Prime Minister Narendra Modi is doing an “unbelievable job” in India by pursuing reforms and taking 400mn people out of poverty through inclusive financial programmes, JPMorgan Chase chief executive officer Jamie Dimon has said.
“They have got an unbelievable education system, unbelievable infrastructure, they are lifting up that whole country, because this one man is just as tough. I think you have to be tough to break that down, you know, and he’s breaking down some of the bureaucracy…,” Dimon made these remarks on April 23 while speaking at an event hosted by the Economic Club of New York.
The US’ most influential banker also praised reforms undertaken by Modi. “They have put in this unbelievable trend [Aadhaar] that every citizen by hand or eyeball or by finger is recognised. They opened bank accounts for 700mn people. Their transferred payments are going through.”
Watch: What JPMorgan CEO said about reforms in India medium nocaptionhttps://youtu.be/oLl2tHVujP8?si=yN9Jqzj8-1WtcEHY
Dimon, 68, also had words of praise for the country’s indirect tax regime, which he said removed corruption emanating from the disparity in tax systems followed by different states.
“…I think you have to be tough to break that down, you know, and he’s breaking down some of the bureaucracy… But they all had completely different, it’s almost like Europe, they are completely different tax systems, which leads to enormous corruption.
“He’s breaking all that stuff down. And so yeah, they are examples of people who have just turned these things around,” said Dimon, who has run the largest US lender for more than 18 years.
What UN report said
Dimon perhaps referred to the Global Multidimensional Poverty Index (MPI) published by the UN last year, which said around 415mn people in India had exited poverty within a span of just 15 years, between 2005 and 2021.
This actually indicates that India’s poverty reduction measures had started showing results much before the Bharatiya Janata Party (BJP) came to power in 2014. The Congress-led United Progressive Alliance (UPA) ruled the country from 2004 to 2014. Dimon did not elaborate on this aspect during his speech.
According to the United Nations Development Programme (UNDP) report, this analysis was based on trends from 2000 to 2022 covering 81 countries with comparable data over time.
Some of the other countries that have managed to reduce poverty include China, Cambodia, Congo, Honduras, Indonesia, Morocco, Serbia and Vietnam.
The global MPI monitors both poverty reduction and how people experience poverty in different aspects of their daily lives — from access to education and health, to living standards such as housing, drinking water, sanitation and electricity.
The report noted that deprivation in all indicators declined in India, and the poorest states and groups, including children and people in disadvantaged caste groups, had the fastest absolute progress.
The update of the global MPI with estimates for 110 countries was released in July 2023 by the UNDP and the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford.
What UPA govt claimed
The UPA government’s report card released by then-PM Manmohan Singh in January 2014 also claimed that the poverty ratio in the country had fallen steeply to 21.9% in 2012 from 37.2% in 2004.
“Under the UPA government, poverty in India has declined in an unprecedented manner. Average decline in poverty was 2% per annum during 2004-12, almost twice the rate of the preceding decade,” it said.
The number of poor people came down to 26.93 crore, which was 21.9% of the total population in 2012, from 40.71 crore in 2004 when the UPA government came to power, according to the report card.
The Congress-led government had launched 16 flagship programmes in both rural and urban areas during the 11th Five Year Plan (2007-12), and fund allocation for them was more than double for the 12th Five Year Plan period, which began from April 2012.
The report highlighted that the expenditure on the rural employment guarantee scheme was increased by more than 100% for the 12th Plan.
Rural distress is high
While the JPMorgan chief praised the reforms undertaken by the Modi government, the economic slowdown in rural India — home to 60% of its 1.4bn people — is painting a starkly different picture to the country’s spectacular growth and the prosperity of its urban population.
For instance, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has generated 40 crore persondays of work more than the pre-pandemic (2019-20) level — suggesting a continuing rural distress, and that job opportunities in the cities may not have returned to normal.
Persondays refer to the total number of work days by a person registered under the scheme in a financial year.
The flagship labour scheme clocked 305.2 crore persondays as on March 31. The final number is likely to go up. The latest data is in sharp contrast to 293.7 crore persondays generated in 2022-23, roughly 12 crore persondays more.
The number in 2023-24 was expected to go down as 2022-23 was the first year after the country came out of the pandemic, and employment avenues were seen as not having returned to normal after the disruption caused by the two major Covid waves, which triggered the shuttering of economy across the rural-urban divide.
But instead of dipping, the work has gone up by 12 crore days and the final figure would be even higher.
The pre-pandemic year marked the natural trajectory of work demand under the job scheme, encapsulating seasonal disruptions like rains or drought, without the unnatural dislocation triggered by the once-in-a-lifetime pandemic.
The past two years — 2022-23 and 2023-24 — provide evidence that employment for the unskilled poor has not returned to the year 2019-20, when the work generated was 265.3 crore persondays.
Critically, the persondays generated in 2022-23 were 28.4 crore more than 2019-20, and it has shot even higher by almost 40 crore in 2023-24 to date.
The work generation zoomed to an all-time record of 389.9 crore persondays in the pandemic-hit year of 2020-21, and then barely slipped to 363.2 crore in 2021-22. The two years are seen as aberrations in the MGNREGS graph because of the closure of traditional work avenues owing to lockdown, and their slow return to normalcy after the virus subsided.
Rajendran Narayanan, faculty at the Azim Premji University and an expert on the job scheme, told TOI, “There is no doubt that it shows a high demand for MGNREGS because of high levels of rural unemployment. It has been observed in various surveys.”
That the work demand and generation under the job scheme should stay elevated, and higher than the pre-pandemic years, is viewed unanimously by experts as signs of high unemployment and rural distress. The unskilled or semi-skilled workers constitute the migrant labour force which mostly finds wages in the construction sector and similar employment in towns and cities.
India’s free food scheme
Earlier this year, the Modi government rolled out what it called one of the world’s biggest welfare schemes, under which the Centre would provide free foodgrains to about 81.35 crore beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for a period of five years.
Free foodgrains (rice, wheat and coarse grains/millets) under PMGKAY will strengthen food security and mitigate any financial hardship of the poor and vulnerable sections of the population, according to a government statement.
It would provide nationwide uniformity in the delivery of foodgrains free of cost in all states/union territories through a network of more than 5 lakh ‘Fair Price Shops’ under a common logo.
The government claims this initiative is of enormous benefit for migrants, facilitating both intra- and inter-state portability of entitlements as part of technology based reforms under Digital India.
The free foodgrains will concurrently ensure uniform implementation of portability under the One Nation One Ration Card (ONORC) scheme across the country and will further strengthen this choice-based platform.
The approximate food subsidy for five years under PMGKAY will be to the tune of ₹11.8 lakh crore.
With inputs from Ambika Pandit, Subodh Ghildiyal and agencies.