DNA Edit: Top priority - PM Modi’s first major policy push is aimed at economy

Prime Minister Narendra Modi is back with a vengeance. After being fiercely targeted by the opposition for having failed to keep up his promise of creating two crore jobs per year and a general slowdown in the economy, PM Modi has hit back as only he can.

In a bid to spur investment and create new employment opportunities, he has set up two Cabinet committees to deal with the two crucial issues. Both the panels — on investment and growth and on employment and skill development — will be headed by the prime minister himself. So, in a sense, the buck stops at him.

The government’s first major push at the beginning of its second term, reveals that Modi wants to put economics high on his list of priorities. It sends out the right signals, particularly when it coincides with a positive World Bank (WB)  endorsement.

According to the WB, India is projected to grow at 7.5 per cent in the next three years supported by robust investment and private consumption. The WB, in its Global Economic Prospects released this week, said that India is estimated to have grown 7.2 per cent in fiscal year 2018/19, which ended March 31.

A slowdown in government consumption was offset by solid investment, which benefitted from public infrastructure spending. While the opposition and some analysts have been painting doomsday pictures about the Indian economy, the WB thinks otherwise, particularly when compared to archrival China. As against a growth rate of 6.6 per cent in 2018, China’s growth rate in 2019 is projected to drop to 6.2 per cent and then subsequently to 6.1 per cent in 2020 and 6 per cent in 2021, the bank said.

With this, India will continue to retain the position of being the fastest growing emerging economy. By 2021 — well into Modi’s second term - India’s growth is projected to be 1.5 per cent more than China’s 6 per cent. That Modi is keen to tackle economic challenges, is evidenced from the fact that a day after the new government took charge, the Centre admitted that the leaked National Sample Survey Office (NSSO) data on unemployment touching the highest levels in decades, was indeed true.

The data, released by the Union labour ministry in May, showed 7.8 per cent of all employable urban youth being jobless, while the percentage of rural unemployed stood at 5.3 per cent. The unemployment rate in 2017-18 was 6.1 per cent, corroborating the pre-election leaked report that had claimed joblessness at a 45-year high.

It is just as well that PM has decided to take the bull by the horns because his government needs to take care of about 12.8 million new entrants to the workforce every year, in addition to about nine million people migrating from agriculture to non-farm sectors annually.

Interestingly, Central Statistics Office (CSO) data reveals that economic growth slowed to a 5-year low of 5.8 per cent in the fourth quarter of 2018-19, pushing India behind China, due to a poor show by agriculture and manufacturing sectors. This is in contrast to WB projections.