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Basically, Modi has followed a policy of surreptitiously taxing the middle class and poor, through indirect taxes such import duties on consumer goods, excise duties on petroleum products, and across the board duty protection to commodity producers, and funneling this pool

of taxes to fund subsidies and tax cuts to corporates.

The amounts involved are not small. A rough estimate is that incremental duties on petroleum products alone amount to incremental taxation on consumers to the extent of about INR, 2 Trillion or about 1% of GDP. Add up all of them, and my guess is that since 2014, consumers have been taxed to the extent of 2% of GDP, directly or indirectly, and these funds have largely gone to the corporate sector via tax cuts and other subsidies, disguised either as protection from imports and/or production linked incentives.

As you can see from the Graph of disposable income of consumers, Modis tax measures have flattened consumers disposable income since 2018. Given the general slump in the economy, the prospects of a consumer led recovery in the economy are pretty slim. Also not shown here for lack of space, there is considerable evidence that consumers had binged on credit before 2018 and are now de-leveraging.

The fact is that if the 2% of GDP that has been skimmed from consumers to the corporate sectors had led to an similar increase in private investment in the economy, GDP growth would not have tapered off, and the need for Govt to prop up growth through borrowings, would not arise. But the harsh fact is, while tycoons love the additional profit bonanza coming their way, they have used these to pair down borrowings, rather than invest, and this shows the extent of their faith in the sustainability of Modis policies. His capricious decision making doesnt inspire confidence either.

So the 2% of GDP that Modi has scrounged from the middle class and gifted to tycoons has borne no fruit for the economy. Perhaps not even for Modi, unless you count buoyant contributions to anonymous electoral bonds as returns. Incidentally, they have proved to be the best investment for tycoons considering the 2% in GDP that has accrued to them as windfall profits in return.

On the employment front, the situation is rather alarming. First consider the big picture before the pandemic as shown in the graph on employment.

Employment rate has been falling since 2012, and has further dropped from 49.9% in 2014, to 47.3 in 2019. Each percentage drop in employment rate translates roughly into half a million jobs lost. These job losses are in the organized sector only.

In the un-organized sector for which no statistics are available, on a conservative basis, a percentage point drop in employment rate means job losses of about 2.5 million. Since 2014, India has lost about 6 million jobs in the economy, before the pandemic struck. Forget about job growth for a growing population. We have fewer jobs now than in 2014.

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The poor and the middle class taxed like never before by the '56 inch' economy - National Herald