What makes Indian farmers happy

Emerging market: economic growth does not make Indians happy

“I want to work,” says the wiry man with sun-tanned skin. The nameless day laborer from the Indian state of Bihar has just cast his vote. He longs for the times when his life was better. “Under Indira Gandhi,” he says to the astonished TV journalist in the best of English. Now the situation is not good. “I don't get work every day, and when I'm not working I can't eat. And I have to sleep without eating, ”he explains. India is currently electing a new parliament in several phases until May 19. The Hindu nationalist Prime Minister Narendra Modi is standing for re-election. “I want to tell Modi to create work,” says the poor day laborer. He is not alone in his opinion. Modi, who promised jobs above all, was unable to meet the high expectations that many voters had. And this despite the fact that India's economy is booming.

Jump to fifth place is imminent

Last year India's economy grew 7.3 percent - faster than China or any other major economy. The World Bank is forecasting a similar rate of increase for 2019 and 2020. India has the seventh largest economy in the world and, according to the World Monetary Fund (IMF), is expected to overtake France and Great Britain this year to finish in fifth place.

But the weaknesses of the “largest democracy in the world” cannot be overlooked. The strong growth has not led to more prosperity for most Indians. Shortly before the start of the election, a confidential government document circulated that unemployment had reached its highest level in over 40 years.

Researchers at Azim Premji University in Bengaluru (Bangalore) have calculated that economic growth of 7 percent has led to less than one percent more employment. According to the Center for Monitoring Indian Economy, 11 million jobs were lost in the past year - most of them in India's vast informal sector, where the poor, uneducated and women find work. At the same time, a million Indians are entering the labor market every month, because the South Asian country is young - two thirds of all Indians are under 35 years of age.

Few jobs for many people

One sign of the tense labor market is the run for secure jobs in the civil service. Every year, one million young Indians take the rigorous screening test for elite officials, though the odds are negligible. Because only a little more than 900 candidates are accepted annually. When the Indian Railways advertised vacancies again after a hiring freeze in 2018, 28 million Indians applied - for 90,000 positions. Despite the economic reforms in the late 1990s, India continues to cling to socialist structures. Protectionism is very important. There is little competition and the barriers for foreign companies are high.

Large conglomerates such as Tata, Birla and Reliance also dominate the scene among Indian companies. They are all considered conservative and risk averse. “Made in India”, Prime Minister Modi's ambitious campaign to boost India's industrial production, didn't catch on with them. On the contrary: India's industrial sector continues to shrink - and in 2017 was only 15 percent of gross domestic product. At the same time, new investments have decreased in recent years. Because domestic firms avoid risk, the government is trying to attract foreign capital to fill the void. But here, too, the development is negative: Foreign investments, which initially reached a record level under Modi, are now falling again after other countries in Asia - such as Vietnam or Burma - have become more attractive for foreign companies and India is overtaking them.

Careless use of resources

India's economic growth is not just bypassing the majority of the population; the careless use of resources such as water and land only adds to the misery. India has only 1,000 cubic meters of drinking water available per capita every year - in some parts of the country you have to drill for water like you do for precious diamonds. At the same time, around 40 to 50 percent of tap water in cities is lost because the water pipes are old and leaky.

Suicides due to crop failures

India's agriculture, the sector that continues to employ half of the country's people, is suffering from increasing climate drought and falling productivity. Last October tens of thousands of farmers protested in the capital for better living conditions. India has 70 million hectares of artificially irrigated land, but this is almost entirely irrigated by outdated methods that use a lot of water and electricity. Hundreds of farmers commit suicide every year because of crop failures and high debts.

Not only the rural population suffers: India's new cities are growing without a plan or method. This has fatal consequences: traffic chaos, a lack of infrastructure and a desolate electricity and water supply are everyday occurrences. Air pollution is also a huge problem. Those who live in the capital New Delhi shorten their lives by an average of ten years. India's voters have little chance of fundamentally changing this. In the United Nations' Global Happiness Report, India ranked 140th out of 156 countries.

Published in the Economics section