“India Inc wants new govt to create jobs, control inflation.” 

This front page headline in the Business Standard left many surprised on Friday. Was it a sign that the government-corporate relationship wasn’t so cosy anymore? After all, barring a few exceptions like the late Rahul Bajaj, India Inc had largely been seen as a group reluctant to call out the Narendra Modi government’s failures.

It was based on a “Business Standard CEO poll”, as part of which 15 CEOs were asked to respond to questions about their hopes from the government. It wasn’t the first time the paper had published such a survey – earlier this year, several industry captains had rated the Modi government highly on the development and governance fronts. Another report, based on a PwC survey – of hundreds of CEOs and carried by several other pink papers – indicated optimism about the Indian economy but noted inflation as a concern. 

But after the Lok Sabha results, a few media reports have noted certain apprehensions within the corporate sector about a coalition government staking claim to power. 

An Economic Times report stated, “Tuesday’s election results have prompted businesses to pay close attention to potential changes with the new cabinet. Even established businesses that thrived during the post-reforms coalition era are now contemplating adjustments. Most business leaders and typically vocal industry chambers have fallen silent, avoiding comments or presenting their wish list for the new government, as they observe political developments in the Capital.”  

In an interview to CNBC TV18, Maruti Suzuki India chief RC Bhargava noted that industrial growth is essential to tackle the problem of unemployment. “My concern is that the very positive policies which the BJP undertook for promoting manufacturing must continue . The climate for industrial growth should continue, there should not be a change in this,” he said, adding that “political management by the BJP will ensure they will make a very viable coalition”.

A Business Today report suggested that MSME and start-ups “seem to be restless on what lied ahead in terms of policy changes”.

Meanwhile, as Modi prepares to take oath as the PM, there has been speculation about his alliance partners trying to extract their pound of flesh in the form of ministries and more elbow room. It also remains to be seen what his government will do to tackle unemployment – a problem BJP spokesperson Gopal Krishna Agarwal acknowledged was a factor in this election. 

Job creation vs unemployment

It’s routine practice by papers of record to publish India Inc’s response on crucial days – such as budget plans or election results. 

For example, a Financial Express report that quoted a few industry leaders – as well as economists – said they believed a sustained economic expansion will enhance India’s appeal to global corporations. “Industry leaders and economists said that while India’s economy is projected to grow at 6.8 percent in FY25, surpassing other major global economies, all eyes are on the new government that will give further impetus to the current growth momentum,” read the strap on the digital version.

A Hindustan Times report quoted real estate industry leaders on their hopes from the government to work on infrastructure development, work towards lowering home loan interest rates, prioritise affordable housing, and provide tax incentives for sustainable development. An ABP digital piece featured similar reactions. A Business Today article pointed to expectations about a boost to electronics manufacturing.

It’s not as if job creation has never found a mention in industry dialogues.

In the run-up to the results, the media had also reported on the manifesto released by the advocacy group Confederation of Indian Industry. CII president R Dinesh underlined the “first and foremost” need for inclusive growth, apart from big ticket reforms, improved support and access to the formal economy for MSMEs, and consensus between centre and states. It wasn’t inclusive growth but big ticket reforms that made it to the headlines.

Even in 2019, the CII had released a manifesto targeting 8 percent average annual GDP growth. The industry body had flagged the need for fiscal consolidation to tackle inflation.

After Modi secured a thumping majority in 2019, Perfetti Van Melle India MD Rajesh Ramakrishnan said that political stability should “hopefully lead to economic stability and acceleration of reforms that can further fuel employment and hence consumption”. 

But the circumstances haven’t helped improve the record. Over the last several months, there have been mass layoffs, especially in the tech sector. This has coincided with a surge in the gig economy. Few mainstream business papers have tried to hold corporates accountable over issues such as worker protection. Fewer still have done ground reports on issues such as India’s jobs crisis – Business Standard had in 2019 carried a report on how an NSSO survey revealed that India’s unemployment rate in 2017-18 was at a 45-year high, and that the survey had been “withheld” by the government.

The Modi years have also been marked by bickering between economists over jobs data and government policies. Pink papers have reproduced the views on both the sides, as well as the surveys that propagate the point and counterpoint. But have offered little independent reportage to focus on the facts on the ground.

There has been the risk of sounding alarmist about the economy. 

In his book A Short History of Financial Euphoria, Harvard economist JK Galbraith noted that he was asked by the New York Times in 1986 to write an article on the speculative build-up in New York financial markets and the mergers and acquisitions mania prevalent at that time. “The article, which predicted the crash of October 1987 was refused publication by the New York Times as it was seen as too alarmist.”

Decades later, the focus has shifted to the word job creation and job creators – a term that was born as Ronald Reagan tried to tackle the jobs crisis in the US as president. In a Fortune piece, freelance journalist John Benjamin noted it as a “cartoon piece of business jargon”. “The phrase has obvious power. We defer to those who make things for us. ‘Job creator’ takes this for granted. If the investor class really is the source of jobs, then labor policy should cater to their needs. Higher taxes and union drives, for instance, should be treated skeptically, because they’ll threaten job creators and hence job-doers downstream. But this dynamic isn’t true. Jobs are not disbursed by powerful people – a bizarrely Soviet idea. They’re governed by market forces, including new technology, inflation, and healthy consumer demand from good wages.”

