FDI In India: Mouth filling but a Vaulting Horse

Lambodar Prasad Dash

For the first time on August 17 this year, Astro-Physicists, Scientist for the first time detected the collision of two neutron stars, which happened at a distance of 130million light years from the earth. They also found that the collision also produced gravitational waves, light with an abundance of precious metal like Gold, platinum. The most astounding galactic activity divulged on 16^th October, after much research and analysis. Where the precious metals went? Have we received the dust of those precious metals? If received, how much? These questions may seem to be much weird and irrelevant to our discussion

Let’s assume that the collision of those neutron stars is like allowing Foreign Direct Investment (FDI) and its impact on a prevailing economy. Which has some immediate effect and some might be detected in the remote past. After the acceptance of Globalisation and subsequent Economic Liberalisation, Every developing country believed that FDI is like “a cosmic scale atom Smasher of energies for beyond humans ever will be capable to build”( what scientist described the Neutron stars collision) which can bring loads of fortunes to their economy. Yes, of course, since its implementation the FDIs proving as boosters to the economy of the developing and third world countries. All are much pleased with its short-term gains, but like the neutron stars collision many of the issues yet to be experienced. Some of them experienced but remain without explanation. 

Now, come precisely to our topic. I have studied many researched articles and papers on FDI, 80% of them equivocal on certain pros and cons. For the last two decades, since the implementation of FDI in India, the protests and criticisms on FDI remain almost limited to the Political debates. There are research works, but most of them lack inductive reasoning or authentic micro-level case studies on the FDI and its impact on the economy.

Indian Government in 1966 and 1985 tried to allow FDI but it failed.  In the late 1990s, during PV Narshima Rao(PMO)-Dr. Manmohan Singh(FM) severely debt-ridden India allowed FDI under the structural economic reform process. In 2006, under Dr Manmohan Singh(PMO) and P. Chidambaram(FM) further liberalised the FDI inflow through an automatic process, which doesn't need Government Permission but a compliance to Reserve Bank of India (RBI).  In 2013, India government made almost all the sectors open to the FDIs. In the Last two years, Under the Modi Government, it gets much enhancement with high voltage publicity on the name of “Make in India”. The Economic doldrums which arise after the Demonetisation and GST, Modi Government jumped quickly with a data sheet to prove that these reformations increased the FDI inflows. But In 2015, the India overtook China and US as the top destination for FDI.

The Organisation for Economic Cooperation and Development (OECD) defines FDI as to take control of owning 10% or more of the business. Businesses that make foreign direct investment are often called as Multi-National Corporations (MNCs) or Multinational Enterprises (MNEs). An MNE may make a direct investment by creating a new foreign enterprise, which called Greenfield investment or by the acquisition of a foreign firm, either called an acquisition of or Brownfield investment.

Since its implementation, Indian Government insisting on the Technological Transformation/up-gradation, Employment Generation, easing Demand-Supply chain, Revenue Generation besides there is a belief that FDI can be a tremendous source of External Capital which can lead economic development.

Now come to the statistical figures, Research works like Sirari and Bohra (2011) on FDI & growth of service sector in India pointed out the growth of service sector to GDP is directly proportional to FDI. I’m here to point out some casual relationship between gloomy economic issues directly linked to FDI. For it, I’m taking three sectors Innovation, Agriculture, and Micro and small Industries especially cottage industries in India.

Mr. Mukharjee In his research paper quoting  Coughlin, Terza and Aromdee (1989, United States) said that the number of potential sites, state per capita income, manufacturing density within a state, better transportation infrastructure, higher unemployment rates and higher expenditures to attract FDI were positively linked to FDI flows. On the other hand, higher wages and higher tax rates had a negative impact on FDI flows.

However, In the Chinese context, based on panel data covering 98 hinterland cities of China for the years 1999 to 2005, Luo et al (2008) found that well-established factors such as natural resources and low labour costs were not important in determining FDI flows to China’s hinterland. Instead, policy incentives and industrial agglomerates were the most important determining factors for FDI flows.

