 25 major sectors. The initial idea was that ‘Make in India’would translate into 100 million new jobs in manufacturing and an increase in the contribution of manufacturing to GDP from 16 percent to 25 percent by 2022 (Srinivasan, 2020; Unnikrishnan, 2020). The initiative was thought to attract a substantial amount of FDI as multinational corporations (MNCs) would seek to establish manufacturing facilities in India. The idea resonated well and has shown to produce expected results in China and other East Asian countries.

Despite all the positive entrapments, the glitzy ‘Make in India’ campaign has failed to come close to the expectations and hype. Manufacturing FDI to India was only about $8 billion for 2018-2019 (Srinivasan, 2020). Larsen & Toubro chairman Mr. Naik noted that ‘Make in India’ has failed to create employment and that Indian companies were still keener to import goods when compared to locally manufactured goods (India Today, 2019b). This reality is in contrast to a pompous reporting by the DIPPT (Department of Promotion of Industry and Internal Trade) secretary, Amitabh Kant, that ‘Make in India Week’ received Rs 15.2 trillion (~$253.3 billion) investment commitments in 2016 (PTI, 2016). In retrospect, this outcome resembles the results of‘Vibrant Gujarat’. For instance, the fifth edition of Vibrant Gujarat in 2011 saw the signing of 8,380 MOUs worth Rs 21 trillion (~S350 billion) of investments from domestic and international companies, but the actual realization of such proposals is poor (Mishra, 2019). To give perspective, the total FDI for the whole of India was $28 billion in 2012-2013, $55.56 billion in 2015-2016, $60.22 billion in 2016-2017 and $60.97 billion in 2017-2018 (BusinessLine, 2014; Kapoor, 2018).

The ‘Make in India’ campaign, as mentioned earlier, was also to boost employment and lift the overall state of the economy; therefore, it is intrinsically linked to the ‘Skills Development’ program initiated by Modi (Sinha & Sinha, 2018). In fact, a new and independent ministry was created by Prime Minister Modi to provide a significant boost to vocational training that will improve the employability of people, the youth in particular. This ministry was to oversee the functioning of the National Skill Development Council founded in 2008. The idea was also in keeping with the BJP’s promise to evolve a flexible and industry-responsive workforce in India through its National Policy of Reskilling and Upskilling (Pandey, 2019). However, the flagship project program, Pradhan Mantri Kaushal Vikas Yojana (PMKYJ), failed to deliver on the expectations. While the PMKYJ Version 1 was mired by poor implementation and controversies, Version 2 is no better as it has failed to provide employment to the majority of people who benefitted from skilled training (Jadhav, 2019; Mallapur, 2017; Pandey, 2019).

The cohesive story of economic growth propelled by ‘Make in India’and skills development initiatives aimed at doing business easily and generating employment appears to have gone awry and is in sharp contrast to the fairy-tale narrative of Gujarat Development Model that was spurred on by Modinomics which knew no constraints. The sharpest criticism and reality check came when it was revealed that India’s unemployment rate now stands at 6.1 percent, which is the highest since 1972-1973 (BBC, 2019). Likewise, the GDP growth rate for 2019-2020 is estimated to be only 5 percent, which is the lowest recorded during the past 11 years (PTI, 2020).

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