India’s trifecta of failure

On January 7, Prime Minister Narendra Modi’s government suddenly announced that an additional 10 per cent of school seats and government jobs would be set aside for the “economically weaker sections,” meaning the poor among the upper castes.
This was on top of the already extensive quotas for various historically oppressed castes under India’s wide-ranging affirmative action policy. The government rushed through a constitutional amendment to this effect on January 8 and 9. The decision may well be challenged in the courts, but the announcement was an implicit confession of three failures.
The first failure is that of affirmative action. After almost seven decades, the world’s biggest and longest-running such programme – mandated in India’s 1950 constitution as a temporary expedient for 15 years – has failed to ameliorate historical caste injustice.
Governments have repeatedly broadened affirmative action to include larger swathes of public life, target more groups, and cover promotions as well as recruitment. Modi has been unable to fix this situation, which he inherited, but did not create.
On January 21, following Modi’s surprise announcement, Nitish Kumar, Chief Minister of the state of Bihar, called for a census of all castes in 2021 to create a system for reserving jobs based on each caste’s share of the population.
The net result is that Indians are more sharply conscious of caste identity today than at independence in 1947. Far from steadily weakening over time, caste identity – and caste-based inequality – has been further entrenched. India now has a frozen equilibrium of caste-defined access to public institutions and services. And with Dalits (formerly called “untouchables”) being such a powerful voting group, no political party or leader dares to suggest the abolition of these set-asides.
Unsurprisingly, the majority of benefits intended for the poor, downtrodden, and oppressed castes have been captured by the elite among them. Entitlements that were meant to address moral claims of equal citizenship have been swallowed by cynical political powerbrokers. This is especially true of caste-based political parties in which the founders’ children inherit the leadership, creating family dynasties.
A second, related failure is that more than 70 years after independence, India has not managed to forge a truly national identity. Instead, the country consists of a collection of minorities who cling ever more fiercely to their group identities in order to obtain various public benefits. Dalit caste identity is recorded at birth and reinforced throughout a citizen’s life. In politics, caste calculations are crucial in selecting candidates to match the demographics of each constituency, and in choosing coalition leaders to head state and federal governments.
Finally, the government’s recent set-aside announcement was an implicit admission of failure to create jobs for the millions of young people entering the workforce. Modi promised in his 2014 election campaign to create 20 million new jobs per year by unleashing India’s entrepreneurial potential. Instead, the unemployment rate is currently at its highest level since the early 1970s.
The government sat on the bleak unemployment figures for months, prompting two members of the National Statistical Commission to resign in protest, before the report was finally leaked to the Business Standard newspaper on January 31. According to the National Sample Survey Office, the unemployment rate reached 6.1 per cent in 2017-18 (compared to 2.2 per cent in 2011–12), with people aged 15-29 and urban women the worst hit.
Higher unemployment is partly a result of Modi’s egregious decision in 2016 to demonetize India’s highest-denomination bank notes of 500 and 1,000 rupees (about $7 and $14 respectively).
This had a particularly severe effect on the informal sector, which employs over 90 per cent of the country’s workforce. Demonetization not only cost India at least 1.5 million jobs; it also failed to achieve its primary goal of uncovering “black money,” because 99 per cent of the cash was returned to banks.
According to independent experts, the latest unemployment numbers are alarming, but not surprising, because signs of rising joblessness had been visible for some time. With a general election due by May, the government’s reluctance to release the report is understandable.
The approaching election also helps to explain the government’s sudden embrace of expanded set-asides. Having failed to create jobs, the government is instead dividing the existing pie among important groups of voters. The reality of job scarcity is to be camouflaged in the sop of set-asides. This is “placebo politics” at its worst. Electoral imperatives have also driven budget giveaways, with something for nearly everyone.
Leading the first Indian government in 30 years to enjoy a comfortable majority in its own right, Modi’s Bharatiya Janata Party had the opportunity to act on its election slogan of minimum government, maximum governance.
Instead, it has largely squandered the chance to undertake significant structural reforms that would have put India on the path of freer markets. The BJP has now retreated to the same populist and socialist nostrums of its main opponent, the Congress party.
Perhaps Modi was spooked by sizeable losses in three important state elections last December. He also faces the political headache of stress in the agricultural sector, which has led many farmers to commit suicide.
India may still be the world’s fastest-growing major economy. But its two main parties’ shared tendency to choose the path of least political resistance and defer deep reforms is postponing prosperity for the average Indian. What Modi’s government really announced on January 7 is that life will remain nasty, brutish, and short for far too many people for some time yet. - Project Syndicate