There is no fixed rule which can attract FDI. It depends upon the variety of economic and Political situation of the invested countries. However, two things are noticeable from the above observations, firstly, the Investors have more decisive role than the government of the invested countries, and secondly, the major attraction for the FDI is low input cost both of Material and Human resources for production and Market. It can be explicitly concluded that the Invested country is always at the receiving end.

When we come to our own country, the FDI inflows to it dominated by the Automatic Route and followed by the Reinvested Earnings and acquisition of shares. FDI through Government approval route is gradually declining year on year basis (RBI, Atri Mukherjee).

Fig-1

In the initial years, the FDI was dominated by the retail sector, but later it is shifted to the Service sector. In 2014-15 the FDI inflows to service sector were INR27,369 Cr, in 2015-16 it increased to INR 45,415 Cr and during 2016-17 (March 31) it is INR58, 214 Cr. Between 2000 and 2017 total FDI inflows is INR316,568 Cr, which is highest among any other investment. This is followed by Computer Software & Hardware, Construction Development and Built-up Infrastructure, telecommunication, Automobile Industry and Drugs & Pharmaceuticals. 

But the India’s International Trade (Export and Import) largely dominated by Mineral fuels, Mineral oils (35% of the total imported Goods and 20% of Exported goods) followed by pearls, precious and semi-precious stones (11% & 12% ) and the top destination for export is USA and UAE, which is around 27% of the total exports. While the top two Importers to India are China and UAE, both contributed 22% of the total imports. It shows that in India, the sectors which attract highest FDI are not helping much in the international trade rather targeting domestic market. Now I place an example how the government is totally zilch on the Innovation and technological up-gradation of Indigenous products. The Lather and Lather products accounted almost 21% of the total exports but the FDI inflow to it is negligible i.e. .02%.

As said by the FDI fact sheet (till 2017, March 31), Government of India, since 2000 the Maharashtra (with some varies) was the topmost destination of FDI inflows with 31% of total inflows to India, followed by Punjab/Haryana (New Delhi 20%) , Tamil Nadu(7%), Karnataka(7%), Gujarat(5%) and Andhra Pradesh(4%). It is conspicuous that the economically advanced states receive Lion’s Share of FDI inflows.

Nunnenkamp and Stracke (2007) found a significant positive correlation of FDI with per capita income, population density, per capita bank deposits, telephone density, level of education and per capita net value added in manufacturing in India.

Fig-2

When we are talking about the employment and income growth, the Per capita FDI inflows has no direct link or an overlapping link to the per capita NSDP or Annual wages per worker. Andaman & Nicobar Island has 0% per capita FDI inflow during 2010-11 but the Per capita NSDP 76,883INR and annual wages per worker is 65,831INR, but during the same period Andhra Pradesh received 679INR per capita FDI inflow but the per capita NSDP is much below than A&N i.e. 62, 912INR and annual wages per worker is 61,007INR. Similarly, Goa Received highest per capita FDI inflows and its per capita NSDP is 1, 68,572 INR and annual wages per worker is 1, 26,788 INR. Although Jharkhand got 0% per capita FDI inflow and its annual wages per worker is much higher than that of Goa i.e. 1, 49,847 INR.

Fig-3

Now come to the Agriculture and Allied sector. The FDI inflows to it are below .58%. The total foreign investment is on fertilizers are .17%, Agriculture machinery (.11%), Food processing industries 2.27% (but most of the food processing industries dominated by meat and seafood). There are a thousand varieties of indigenous seeds and farm animals breeds but very few got patented. Now the foreign investment on Genetic Modified seeds is being encouraged by the Government. Some research works on Madhya Pradesh accused the forceful implementation of GM farming to the growing Farmers' suicide incident (Fig-2). At some point, the most developed States, which also attracts a major portion of FDI is unavoidably linked with Farmer deaths. (Fig-3)

Fig-4

The incoherent government policy on the Agriculture already weakened the Farmer's economy. Now to make FDI more attractive to Foreign Investor's government putting unreasonable pressure on the land to create a conducive environment. 

