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Modi says the economy isn’t so bad; He’s right – it’s worse

by Samarth Bansal and Aman Sethi

On October 4, Prime Minister Narendra Modi offered a robust defence of his government’s management of the economy, shortly after the Reserve Bank of India lowered its Gross Value Added (GVA) growth estimates for the current fiscal year from 7.3% to 6.7%.

Since then, the ruling party has been pains to push a positive narrative on the economy,  extent of emailing clips of the speech to journalists who write about the economy.

So, what is the current state of the economy? Here’s a reality check.

How many jobs has the economy created?

Modi said: “Upto March 2014, the subscriber base of the Employees Provident Fund Organization (EPFO) stood at 3.26 crore. Over the last three years, the numbers increased to 4.8 crore. Some people forget that this number can’t increased without a corresponding increase in employment.”

Reality Check: EPFO numbers have increased, but this doesn’t necessarily mean that total employment has increased. In July this year, this jump in EPFO subscribers was attributed to a government amnesty scheme which allowed firms to come clean on their actual staff strength without being penalized. In a detailed note, Mahesh Vyas, Managing Director and CEO of the Centre for Monitoring Indian Economy (CMIE), explained why using EPFO data as a proxy for job creation is “fraught with danger.”

Referring to the jump in the subscriber base, Vyas wrote: “This is not new employment. It is merely enrollment of employed persons into EPFO.”

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