Voter's choice: Mediocrity or prosperity?

India's economic future will be significantly impacted by the outcome of the general election, for politassailed by a triple whammy of inequality, declining prosperity, and structural weakness.

Rural distress has been a feature of the economy, accentuated by Covid. Agriculture, employing 45 per cent of the working population, grew by just 1.8 per cent per annum last year. As a result, 40 per cent of Indians receive subsidised free food. Urban employment languishes. Over 100 million young people are neither working nor in education or training. Hordes of youth waste the best years of their lives competing for a static pool of lowend government jobs or working in the informal sector for pitiful wages, as the share of manufacturing has declined to a low of 13 per cent of gross domestic product (GDP). Like the French Bourbon monarchs, the elites eat their cake inside gated communities, growing fat on capital gains and booming stock markets. Real wages are stagnant, even as crony capitalists spend lavishly and hedge options by transferring their wealth and children abroad.

There is no coherent long-term economic strategy or vision. Sharply deepening inequality between the North and the South is giving rise to existential political economy questions, which remain largely unaddressed.

In the face of these challenges, the ruling party's manifesto offers little except gloss and subsidies. It does not even speak of the unemployment challenge or acknowledge rural distress. Only the Home Ministry seems to have a clear strategy on the use of coercive power to implement things promised in the 2019 manifesto. In an interview yesterday, the Home Minister talked of stock market performance and rupee currency settlement as the key economic aims of the next administration, seemingly overlooking the core afflictions of the Indian economy.