The investment procedures and double taxation avoidance treaties are the major cause of tax heavens. But the government has paid little interest to eradicate the menace. Even Last year, at several occasions Modi Government reiterated to bring reformations in the Mauritius Route (Fig-4) in FDI but no authentic steps have been taken so far. Rather the FDI has found a new route i.e. Singapore to avoid taxation in India. In the next article, we will discuss on the dark side of this international investment routes. 

Modi Government in Reality-Shock

Lambodar Prasad Dash

How much Modi Government trying to stifle the growing piques on the Jay shah's alleged financial gain issue, it is another incident which further exposed the Modi Government to the Reality-Shock Syndrome. Recently, the RBI’s Quarterly Policy Report and Earlier to this the Centre’s financial report on GDP and Economic Survey already made the Government incarcerated to the situation.

Prime Minister Narendra DB Modi and BJP National President Amit Shah (File Photo)

Jay AmitBhai Shah, the only son of most powerful Bharatiya Janata Party (BJP) national president Amit Shah. The Wire, an online media house uncovered the alleged financial misappropriation which gives Jay a whopping 16,000 times monetary gain within 2 years. The amount of truth behind the accusation is yet to be proved (if Modi Government or a judicial proceeding wants). It has put an incorrigible question mark on the submission of the Modi Government and its precision on corruption. Although the issue is not related to any members of the treasury bench for which the government to take the blame, yet it is the subject directly impinge on the party’s very sensitive part, its image.

Before going to the details, it is relevant to quote Tom peters and Nancy Austin from their book “A passion for excellence: The leadership difference”. 

• People have ego and developmental needs ...and they will commit themselves only to the extent that they can see ways of satisfying these needs.
• People cannot be truly motivated by anyone else...That door is locked from inside.
• When people are in an atmosphere of Trust, they will put themselves at risk, only through risk is there growth....reward...self-confidence...leadership.

Now, come straight to the 3rd point, since 2014 Election Campaign Narendra DB Modi time again has reiterated that the “corruption” is the biggest enemy of the country and it is the only hurdle to India’s development. He promised that his mission as Prime Minister is not to enjoy power but to uproot it. He also cautioned that the fight against corruption is not so easy and called the people’s support to be ready to bear the difficulties patiently during these fighting.  People unquestionably believed his Magniloquence. Extended support not only during demonetisation but also in his every disastrous reformation.

Contrary to the situation, during the same time, in recession stuck Brazil People came out to the streets and forced the government to rollback demonetisation. In Brazil, there was widespread resentment, spontaneous Protest sparked overnight. In many Western Countries, it is evident that if the government failed in any economic administration, the people’s remonstration is intense. But, in India the situation is different. People are more forbearing and indulgent towards such situations.

Now, come to the 2nd point, It seems that soon after 4 months of the implementation of demonetisation people de-motivated slowly but surely. As most of the economic reforms could not substantiate the Modi Government’s claim on corruption, Black-Money, Terrorism, Parallel economy, digital transaction, except the government forced surroundings. Rather the economic reforms posed as a stumbling block to the big ticket schemes like “Startup India”, “Make in India”, “Smart City Mission”, and “Skill Development”. Besides this, Modi-Government unable to boost the Export of indigenous products except for software

The Spice of India, most demanding products faced severe hardship during all these years. In the year, 2016-17 (Apr-June) the export reduced to 621.78US$ from 2432.85US $ (2014-15). Agriculture and Processed Food Products Export Development Authority (APEDA) Export performance abridged. In the year 2015-16, total export of Agri and Allied products was 43,369.62INR Cr which is reduced to 6,398INR Cr in 2016-17. PEC, a Government company, primarily engaged in export of projects, engineering equipment and manufactured goods, defense equipment & stores and import of industrial raw materials, bullion and agro commodities also faced financial constraints. Sales turnover reduced from 9780INR Cr (2013-14) to 3746 INR Cr (2016-17). Similarly, the sectors which declined are Processed meat (-77%), Leather and leather manufactures (-6.08%), Chemical and Related Products (-73%). Plastic & Rubber Articles (-2.68%), Base metals (like Iron, Aluminium, Copper) (-6.25%), except machine and Telecom instruments the export of other electronic items reduced. In the IT sector, Software service export growth dropped off (5.6% in 2012-13 to -.7% in 2016-17), IT-BPM export growth reduced from 11.1% (2012) to 7.8% (2017).  All these sectors accounted 40% of the total exported goods and services.

