Almost a year into power, Prime Minister Narendra Modi’s body language is not what it used to be when he took the reins of the NDA government amidst heightened expectations among various constituencies – the young job seekers, farmers, domestic and global investors.

A robust economic revival and benefits flowing from it is what Modi had offered these constituencies during his high-decibel election campaign. On this count alone, the NDA government looks seriously adrift. The capitalist class and foreign investing community, which so enthusiastically backed Modi, are disillusioned, to say the very least. Most of the erstwhile vocal Modi supporters among the investing class say they are embarrassed to see that nothing much has changed in the way the economy is being run. In many critical policy domains, it is just old wine in old bottle, they say. While still giving Modi some benefit of doubt because he is “well-intentioned and wants to help the industry”, some sympathetic capitalists like Ratan Tata are urging investors to be a little more patient. Some who have openly been vocal about the drift in the government’s decision-making process, like HDFC Chairman Deepak Parekh, have received mild rebuke. The most vocal among the global investing community is the legendary American investor Jim Rogers who chose not to mince words last week and said, “Modi is all talk, no action”.

This sentiment has echoed through the Foreign Institutional Investor (FII) community which has substantially down scaled its original projection for the growth of Sensex by this year end. Earlier reputed FII research houses were projecting the BSE Sensex to reach 33,000 by December 2015. Now they have formally re-rated it to remain flat, in the current range of 28,000 to 29,000.

This shows that FII enthusiasm about India is waning this year and their attention is shifting back to China and other emerging economies. This is reflecting in a big growth-nearly 20 per cent– in China’s stock index this year as compared to a flattish trajectory of the Indian stock market. This market stagnation is corroborated by the real economy numbers on the ground. Both Finance Minister Arun Jaitley and Prime Minister Modi declared last July that the economy had bottomed out decisively. But things have turned out differently. The real numbers on the ground are there for all to see. Reputed agriculture economist Professor Ashok Gulati, who is also a member of the agriculture cell at Niti Aayog recently wrote an article saying final growth figures for the farm sector in 2014-15 could be zero, even negative. This could have a spillover effect in 2015-16 given the ongoing distress in the farm economy and predictions of a weak monsoon. Since rural incomes have a big impact on demand for consumer products, we could see a delay in industrial growth recovery. Already we are seeing reports of how farm households have no surplus to spend on marriages and other social celebrations this year.

Industrial investment is not picking up also because there is a huge overcapacity already. Industry is working at only 65 per cent capacity and there is very little sign as yet of an uptick in consumer demand. Industry typically starts planning for new investments when its usage of existing production capacity crosses 85 per cent to 90 per cent. Current capacity utilization is way below this threshold. This is also reflecting in the latest core sector production figures released by the government for the month of March. Core sectors like steel, cement,coal, electricity, crude oil, natural gas and fertilizers showed a negative growth in March. A shrinkage in growth has happened for the first time in 17 months. The consistently negative export growth so far this year is equally worrisome. Things are looking quite dismal, overall. So GDP growth of 7.4 per cent in 2014-15 could be an over-estimate even going by the new GDP series. The projection of 8-8.5 per cent GDP growth in 2015-16 also looks uncertain.

The government is aware that the private sector is not coming forward to invest quickly. So Modi and Jaitley have embarked on a strategy, partly reflected in the Union budget, to drive massive investment through the public sector. But the actual reading of the ground situation shows that the targets set may be too stiff. Indian Railways have promised to invest Rs. 1 lakh crore in 2015-16 and Rs.8.5 lakh crore over five years. It is not clear how the Railways bureaucracy is preparing to increase investments on such a scale. The same is true for other public sector units (PSUs) linked to coal, power, gas, steel etc. If the PSUs had indeed scaled up investments since last year, the core sector growth would not have been negative in March.

The investing class is largely disappointed with Prime Minister Narendra Modi because he promised them big legislative reforms relating to land acquisition, labour practices and tax practices. On all three counts the investors are somewhat disillusioned, though Modi continues to mollify them saying things will improve. On the predatory tax regime, foreign and domestic investors are far from satisfied. On land and labour law reforms, the Modi government has bitten off more than it could chew. The result is a bitter political stand-off being witnessed on the land ordinance between the BJP and the opposition, with NDA allies and Sangh Parivar elements sitting on the fence. On labour reforms, the Centre has backtracked and left it to the BJP states to do the needful.

The political narrative playing out has painted the Prime Minister as “anti-farmer” because of the manner in which his government is pressing on with the land ordinance in the midst of a general farm economy crisis. The strain of all this is showing on the PM now. Narendra Modi has become so defensive that he proclaimed twice within ten days that his government is not acquiring land or making policies for Mukesh Ambani. No Prime Minister has ever sought to communicate his or her policies in such a defensive tone.

Interestingly, a recent reply to an RTI application filed before the Finance Ministry revealed that only 8 per cent of all pending investment projects are stalled because of land acquisition problems. General market conditions (including global headwinds) and lack of promoter interest are cited as the bigger reasons. This sentiment seems to be affecting Modi’s “Make in India” project as well.

There is a need to do a more objective diagnosis of why investments are just not working out. While in the opposition, Modi blamed everything on UPA’s policy paralysis. Now in government, Modi is facing similar problems. The NDA must introspect why the economy is not picking up significantly even after oil prices have fallen by over 40 per cent. There are many underlying and unresolved political economy contradictions which need to be studied with greater rigour. Thomas Piketty, author of “Capital in the 21st Century” has argued that when inequality exceeds a critical level, economic rationality becomes the enemy of democratic rationality.

Needless to say democratic rationality prevails in the end.

(M.K. Venu is Executive Editor of Amar Ujala publications group)