Modi risks losing focus on India’s ailing economy as protests build

Bloomberg

A new law on Indian citizenship is threatening to pull Prime Minister Narendra Modi’s focus away from a flagging economy as protests and criticism builds against the divisive plan.
The government was forced to call in the army to quell protests in some parts of the country after the parliament passed legislation that will prevent undocumented Muslim migrants from three neighbouring countries becoming citizens.
Less than a month ago, Modi’s government was ramping up programs to help boost economic growth from a six-year low of 4.5%. At the same time, the Reserve Bank of India has cut interest rates five times this year to support growth. Still, there’s little sign of a revival with consumer demand and investment remaining weak.
The protests risks taking the government’s attention away from immediate problems facing the economy.
Unemployment is at a more than four-decade high, a drag on consumer confidence and spending in an economy where consumption makes up about 60% of GDP.

Finance Minister Nirmala Sitharaman met with reporters on Friday to share the progress on measures unveiled by the government so far to revive consumption. But she parried questions on whether the slowdown has bottomed out.
“I am not engaging in predicting where the economy is right now, but I am focusing on working to address issues,” Sitharaman said.
The new law “takes the focus away from important economic issues,” said Prabhat Patnaik, an economist and a professor emeritus at the Jawaharlal Nehru University in New Delhi. “The more you have disruptions to normal life, the more the impact on economy and production.”