Public Confidence in India's Economy Drops Amid Ongoing Election

Kristian Rouz — A new poll has found that the majority of Indians don't believe their nation's economy has improved over the past few years, as the cabinet of Prime Minister Narendra Modi has failed to address the inequality, structural inefficiency, and sluggish job creation.

While the outcome of the ongoing elections is still uncertain, some regions have recorded a higher-than-expected protest vote.

According to a Gallup poll released Friday, only 49 percent of Indians believe the economy is getting better. 18 percent of respondents said economic conditions in the country have become worse under the Modi cabinet — suggesting the overall economic sentiment is somewhat positive.

However, India is a nation of 1.3 billion people, and the differences between its regional submarkets are immense — as is the inequality between various societal strata. For example, the Gallup poll found that India's rural regions are generally more optimistic of the current economic conditions than urban areas.

Only 41 percent of Indians said that now is a good time to look for a job in their region, while India's unemployment rate increased to 3.53 percent last year from 3.52 percent in 2017. Albeit even lower than in the US, India's jobless rate compared against the size of its population also points to a huge number of unemployed among urban residents.

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"The increase in unemployment is clearly visible all across India", a study from Azim Premji University found. 

Meanwhile, the World Bank found in its recent review of the sustainability of India's economy that the nation is excessively reliant on domestic demand as the main driver of its economic expansion.

Experts said India should boost its exports in agricultural and manufactured goods, as well as commodities.

However, that may be a tough challenge amid a slowdown in the global demand for manufactured goods — as even Mainland China has struggled to maintain its level of exports over the past few years.

"At the same time you've also seen in the last couple of years that (India's) current account deficit widened — an indication that increasingly growth came from the non-tradable sector — from the domestic sector, and that makes it difficult to export more", Hans Timmer of World Bank said.

According to Gallup, India's GDP growth has slowed from 8.2 percent in 2015 — when many economists expected India to become the new China — to just 6.7 percent last year. Albeit still quicker than China's, India's pace of economic expansion appears to be less sustainable due to insufficient diversification in its sources of growth.

Gallup experts said PM Modi's political party — known as the BJP — is facing its main challenge from disenchanted urban voters, who expressed the most pessimistic view of the future of India's economy.

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Additionally, the poll's findings suggest that India's urban-rural divide may be deepening amid the booming agricultural sector and a slowdown in manufacturing — which India's next government will have to prevent in order to maintain political and economic stability in the country.

India's ongoing elections started on 11 April and will conclude by 19 May 2019, while the vote count will be complete by 23 May. Results of the vote will be announced on the same day.