India’s prime minister made a surprise decision in November 2016, launching a demonetisation drive that rendered 100 and 1,000 rupee banknotes obsolete. The negative impact of the decision was clearly visible the following year as the country’s unemployment rate rose to a 45-year high of 6.1 percent, according to a groundbreaking report by Indian newspaper Business Standard on Thursday, quoting figures from a survey the Bharatiya Janata Party (BJP) government had allegedly concealed from the public.
The report pointed out that the unemployment rate is at its highest level since 1972-73, quoting a periodic labour force survey (PLFS) of the government-run National Sample Survey Office (NSSO). Prior to the news report, the NSSO survey findings became a pressing issue as two senior government officials resigned earlier this week. One of them, P.C. Mohanan, accused the government of withholding the NSSO report even after it had been officially vetted and approved. The NSSO comes under the Ministry of Statistics and Programme Implementation and is responsible for conducting large-scale sample surveys in the country, forming the basis of many research studies and reports.
This is the second such blow to the government after a think tank reported earlier this year on a loss of 10 million jobs between December 2017 and December 2018, a figure which was denied by the government. “One reason for the whopping figure of unemployment is that demonetisation led to the shrinking of the informal sector. It ended up creating havoc for this sector which accounts for 90 percent of the people working in the economy and is intensively cash dependent,” Political Analyst Sajjan Singh told TRT World.
“When the government saw that it was nowhere close to curbing the unaccounted money, which they said was the primary objective of demonetisation, it went on to justify it by shifting the goalpost to digitising the economy.” The BJP government has now come under intense criticism for ‘withholding’ the NSSO report with many accusing it of hiding the dismal unemployment rate in view of the upcoming national elections. “The statistical claims by the government in terms of growth rate do not find resonance on the ground, whether in the agrarian sector, informal or the formal sector,” Singh said. “There is also a trend that when there are no jobs in the economy, the people who are looking for jobs also tend to withdraw to a private shell. It notifies a kind of depression within the economic realm.”
Speaking to TRT World, Jayati Ghosh, a development economist at India’s prestigious Jawaharlal Nehru University, said: “These figures were expected and explain why the government is trying to suppress this report. “Labour force participation rate, which consists of both people who are employed and those who are seeking work, has fallen and the employment rate has fallen to only 36.7 percent – a drop of 2.7 percentage points in a supposedly growing economy. It’s terrifying.”
According to Ghosh, the alarming figures also indicate the labour market has come under strain mainly due to scrapping of 86 percent of currency notes and the “bad implementation” of the Goods and Services Tax (GST). “The government does not have the strength to confront that and is desperately trying to cover it up,” she said.
In 2014, the BJP government came to power under Narendra Modi on promises of development and providing jobs. Now, with the general elections just over two months away, the claims seem to be unravelling. The resignations of the only two external members of the NSC also indicates the level of influence and interference the central government holds over different institutions and ministries and its attempt to cover up all kinds of data which show it in a bad light.
According to IndiaSpend, a data-driven news website, the government has been withholding not just employment data but also that on caste, farm suicides, crime and nutrition. The data on foreign direct investment, which was published every quarter by the Department of Industrial Policy and Production, has also not been published since June 2018, despite the Reserve Bank of India providing it with regular updates. The suppression of information not only hurts the credibility of the government but also deprives the country of a fair chance to judge the efficiency of the government, especially when the next general elections are due soon.
In response to the Business Standard report, officials from Niti Aayog, a policy think tank of the BJP-led government, said the NSSO data had not been released because it is “still being processed” and will be released when it is ready. They also said that the numbers released were neither “verified nor final”. The governing BJP is already embroiled in a range of issues. A recent two-day strike by more than 200 million workers against growing unemployment was yet another indication that things are not right.
The agrarian crisis and widespread protests by farmers cost the BJP the assembly elections in three major states. With growing discontent, the party is likely to face a tough time in preserving the voter base that propelled it to power in 2014. “I hope the government does not resort to anything drastic in terms of social stability to divert the attention of people from this issue,” Ashwini Deshpande, a professor at the Delhi School Economics, told TRT World.
For his part, Singh predicts a declining vote share for the ruling BJP in the 2019 national elections. “A government needs an economic base to play cultural politics. Once that starts depleting, the cultural top is not going to sustain,” he said. “People will no longer think in terms of their religious or caste identity but in terms of their occupational identity. What seems to be the scenario is that once this occupational identity supersedes the cultural identity, the voting behaviour will be more anti-BJP.”