New Delhi — On paper, India’s economy has reached its flagship year. Exports are at record highs.. The profits of listed companies have doubled. The vibrant middle class, built over the last few decades, now spends a lot on movie tickets, cars, real estate, and vacations, so economists call it post-pandemic “revenge spending.” increase.
Still, India Fastest growth Within this year’s major economy, the numbers in the rosy headlines do not reflect the reality of hundreds of millions of Indians. Growth has not yet been transformed into a sufficient job for the wave of educated youth who join the workforce each year. Much more Indians make a living in the informal sector and have been hit in recent months, especially by high inflation in food prices.
The severance is the result of India’s uneven growth, which is underpinned by the greedy consumption of the country’s upper layers, but its benefits often do not extend beyond the city’s middle class. According to the report, the pandemic widened the gap, put tens of millions of Indians in extreme poverty, and the number of Indian billionaires surged. Oxfam..
Concentration of wealth will double the size of India’s economy by 2024 when Prime Minister Narendra Modi is reelected in 2019, with more than $ 5 trillion clubs alongside the United States, China and Japan.
The government reported at the end of last month that the economy expanded 8.7% last year to reach $ 3.3 trillion. But with sluggish domestic investment and slowing government employment, India should subsidize fuel, food and housing for the poorest to deal with widespread unemployment. became. Today, free grain accounts for two-thirds of the country’s more than 1.3 billion people.
These distributions have pushed India’s inequality to its lowest level in decades, according to some calculations. Still, Indian government critics say subsidies cannot be used forever to solve inadequate job creation. This is especially because tens of millions of Indians (new graduates, farmers leaving the fields, working women) are expected to flood the non-farm workforce in the coming years. is.
Mahesh Vyas, Chief Executive Officer of the Indian Economic Monitoring Center, a data research firm, said:
As a kid, Shinha liked to stand in front of the village classroom with fake glasses and wooden batons and pretend to be a teacher to entertain fellow students a lot.
Her ambition came true a few years later when she got a job teaching math in a private school. However, the coronavirus overturned her dream as India’s economy shrank 7.3% in fiscal 2020-21. Within a few months of the start, she and a few other teachers were fired because so many students dropped out.
30-year-old Shinha wants a job again. In November, she joined thousands of applicants competing for a long-awaited job in the government. She has also traveled to Haryana in search of her job, but she turned them down because of the small wages she paid less than $ 400 a month.
“Sometimes during the night, I’m really scared: what if I can’t get anything?” She said. “All my friends are suffering from unemployment.”
But for Indian politicians, high unemployment is “not spectacular,” said economist Vyas, adding that he was much more interested in inflation affecting all voters.
India’s Reserve Bank and Treasury are hitting many countries due to pandemic-related supply chain problems and the Ukrainian war by limiting wheat and sugar exports, raising interest rates and lowering fuel taxes. I tried to fight inflation.
Banks raised their borrowing rates for the first time in two years in May and then raised them again on Wednesday to 4.9%. Inflation is expected to reach 6.7% in the next three quarters.
Reserve Bank officials also adopted a range of fiscal and financial tactics to continue to support growth, but fell to 4.1% in the first quarter of 2022. Household consumption, a major driver of the Indian economy, has declined in recent months.
“We promise to curb inflation,” said bank governor Shakticanta Das. “At the same time, we need to keep in mind the requirements for growth. There can be no situation where the surgery is successful and the patient died.”
Oxford Economics analyst Priyanka Kishore said the Bank of England and the US Federal Reserve have to accept lower growth rates due to higher commodity prices, but India’s preparations. The bank said it was not in that camp. “Growth is very important to India,” she said. “There is a political agenda.”
The ban on food exports is a major turning point for Mr. Modi.He said in April in response to Russia’s blockade at a Ukrainian port that led to a global shortage of grain. Can help Indian farmers feed the world.. Instead, the Indian government has imposed an export ban to keep domestic prices low, as global wheat shortages are pushing up prices.
Such temporary intervention is easier than tackling the fundamental problem of massive unemployment.
“You have wheat in your livestock and you can ship it home and be happy right away,” Vyas said of the storage facility, “it’s far more to try specific policies for employment. It is intangible for a long time. “
According to analysts, these policies could include greater efforts to build India’s underdeveloped manufacturing industry. They also say that India should relax regulations that often make business difficult and reduce tariffs to make it easier for manufacturers to secure parts that are not made in India.
Exports are the source of power for the Indian economy, with the rupee falling about 4% against the US dollar since the beginning of the year, which would normally boost exports.
However, US inflation and the European war have begun to affect the sale of Indian-made garments, said Raja M. Shanmgam, chairman of the Tiruppur industry group, a textile hub in Tamirnadu.
“All input costs are increasing. The industry has long been working on thin wafer margins, but now it’s working on losses,” he said. “Therefore, the situation that is usually happy for exporters is no longer the case.”
The struggle of working-class Indians and the millions of unemployed may ultimately be a drag on growth, economists say.
Zia Uller, who drives an auto rickshaw in the industrial city of Karnataka in southern India, said his income is still only about a quarter of what it was before the pandemic.
The $ 20 he earned every day was enough to cover the household expenses of a family of five and the tuition of three children.
“Customers like to walk,” he said. “Recently, no one seems to have the money to buy a car.”
Ura, 55, said the cost of food was so high that she had to eat less and take her two children out of school.
“Now, only one of my eldest daughters is in school,” said Mr. Ulla. “The rest are looking for jobs in the area.”
Hari Kumar contributed to the report.