Modi Govt.’s Economic Policies Have Bulldozed Livelihoods of Common People

May 13, 2022

The past eight years have seen increasing economic hardship for families of common people. Unemployment, insecurity of jobs, low wages and salaries, closures and retrenchments, and the complete stoppage of work during the lockdowns have destroyed people’s livelihoods and lives. On top of that, rising prices have robbed people of whatever meagre earnings they were managing with back-breaking labour. Most of this havoc can be traced back to the policies of Modi led BJP government, which have been imposed like bulldozers on the people. The promises of ‘achhe din’ (good days) lie shattered or rather, these good days have come only for the super rich of the country whose wealth and profits have increased by leaps and bounds.

The most serious and sweeping failure of Modi government’s policies has been in failing to provide jobs. Every year, over one crore youth become old enough to join the workforce. Yet job creation has been so limited that most of them join the ranks of an ever growing army of unemployed.

Raging Unemployment

Unemployment rates have been hovering in the 7-8% range since the latter half of 2018, according to CMIE survey data. During the lockdowns in the past two years, it went up to an unimaginable 25%. But the true measure of the jobs crisis is not had from just unemployment rates. To understand the scale and severity of this crisis look at this: total number of employed persons in India has shrunk in the past five years, from 40.9 crore in January 2017 to 40.3 crore in April 2022 although India’s population has increased in the same period from 130.5 crore to 137.4 crore. This means that employment declined by 1.5%, even as population increased by over 5% in the past five years.

Meanwhile, work participation rate, that is, the share of working age population which is either working or seeking jobs has fallen from about 45% in January 2017 to about 41% in April 2022. This means that more and more people are simply getting frustrated and discouraged by the lack of jobs and sitting idle – they opt out of the job ‘market’ as it is called. A large share of them are young people who incur debts running from pillar to post, giving interviews and exams searching for illusory jobs.
Nearly 7.8 crore jobs were lost during the quarter ending June 2020 coinciding with the first wave of the Covid-19 pandemic. The second wave of pandemic, in the quarter ending June 2021 witnessed a loss of 1.3 crore jobs. The return of normal conditions had seen most jobs coming back – but a wide gap has remained. It is estimated by CMIE that nearly 33 lakh jobs are still short from the pre pandemic levels.

But what is noteworthy is that there has been a shift in the nature of jobs – women have lost more jobs, industries and service sector establishments have lost more jobs. Many people have shifted to rural areas and are somehow managing to earn something by doing small agricultural jobs. Thus, casual, daily wage type of work at low wages and with no job security has increased, while better paying, regular jobs have been lost.

Women’s work participation rate remains low at a mere 22.8% according to the pre pandemic PLFS report for 2019-20. It had already been declining for several years before. Among young women (15-29 years) it was even lower at 21%. There has been no government survey since the pandemic broke out in 2020. CMIE estimates, as reported by an Ashoka University study, show that average monthly female employment in India in 2019 was 4.35 crore, which decreased to 4.07 crore in 2021.
In urban areas, the women’s employment situation is worse. CMIE data shows that urban India had 22.1 percent fewer women employed in 2021 as compared to 2019 and fewer women were actively looking for jobs in 2021. While 95 lakh women actively searched for jobs every month in 2019, this number declined to 83 lakh in 2020 and only 65 lakh in 2021. This trend was observed in both urban and rural India.

The number of people working at a pittance in the rural jobs guarantee scheme (MGNREGS) has increased dramatically in the past few years, indicating the desperate jobs situation. Before the pandemic, in 2019-20, 7.88 crore persons worked under the scheme. This increased to 11.19 crore in 2020-21 and remained high at 10.62 crore in 2021-22. Such is the desperate jobs crisis that in rural areas, people are willing to work for a paltry average wage of Rs.209 per day for just 50 days average in a year.

Starvation Wages

Real agricultural wages have increased by a mere 0.3% in 2020-21 and by 1% in 2021-22, according to a study done on rural consumption levels, reported by the Economic Times. In the same years, non-agricultural wages in rural areas increased by 1% in 2020-21 and declined by 0.2% in 2021-22.

These abysmal changes in inflation adjusted wages in rural areas, where the bulk of India’s population lives and works, shows the deep economic distress and pauperisation of people.

According to the Periodic Labour Force Survey (PLFS) for 2019-20,

    • Among regular employees, average monthly salary for men is Rs.14,000 in rural areas and Rs.20,000 in urban areas while women get about Rs.9,300 in rural areas and Rs.16,300 in urban areas.
    • Casual workers get daily wages of only Rs.305 in rural areas and Rs.383 in urban areas if male, while female workers get Rs.197 in rural areas and Rs.254 in urban areas.
    • Among self-employed persons, men earn only about Rs.9,500 monthly in rural areas and Rs.16,000 in urban areas, while women workers get Rs.4,800 in rural areas and Rs.7,300 in urban areas.

CMIE’s most recent survey report (March 2022) paints a stark picture of the pitiable household income levels. About 57% of households, according to this survey, earn less than Rs.2 lakh per year. That works out to about Rs.16,666 per month. Of course, this is an average and many earn much less than that – about 17% earn less than Rs.8,333 per month. Median annual wage is just Rs.1.7 lakh or about Rs.14,000 per month. The survey has not revealed the hours of work that gets this wage – other surveys and anecdotal evidence suggests that usually people work for more than 8 hours to earn this much.

These earnings are subsistence level and if price rise is taken into account these become even less. Also, these are earned under extremely harsh conditions of work, usually for many more hours of work than the standard 8-hour work day. One of the reasons for these very low levels of wages/earnings is hidden unemployment - the large army of jobless is forced to take up any job for whatever meagre wage. Only then can they escape starvation. So, for big land owners or industrial employers, the raging unemployment also serves as a big boon – it keeps wages depressed and profits high. This is Modi’s biggest gift to them.

The bulldozers of economic policy practiced by the Modi government have thus led to economic ruin for the labouring classes including the lower middle class working in various services in urban areas.