Last but foremost, In the above mentioned psychological traits of people in relation to an organization or a nation, the first assertion is on the people’s ego and development needs, which now are dwindling. As now, when people see that the Modi Government is noiseless on the perpetrators of corruption, Black Money rather their own men has been accused of the series of corruption charges. Employment is not generated as per the Election Manifesto but to a certain extent adding numbers to the unemployment.

It seems that the chest thumping on development and projecting himself “Vikash Purush” (Messiah of development) won’t produce development. The statistical figures of the government itself negate the claim of the Modi Government.  It shows that either Government is suffering from Hemispatial neglect Syndrome (a person who could not see or recognise the other half of the things) or it is a deliberated attempt of manipulation of facts, doctored data and managed publicity to hide its weakness.

For example, the Modi government’s one of the most hyped programs is the rural electrification scheme. The government maintained that even after 70years of Independence many villages having without electricity and they are doing a tremendous job to make all of them electrified. But in reality, before 2014, except Jharkhanda, Bihar, Odisha, UP, WB and Assam all the states achieved electrification between 90-98%.

In the Human development index (HDI) India already gained 4 positions before 4 and within last 3 years the condition not improved well even after the increase of budgetary allocation on social welfare schemes. According to the economic survey report (2016-17) part-2, Indonesia, Brazil, Sri Lanka and Malaysia are far better-performed nations than India. 

T S Venketaraman (Management Crises and Strategies for Growth, The Hindu Speaks on Management) rightly quotes, "... the financial difficulty is a result of several managerial mistakes made months or sometimes years ago. If a manager has misused funds once, he will do the same next time if he is given more money." 

How much optimistic is Modinomics?

Lambodar Prasad Dash

On 5^th October, almost one year after the implementation of Demonetisation, addressing the company secretaries Narendra DB Modi, The Prime Minister of India said, some get a sound sleep at night only after proliferate Pessimistic notion about the Government and on the Economy. According to the Human behavioral psychology, it is a sign of self-soothing expression, but his remark to the critics really mean?

Before digging into the Prime Minister Narendra DB Modi’s Economic policy and how optimistically it is taking the Country’s Economy growth forward, it is amusingly relevant to point out the possible inspiration which shaped his understanding.

Rashtriya Swayamsevak Samgha (RSS) which is the topmost advisory council to the present day BJP government on Statecraft and External affairs mostly influenced by Kautilya @Chanakya. There is no wrong to get inspiration from the great man, who laid the foundation stone of the Democratic Monarchical system and developed a pan Indian Spirit. But it is something abnormal with the brain that thinks which were relevant some 1500yrs ago can be implemented nowadays with exact significance.

Mr. Modi’s sudden announcement of Demonetisation, surprising announcement of various schemes, his Religio-Political gimmicks all are understandable from a chapter of Artha Shastra; the sloka (5.2.39-45) narrates how to exploit the gullibility of the people.(Kautilya- The Artha Shastra, L N Rangarajan, penguin)These include:

-Building overnight, as if it happened by a miracle, a temple or a sanctuary and promote the holding of fairs and festivals in honour of the miraculous deity;

- Exploiting an unnatural happening, such as an unseasonal flower or fruit, by making it into a divine phenomenon;

- Using secret agents to frighten people into making offerings to drive away an evil spirit;

- Playing tricks on people by showing a cobra apparently with many heads, or a stone cobra coming alive;

- selling remedies against evil occult manifestations.

