Modi lifts millions out of poverty
by Naagesh Padmanaban on 06 Jun 2018 9 Comments

In an earlier piece, the ground work laid by Prime Minister Narendra Modi in his first four years in office was analyzed. His important achievement is the creation of a policy environment that facilitates accelerated growth. As pointed out, the implications for the country are many. This piece will explore the ripple effects of the rapid transformation on society.


One big game changer that Modi has spotted very early has been the widespread use of the mobile phone in India. With over 118,34,08,000 mobile phones, India has a massive penetration of over 91% (Wikipedia), the bulk of the users being rural and urban poor.


This large user base presented a great opportunity to deliver government services to the people via the mobile phone. In fact, Modi has used the mobile phone as a development accelerator. Called the Digital India Initiative, the e-governance architecture provides swift and intermediary-fee delivery of services as never seen before.


Modi’s Digital India is probably the biggest platform for delivery of government services anywhere in the world. Fully leveraging India’s prowess in information technology, this has been created in record time. The bandwagon service platform enables citizens to track the status of their application to government, request information, seek marketing information on agricultural produce, weather information, cashless transaction using digital wallets, file income taxes electronically, access free CBSE textbooks, review digital land records, view data from the Geo-Informatics Center and an almost endless list of services line up.


But how are the sweeping changes brought in by Modi impacting India? Have they created job growth? Political opponents of Modi have charged that despite these changes, there is no impact on employment. While concerns on employment are valid, the truth is that the changes have brought a large number of jobs, particularly in the informal sector.


It must be noted here that Indian economy is a complex mix of formal and informal sectors. This informal sector, like the small business sector in the US, is a key pillar of the economy. It employs over 120 million people while the formal sector employs only 12.5 million ( It is one of the largest disaggregated business ecosystems in the world – shopkeepers, vegetable vendors, repair shops, artisans, street vendors and many more – sustaining around 50 crore lives.


According to the National Sample Survey Organization (NSSO), as of 2013, micro, small and medium enterprises (MSME) totaled 6 crore business units, mostly individual proprietorship. Most of these are owned by weaker sections of society, particularly from SC/ST or Other Backward Classes.


Since they are not organized, granular data is hard to come by. This has posed a great challenge in assessing the true benefits, particularly in the generation of employment. But a fair assessment of the impact on employment can be deduced from the data available with the Mudra Bank. Since its inception three years ago, the bank has disbursed loans to more than 12 crore small entrepreneurs, which is more than the total population of Italy and France ( Fifty per cent of its borrowers were from SC/ST and over 75% were women.


Assuming that only 50% of the borrowers employed one additional help, Mudra bank would still have generated a minimum of 6 crore direct jobs. Further, even if only 25% of the borrowers were successful in developing their businesses, then at least 3 crore people would have enjoyed a higher disposable income. This is a very conservative estimate and data on the ground may indicate an even better scenario. More importantly, all this was in the weakest sections of society in rural as well as urban areas. The gains in employments from Mudra bank are substantial.


Modi’s transformation exercise has greatly impacted Indian society. A series of small but important changes in the way the public consumes government services have generated optimism and boosted the self-esteem of the people. It is now commonplace to hear senior citizens in temples, marriage get-togethers or other social occasions wax eloquently about the beneficial changes Modi has brought about in the country.


The senior-citizen demographic segment in particular has lived through hell – having to pay bribes, suffering untold delays in everything, being ignored or harassed for seeking what is legitimately due to them. Many have not forgotten how millions of retired government and public sector employees have been forced to pay bribes just to get legitimate pensions or retirement dues. For them Modi has given a new life experience.


The impact on women is profound. For instance, a housewife is now able to sell her cooked food to local area residents by soliciting orders via SMS and accept digital payments. She can borrow money at subsidized rates from banks or lending institutions that are refinanced by Mudra Bank. All this, without paying a rupee in bribe to intermediaries. Such anecdotes abound in almost every town and village in India today. Not to forget, this was not even in the realms of imagination for many Indians even a few years back.


But bigger questions loom large for the BJP. The kick-starting of the economy has started a new social dynamics in the county. It is narrowing, albeit at a slow pace, income disparities at the lowest levels in the economy. But how will all this impact the 2019 election? Will it boost the prospects of the BJP? Why did it not influence Karnataka elections or the recent by-polls? Is BJP’s ‘development first’ agenda waning? Political observers are not in agreement and opinions seem to vary widely, largely depending on whom you talk to.


The fact is that the number of reforms is unprecedented and the impact on the ground, as explained above, is lifting millions out of poverty. But these poor millions, by themselves, may not be able to decisively sway the elections. On the other hand, it is also true that sections of supporters feel let down by the BJP. From the delay in building Ram Mandir to corrupt politicians of UPA not facing the law, the anger is real.


This anger needs to be unpacked for a better understanding. The dissatisfaction largely stems from impatience due to non-fulfillment of expectations. Here again, these are the classic problems seen in a large pluralistic society where the expectations of different sections compete for attention at the same time and often are not complementary. Modi’s government has impacted them differently and hence the sense of unfulfilled expectations.


In a complex country like in India, poverty alleviation at the lowest level is rightfully the urgent priority and Modi has devoted a lot of time for it. As regards booking the corrupt, the delay is inexplicable. The only plausible explanation is that Modi does not want to create a martyr out of these corrupt leaders who, left alone, have no chance of winning.


For the millions at the lowest levels of society, Modi is a godsend. So, too, for millions of middle class Indians, particularly the under 35 segment of society. For them, the actions have matched the promises. This is a rarity in Indian politics.


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