10 worrying signals for India on inflation, unemployment, inequality

"The story of my small town is basically the story of India. There's a new Pizza Hut, KFC, Domino's, shiny malls & supermarkets, terrific fiber optic internet. Zomato/Swiggy deliver too! What's missing? Roads, pavements, garbage disposal & any inkling of public administration!"

-Nikhil Inamdar

"Your daily expenses are growing by 14%. Your tax rates are stagnant. Your investment return rates from FD/PPF are diminishing. Your savings return rates are less than 3%. Your food is expensive. Your cloth is taxed more. Your fuel is more expensive. Is your salary growing enough?"

-Rajat Dutta

"But what can we expect? The ruling party is busy making temples and another party which fancies itself as the alternative is busy offering free trips to the temples"

-Alex Chandy

"Inflation hits the poor, not 5% of the population who are privileged. It's the bottom 50% who will suffer. The vacation destinations of the rich will shift from Iceland to Maldives. You, earning two rupees per tweet for abusing, will lose a meal"

-Ruby Roy

There is growing anxiety among the Indian middle class. Rising prices and growing unemployment are adding to their worry. Senior citizens are helplessly watching their savings dwindle because of low interest rates. Indeed, signals about the Indian economy are worrying. Straws in the wind portend an ill wind for the country ahead.

But with neither Parliament nor the media discussing the implications and finding a way forward, citizens are left wringing their hands.

Just a few such signals received in December are enough to indicate the gravity of the situation. But much of the country is still talking about mandirs and mosques, Hindu-Muslim divide, Partition and Aurangzeb and the glory of Ayodhya, Kashi and Mathura. These are 10 such reports which should make Indians sit up.

1. The wholesale inflation rate in November was at a worrying 30- year high of 14.2%. But this failed to make it to the front pages of most newspapers.

2. Indian consumers remained pessimistic in November, a RBI survey on consumer confidence showed.

3. Banks have written off Rs 10.72 lakh crore since 2014-15, when the Modi government assumed power, of which Rs 2,02,781 crore of bad loans were written off in the last fiscal.

4. The top 1% of India’s population earned more than one-fifth (21.7%) of the country’s total national income in 2021, while the bottom 50% made just 13.1% of the money, showed this year’s World Inequality Report. The top 10% of the population owned as much as 57% of the country’s national income in 2021, according to the report.

5. Public sector banks lost nearly Rs 2.85 lakh Crore on loans to 13 corporates even as they are being used by the government to bail out Yes Bank and IL&FS, said the United Forum of Bank Unions. The 13 corporates’ dues were Rs. 4,86,800 crore and were ‘resolved’ at Rs 1,61,820 crore, causing a loss of Rs 2,84,980 crore.

6. Retail inflation rose to a threemonth high of 4.91% in November, up from 4.48% in October and 4.35% in September. The Consumer Price Index inflation in rural India stood at 4.29%, while it was 5.54% in cities.

7. Passenger vehicle sales declined by a whopping 19% in November compared to November last year due to semiconductor shortage and poor economic recovery.

8. As per CMIE, India’s Labour Participation Rate (LPR) was 41.38% in March 2021 but fell to 40.15% in November, indicating that 60% of employable Indians are just not looking for work. The figure is among the lowest even in Asia and is attributed to women opting out of work or not getting gainful employment. According to CMIE, LPR was 47% in March 2017 and fell sharply to 40% in just four years. Most of the decline happened before the pandemic.

9. India’s fuel demand fell 11.4% in November compared with the same month last year, data from Petroleum Planning and Analysis Cell of the Oil Ministry shows.

10. The poorest 50% of Indians today earn what the poorest 50% of Americans earned in 1932 after the Great Depression, reported the World Inequality Report.

Government employees and those among the Middle Class who still have jobs are lucky though a large number of the educated youth are forced to do several gigs to fend for themselves. People working in the private sector and senior citizens voice their dissatisfaction at Fixed Deposit rates in banks having come down to 4.5 %-5%. “It's ridiculous, just 2-3 years back it was around 7-7.4%. It’s the primary source of income for retired people; but the government is neither able to ensure social security nor a stable interest rate regime,” complained a senior citizen bitterly.

They had saved their hard-earned money and postponed consumption so as to build up a nest for their old age, he explained. But by saving they lost out when they were young and they are losing out now that they have grown old and depend on the savings.

“It's very difficult for people working in the private sector or retired persons to manage. Prices are going up while income is going down. The rich are becoming richer and the poor and the middle class are becoming poorer,” concurred his companion, refusing to divulge identity. Another morning walker was even more upset. “Nobody is interested in these issues...It seems majority of the people have suddenly become well off…I don't know how. Even elderly & retired people in WA groups are not bothered about these issues,” he lamented.

Growing unemployment is another issue that can no longer be ignored. BJP MP from Pilibhit Varun Gandhi tweeted, “First, there are no government jobs. Still, if some opportunity comes along then paper is leaked, if exam is taken then there is no result for years, or it is cancelled due to some scam. Over 1.25 crore youngsters are waiting for the railway Group D job result for two years. Same is the case with Army recruitment. Until when should the youth of India keep patience?"

While the average wealth of an Indian household is worth Rs. 9,83,010, the World Inequality Report said that the bottom 50% of the country’s population own “almost nothing”, with an average wealth of Rs 66,280. The middle class is also relatively poor, owning 29.5% of the total wealth of the country. The wealthiest 1% population of India alone owns 33% of the country’s total wealth.

In the midst of such encircling gloom, the Lok Sabha was informed that 8.81 lakh Indians gave up their citizenship since 2015 and settled abroad. And a parliamentary committee found that out of Rs. 446.72 crore released for the flagship 'Beti Bachao Beti Padhao' (BBBP) scheme in 2016-2019, 78.91% was spent exclusively on "media advocacy", a euphemism for advertisements.

With fuel and food prices spiralling upwards, the Finance Ministry conceded, “The high rate of inflation in November 2021 is primarily due to rise in prices of mineral oils, basic metals, crude petroleum and natural gas, chemicals and chemical products, food products, etc.”

Economists said that despite a softening in global prices of crude oil and the government's recent cut in fuel tax, inflationary pressures are building for households as firms try to pass on rising costs as domestic demand picks up.

Wholesale fuel and power prices rose 39.81% on the year versus 37.18% in October, while manufactured product prices rose 11.92%, against 12.04% in the prior month. Wholesale prices of food accelerated at a 6.70% pace in November from a year earlier, versus 3.06% the previous month.

The gap between retail and wholesale price-based inflation has widened in recent months as many companies and retailers struggle to absorb the galloping input costs that threaten their bottom lines. The RBI's Monetary Policy Committee left interest rates on hold, saying growth was a priority as it warned of risks from inflation and the new Omicron variant of coronavirus on the economic recovery.

(This article was first published in National Herald on Sunday)