If people are not taken in so easily, they should be frightened into doing so.

The next chapter also elaborates (5.2. 46-51) other methods of cheating to collect revenue. 

The Artha Shastra is not purely like modern day Economics. It is a treatise on statecraft and affairs of government and governed. Narendra Modi led government at the centre lacks this basic understanding about the economics. Why and How?

Firstly, the entire economic edifice and the administrative setup both good and bad are inherited from the previous government. But the Modi government has been evasive on this theory. Except for one or two instances, for some unavoidable circumstances, Modi government accepted the truth.

Secondly, which is, of course, the most perilous part that they always apprehensive to prove their stand right.

There may be a strong reason behind such approach; Firstly, BJP came to power by tarnishing every activity, schemes of the Congress-led UPA government, even though most of them were quite good and noble.  So it will backfire if they recognise it publicly. Secondly, if they recognise the legacy of the previous government, there leaves little room for them to prove they are doing the best.

This is the fundamental mistake of the Modi government which makes them further secretive in making economic and administrative affairs.

Since my focus is on the economic situation, with an apology I am taking out the administrative and Political issues and reserve it for another article.

Economics is Primary cogwheel of a person’s life. Throughout one’s life, economics will play a major role in determining what one do and how happy he is doing it. Not only individual’s life Economics equally vital for a country. It influences the affairs of the government and determines the wellbeing of the nation as a whole.

The “Laissez-faire” philosophy which since the beginning of the 19^th century has been the driving force to determine the course of democracy and the role of the government is now becoming more complex. The advancement of new technologies basically Digitisation there is a growing demand for the de-materialization, de-monetisation, and democratisation of information, currency, and resources. The contours of Economics are also expanding and overlapping other areas. As the Income is largely depending on how effectively the nation or the individual participating in the economic process. Every step towards a more intricate economy brings new problems and economic interrelationships.

However, it seems that Modi government has learned the importance of the above facts. Hence with more enthusiasm, it is trying to implement the digital transactions. It demonetised, Simplified the Tax regime, wants to store the electronic database of every individual’s. But the Truth is, all these noble economic steps inherited from the previous government. Since Modi Government inherited the idea only not the understanding, it is facing a setback in every implementation.

In my previous article, “countering the economic crisis, Modi govt is on the horns of dilemma” I have analysed how India had made the standstill economy vibrant and successfully countered the 2008- 2010 global financial crisis and put the country’s GDP all-time high at +9%. Modi Government inherited a hale and hearty economy with some revolutionary schemes to implement further. The concept of the healthy economic scenario is neither a big leap nor total shifting of the track, but a sustainable and equitable development.

Between 2004 and 2012 most states did well in poverty alleviation. The Reduction of the poverty was 10 to 15 percent. Although the poverty in some states like Nagaland, Mizoram, Arunachal Pradesh, Gujarat increased but the well known poor states like Bihar, MP, UP, Odisha, Rajasthan improved their “poverty reduction rank.” Other government data indicates that the increase in the urban poverty and large-scale migration to urban areas.

An economic life of a rural person is quite different from an urbanite. Even though they earn less than their urban counterparts they are somehow protected from the immediate impact of the unstable economic situation. Since, they highly relied on the simple life, dependence on home/local produced foods/goods, their monotonous diet, etc. Most of the Village folks live out his years never going more than 25miles (a rough estimation) from his home village.

Most of the Demonetisation sufferers are the urban poor and lower income groups, who left the village and earned their livelihood from the unorganised sector. There is no authentic data to show how much the unorganised sector affected by the demonetisation disaster. What the figures government are disseminating, likely to hoodwink the faults.

Many ministers including Finance minister, High rank officers narrated it was to give bolt to “Parallel Economy” run by “Black Money.” But there is no applied term in economics to describe Black Money; it is unaccounted money or untaxed money laundered in Tax heavens. The Parallel economy in its general usage refers to Black market. But in economics it has no negative sense, but a definition to bring more effective monitoring techniques. Economists like Feige defined it as, “hidden economy as including those economic activities which go unreported or are unmeasured by the prevailing techniques for monitoring economic activities.”

