Modi Govt's Economic Crisis: Who Bears the Cost?

The Cost Falls on Common Citizens

Economist and social commentator Anand Teltumbde has raised a pointed critique of the Modi administration's approach to India's economic challenges. His core argument: the government is asking ordinary Indians to make sacrifices for an economic crisis that, he contends, stems from policy failures at the highest levels of decision-making.

This observation arrives at a moment when India's growth trajectory has faced headwinds. Multiple sectors report slowing demand, investment sentiment remains cautious, and wage pressures mount even as businesses cite cost constraints. The narrative from policymakers emphasises patience, structural reform, and long-term vision. Yet for millions of workers, small business owners, and salaried professionals, the immediate pinch is real.

Policy Decisions Under Scrutiny

Teltumbde's accusation points to government-led economic decisions as the root cause of current difficulties. Without naming specific policies explicitly in the framing cited, the broader critique encompasses macroeconomic management, fiscal choices, and structural interventions undertaken since 2014.

Critics argue that decisions such as the rapid implementation of the Goods and Services Tax (GST), agrarian policy shifts, and monetary tightening phases have had cascading effects on consumer spending, working-class income stability, and medium-enterprise viability. The demonetisation shock of 2016, while now years past, continued to reverberate through informal economy structures and small-scale operations.

Who Pays the Price?

The sacrifice narrative takes concrete form in employment trends, wage stagnation, and reduced purchasing power among India's working and lower-middle classes. Data from labour agencies and industry bodies consistently show:

• Manufacturing and construction sectors reporting job losses or frozen hiring
• Informal workers facing reduced hours and income volatility
• Small traders and retailers squeezed by regulatory compliance costs and shrinking customer bases
• Agricultural producers battling input cost inflation and price volatility

Meanwhile, large corporations maintain pricing power, and financial markets have remained relatively resilient for asset holders. The distributional asymmetry—where losses are socialised across the working and lower-middle classes while gains accrue narrowly—forms the crux of Teltumbde's argument.

The Structural Inequality Question

Whose Recovery Plan Is It?

Government stimulus and recovery measures, when deployed, often flow through institutional channels: bank lending, corporate subsidies, infrastructure contracts. These benefit entities with collateral, political connections, and scale. A daily wage labourer or street vendor cannot access a ₹10 crore export credit facility or infrastructure construction contract.

Conversely, austerity measures—whether in public sector recruitment freezes, reduced welfare spending, or user fee increases—land hardest on those without private safety nets. When bus fares rise or education fees increase, the impact cascades through families living paycheque to paycheque.

The Narrative Gap

Government communications typically frame economic challenges as temporary, cyclical phenomena requiring patience and structural adjustment. The message to citizens: trust the process, sacrifices today yield dividends tomorrow. Yet for those without inherited wealth or secure employment, tomorrow's promise offers cold comfort against today's hunger.

Teltumbde's critique highlights this narrative disconnect. When a government asks its poorest citizens to absorb economic shocks—through reduced services, job insecurity, and declining real wages—while claiming to have no responsibility for the crisis itself, the social contract weakens.

Broader Economic Context

India's growth rate, while still among the world's highest, has decelerated from the 2015–2017 average of 7–8% to lower levels in recent years. The pandemic delivered additional shocks, though India's nominal GDP recovery has been faster than some peers.

However, nominal recovery masks real hardship. Inflation in food and essentials has eroded savings. Corporate profit margins remain healthy even as wage growth lags. Credit conditions have tightened for small and medium enterprises, choking investment and job creation in labour-intensive sectors.

The fiscal position offers limited room for large-scale counter-cyclical stimulus. Defence and interest spending consume rising shares of the budget. This leaves discretionary social spending—healthcare, education, welfare—vulnerable to compression, further burdening those dependent on public services.

The Accountability Question

Teltumbde's framing raises a governance question that transcends partisan politics: when economic policy fails to deliver shared prosperity, who bears responsibility? And on whom should adjustment costs fall?

Conventional economic theory suggests market adjustments distribute pain broadly. In reality, institutional power, asset ownership, and labour market position determine who suffers and who prospers during slowdowns. A senior executive with equity options, a farmer with irrigation assets, and a construction labourer experience the same GDP slowdown in radically different ways.

The implicit charge in Teltumbde's argument: policymakers who claim credit for growth should also acknowledge culpability for contraction. Asking ordinary citizens to tighten their belts while shielding institutional interests and powerful constituencies appears, at minimum, ethically inconsistent.

India's economic challenges are real and multifaceted. Solutions require difficult choices. But the fairness of those choices—and whether sacrifices are distributed equitably—remains a legitimate subject of democratic debate.