This might be true for India, where the government’s bet on large-scale industries hasn’t spurred the expected scale of investment or employment, while job-intensive sectors such as MSMEs, despite some boosters, still feel the need for improved policy measures.

Modi govt, India Inc, and jobs

While there have been allegations of favouritism, the Modi government is perceived to have gone all out to push India Inc to increase investments: From the 2019 cut in corporate tax, to production-linked incentives, and steps such as the waiving off of gigantic corporate debt. The government seemed to think that this would boost corporate investments and capabilities, and in turn, give impetus to job creation.

But finance minister Nirmala Sitharaman lost her patience in 2022. “I want to hear from India Inc. What’s stopping you when countries and industries abroad think this is the place to be now.”

Earlier this year, Chief Economic Advisor V Anantha Nageswaran cited the satirical film Mohammed bin Tughlaq to say that it had “an element of truth” in what the prime minister in the film could do to tackle a problem like unemployment. “For unemployment, he simply says, ‘Look, all I will do is I’ll keep talking on every dais and stage that we have to solve the unemployment problem, and that is my contribution to solving the unemployment problem. Because this is not something I can address.” 

Two months later, at a CII summit in Delhi, where Nageswaran was present, Godrej Group’s Nadir Godrej reportedly offered his take on the stage through a poem. 

“Real unemployment is very high,

what is it that we should try

To create good jobs for all

and ensure employment doesn’t stall…”

“For developed status we now aspire,

I sincerely hope we never tire

Can India prove to be a heaven

as early as 2047

I am sure your prognostications will be wise,

but what if the election brings a surprise

We thank you for what we learnt here,

the economy should spread its cheer

To every Indian, everywhere,

the outcome is best when we share.”

Are coalitions bad for economic growth?

In 2020, then NITI Aayog CEO Amitabh Kant shocked many by saying that “tough reforms are very difficult in the Indian context, we have too much of democracy...You needed political will to carry out these reforms (mining, coal, labour, agriculture) and many more reforms still need to be done.”

However, in his book Coalition Politics and Economic Development, academic Irfan Nooruddin points out that coalitions are associated with periods of greater economic growth, less economic volatility and more foreign investment. In a conversation with The Hindu, he noted that there is “more credibility to the government’s policies, because it has a harder time making radical changes”.

The Modi government’s record on unemployment and inclusive growth has been repeatedly criticised. 

In April this year, the World Bank warned that India and its neighbouring countries risk squandering their “demographic dividend” despite witnessing the world's fastest economic growth. The employment ratio for south Asia was 59 percent last year against 70 percent in other emerging markets, the report noted. Meanwhile, the youth unemployment rate was 45.4 per cent in India last year, as per think tank Centre for Monitoring Indian Economy. 

According to the International Labour Organisation’s India Employment Report 2024, youth (15-29) unemployment rate surged over the last few decades – from 5.6 percent in 2000 to 6.2 percent in 2012, and to nearly 18 percent in 2019, before sliding to around 15 percent in 2020. It said the youth unemployment rate increased with the level of education, with the highest among graduates and higher among women than men.

The Modi government had reportedly registered a formal protest over the report.

Earlier this year, a Bank of Baroda study suggested that service sector firms in the information technology, banking and finance segments made up for nearly 50 percent of the new jobs created in the financial year 2023. Companies in the infrastructure, manufacturing, and consumption sectors saw moderate job creation. 

In his book The Crisis of Democratic Capitalism, Financial Times’ chief economics commentator Martin Wolf argued a clear link between higher growth and democratisation. At a webinar, he was also asked why Indians should be interested in democracy, a “western idea foisted upon the rest of the world”.

“Sceptics might still argue that democracy is not the best way for poor countries to become richer. They can point, for example, to China’s amazing growth record over the past 40 years. Yet the evidence does not support this view. A 2019 paper, Democracy Does Cause Growth, by Daron Acemoglu and others, argues that ‘there is an economically and statistically significant positive effect of democracy on future GDP per capita’. Thus, ‘long-run GDP increases by about 20-25 per cent in the 25 years following a democratisation’. Crucially, this also applies to countries at the early stages of development,” he later wrote in the Financial Times.

The media and unemployment

In 2022, amid the Narendra Modi government’s Tiranga drive to mark 75 years of Independence, Newslaundry had analysed “nationalistic” shows to see how many of them were actually catering to issues that matter to the nation. We had found that their flag-waving was little else than a Morbius strip of dogwhistles, communal agendas and pro-government narratives on screen. 

Between February 1 and April 12 this year, Newslaundry tracked 429 segments on primetime shows by six anchors on six prominent TV news channels, to check if issues such as unemployment, inflation, healthcare and education received prominence over divisive agendas. Only 1 percent of these segments focussed on jobs and education.

Will they change track? The Business Standard front page headline might be a cue.

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