However, it is sure that the role of Hard currency for most of the activities in Black Market is highly implausible. On the other side there is an innocent world, where a Parallel economy has prevailed since time immemorial. It is the rural area which suffered most (though the impact varies from state to state depending upon the economic activities). How scanty the earning, it is hard earned from the unorganised sector. It never deposited in Banks, maneuvered by the unregistered local money lenders.

My firsthand experience says the demonetisation triggered the reverse migration. Many returned to the village. Ironically, before demonetisation, Modi Government contracted the budget allocation for many social welfare schemes. Due to contraction of the revenue allocation State governments were reluctant to spend on Infrastructure. The mining sector was under regression. The Market was highly susceptible because of the possible implementation of new tax order. Agriculture was under stress. Those who returned to villages found no employment immediately. For them, two optioned opened either they borrow money or sell and mortgage what they have. Modi Government totally closed its eye to all these factors.

Good Economy produces two things one is “Constant” another is “Equilibrium”. In Constant, like a cogwheel, it pulsates other things to run. Secondly, when a new economic composition brought forth it must give rise to a state of equilibrium. If the new economic order brings any capricious result it never termed as good economy.

In contrary, Modi Government arguably unwavering by debating that it is quite common to protest any novel Idea. However, this is rhetoric filled with a fallacy of Logic and reason.

Without rectification, the economic order, either in deliberation to implement its political agenda or to satiate its inferiority complex Modi Government has unabated in committing series of economic mistakes. It is a general sense of understanding that when the economic condition is highly volatile, one should not go for external aggression or become a perpetrator to the warlike situation. But Modi Government increased Defense budget, Undergone two warlike situations – Pathankot and Doklam Standoff, did surgical strikes. Conversely, in a fully employed economy, we must choose between guns and butter, If we use a big chunk of our productive resource for national defense our standard of living in civilian good is going to be correspondingly lower.

It is quite amazing that in one hand Modi government is talking to take India to a new height and showing dreams to make it Master of the World (Viswa Guru), on the other hand, it is tightening the noose around a healthy economy.

Before concluding my analysis, it is relevant to point out a major issue which may bring disaster to the Indian economy in the near future. As a close watcher of the world especially Indian Economy, I felt that the consumer behaviour of the Indians highly manipulated not by the market but by the Ruling Party (!). The demand for the variant goods now squeezed (may be due to various economic reasons) but there is a selective dissemination of demands, orientation for what to choose and what not to be chosen, imposed preference for a particular variety of goods. When we are competing with the world especially a neighboring country (China) which is very strong in the retail chain, such practice may bring the catastrophic result to many MSME sector and Innovations. It is imperative from the fact world market is skeptical to the “Make in India” products; Even The country’s own defense sector is not willing to absorb it.

Last though not the least, Now Modi Government planning for another blunder. It proposed to hold simultaneous elections. The argument for it is to reduce the burden of expenditure. But Modi Government should not forget that the Economy is a perennial process. The reformation only can be fruitful when you work persistently by remaining on the track. The early election may in distance future give some relaxation to the economy but the state exchequer which is already under the stress could be more brittle with this step.

By general agreement, it is the job of government to establish and enforce the basic rules to enable men to deal effectively together. Without understanding this, the slogan “collective effort, inclusive growth” will be an epithet of the abysmal dismay of Indian Economy. 

Countering the Economic Crisis, Modi Govt is on the horns of dilemma

Lambodar Prasad Dash

I’m neither a great economist like Dr Manmohan Singh, Ex-Prime Minister of India who can predict accurate figures on Economic Crisis nor a panel expert in live newsrooms who are full of biased and half-knowledge of the economic situation. I belong to a state where except 100 odd law makers, mining owners, industrialists, and High-rank officers all are lower middle class or poor. I usually travel extensively through rural Odisha and some part of eastern India. From my first hand experience of the economic situation I can say that the present Economic situation in India is like on the horns of dilemma.

