Editorial     

Published: May 31, 2025
Updated: May 31, 2025

Economy ‘booms’ on empty stomachs!

It is intriguing that while the Modi government is boasting about India emerging as the fourth largest economy of the world, replacing Japan, and soon to be the third largest economy, replacing Germany, there are no signs of such ‘prosperity’ among the 120 crore denizens of the country. While BJP president JP Nadda praises Prime Minister Narendra Modi for lifting 25 crore Indians above the poverty line during his 11-year rule, the Prime Minister says his government is supplying food to 80 crore poor Indians free of charge. Whom does one believe – Mr Nadda or Mr Modi?

If the country is progressing so fast and becoming more prosperous than Japan and other developed countries, how does one explain the miseries of millions of Indians? The Prime Minister himself has gone on record saying that 80 crore Indians would have to go to bed hungry every day if the government did not provide them with free rations.

People’s miseries are increasing by the day, with unemployment on the rise on account of an economic slowdown, cutting-edge technologies like Artificial Intelligence reducing job opportunities, and the return of NRIs who have lost their jobs, primarily in the US. Accord ing to official data, the unemployment rate in India averaged 18.17 per cent from 2018 till 2025, reaching an all-time high of 23.50 per cent in April 2020.

If India has really overtaken any developed country, it may not be on account of its pace of growth but due to a sharp decline in the pace of growth of countries like Japan or Germany. In fact, our pace of economic is steadily falling. The GDP growth rate of India, which was 8.4 per cent in 2024, has dropped to 6.4 per cent in Q2FY2025. And the International Monetary Fund (IMF) has projected the GDP growth rate for fiscal 2025-26 at even less — 6.2 per cent.

The question that comes up is: Is India on the cusp of a medium-term slowdown? Can its growth rate be sustained to meet the government’s goal of ‘Viksit Bharat’ (developed economic status) by 2047? As global headwinds, ranging from the unsettling Trump tariffs to geopolitical tensions, intensify, what can the Modi government do to balance robust domestic demand and government spending against the shifting tides of global trade and economic uncertainty?

The environment is quite disappointing. The wheels of manufacturing have slowed down and fresh capital formation is sporadic. Thousands of MSMEs have been forced to down shutters, throwing thousands of workers out of jobs. Due to technological advance ments, employment opportunities have fallen sharply. At a time when rapid job growth the need of the hour, the government is not taking any imaginative and effective steps to boost employment. This factor facing the world’s most populous country will have far- reaching implications for India’s economic growth.

According to the India Employment Report 2024, prepared jointly by the Institute of Human Development and the International Labour Organisation (ILO), India’s working population increased from 61 per cent in 2011 to 64 per cent in 2021, and is projected to reach 65 per cent in 2036. However, the percentage of youth involved in economic activi ties declined to 37 per cent in 2022.

In fact, the situation on the employment front has worsened during the last 11 years of the Modi government. According to the Centre for Monitoring Indian Economy, an independent economic thinktank, the unemployment rate, which was 5.42 per cent in 2013, shot up to 7.8 per cent in 2024. Surprisingly, it is not yet realised that joblessness is a serious challenge that has profound consequences for the economic, social and political life of the country.

At the same time, galloping inflation has made the lives of the common man and woman – particularly the low- and middle-income group — miserable.

In these circumstances, to tom-tom the fact that India is the fourth or third largest global economy is meaningless and cruel to the ears of ordinary Indians groaning under the twin burden of unemployment and rising inflation.