Prime Minister Narendra Modi had Visualised a “New India”, in other words to make some of the Indian cities as “showcase” of development. He knew the situation of urban-centric development, as in 2011 among 100 fastest growing cities of the world India has 25.  He also well calculated the strength and their aspirations of the youth population of India, which stood almost 50% of the total 132 crore populations.  Another important aspect of the youth population is the percentage of married women in younger age groups (15-19) has declined drastically from 70% (1961) to only 20% (2011). Student enrolment in higher education if highest which is almost 80%. With these demographic figures this decade has seen a major shift of people’s expectation and political orientation.

Since the days of major economic reforms in 1990s, the Indian economy gradually started competing with world’s other nearly developed countries especially Brazil, South Africa, China. The per capita income also increased from 1130 US dollar in 2006 to 1646 US dollar in 2014. The economy of India at 2014 was almost strong and vibrant. Pockets of people were deep enough to invest in more education, Health, housing. The labour statistics also shifted from agriculture to infrastructure & mining. The internal migration from Rural India to Urban areas is also increased manifold during the decade. In 2001 census the total internal migration stands at around 31 crore, whereas in 2011 it is 43.36 crore. According to the recent Economic Survey of India-2016-17, the growth of migration for economic reasons is 4.5% annually (!)

The UPA government total spending on social welfare schemes stood 1.7% of the total GDP. The BJP led NDA government in the last fiscal (2016-17) increased the spending but the overall percentage remained almost at the previous figure. Worsening the situation further Narendra Modi Government squeezed the diversification of social welfare schemes.

Initially, the Narendra Modi’s development model seems to be correct when it was at planning level but latter, at implementation stage it developed many technical glitches. The major cause of these problems is the immaturity to the changing economic scenarios. For example, according to the Asian Development Bank estimation for 2014-15 the Extreme Poverty percentage of India stood at 21.9% , which means around 30 crore people are living under this category. But according to the World Poverty Clock real time data (on 9.45pm, 21/09/2017) the total poverty population in India stood at 14.1% of the total world population which is whooping 91 crore people are below extreme poverty line (per day income below 1.9 US Dollar). In such situation, Modi Government started a direct money transfer scheme under Ambitious Pradhan Mantri Ujjwala Yojana (PMUY) with free LPG connection to 5 crore families below poverty line. There are many instances where as a rural poor sold its LPG cylinder to another affluent person or many subscribing these benefits on their names. These instances are further increased after the fall of employment due to Demonetization. The poor families used this benefit as a source of income.

Similarly in the Smart City Mission the rate of Rural to Urban migration, the percentage of migration for economic reason not taken in to account. For example, according to an NGO working for slum areas in Odisha, within last three years the slum population of Bhubaneswar increased, 6-7 new unauthorised slums established having population more than 7 thousand. Government is striving between their resettlement and implementation of Smart City. In the September, 2017 monsoon session Odisha assembly passed the slum dwellers act which guarantees 160 square feet land for the construction of house.  This act further made the vision of smart city messy.

After criticisms from many quarters for growing unemployment, weakening GDP, Growing fiscal deficits,  fattening the NPA of Banks, GST impinged inflation on 20 September, 2017 an expert committing meeting was chaired by Finance Minister Arun Jaitley, where it was decided that Government soon to revive the investment plans to counter the ongoing economic crisis. The present economic crisis being felt at Macro level, the shifting of investment plans might create a ruckus in FDI investments. The investors will be more skeptical towards the government. This situation might create more ripples than pacifying the situation.  His stress for the Universal basic income scheme indicates the decreasing funding of public welfare schemes and increase schemes for Job creation. This is quite difficult to manage. If Government is mulling for more shifting of tax slabs and structures the manufacturing market will be put under threat, which is already under pressure. Last though not the least concern, whether the new shift of investment can fulfill the aspirations and dreams of the young generation which were largely hyped by Narendra Modi during his 2014 election campaign.