Spotlight
New Delhi, 4 December
2017
Poor’s Tardy Consumption
IS GDP GROWTH THE ANSWER?
By Dhurjati Mukherjee
India’s consumption
growth has experienced nothing short of an explosion over the last two-three
decades according to reports. Importantly, the steady rise in the country’s
national income over the period 2006-2012 at a compound annual growth rate of
13% clearly had a primary role in driving annum growth in the private final
consumption expenditure over this period.
Besides, even after the
national income growth slowed down during 2012- 2017 to 12.4%, consumption
growth recorded at an average of 13.6% over the period. Reports also indicate
that despite a slowdown on income growth, employment growth as well as
networks’ growth, consumption growth remained strong.
It is no secret that
employment growth came to a standstill and is a subject of intense debate as since
2012 there is lack of expansion in the industrial sector, increase in
automation and subdued tendency in sectors like construction.
Obviously, the question
arises that if income growth, employment growth and network growth remain
compressed over the next few years, then can consumption growth remain
unaffected?
Given that there is a
widening disparity between incomes of the upper and lower segments of society which
has been increasing over the years. In fact, a recent paper by Lucas Chancel
and Thomas Piketty rightly concluded that income growth of the top 10% grew at
a much faster rate than the average, while income growth of the balance 90%
fell below average.
Moreover, the increasing
wealth concentration among the rich has been corroborated by Credit Suisse Global Wealth
Report 2016 wherein it revealed that the top 1% which owned
36.8% of the country’s wealth in 2000; now owns close to 58% of it. The global
average is just 50%. An Oxfam 2017 report showed that 57 Indian billionaires own as much
as the bottom 70% of the population.
Thus, it can be
easily be concluded that consumption uptrend that is witnessed is mainly due to
the increase in expenditure of the upper sections who mostly reside in metros
and big cities. Apart from this class, a certain section of the middle income
groups, who work in the formal sector in Government and private sectors or have
their own business are quite well off and capable of increasing their
consumption expenditure.
Moreover, current
studies clearly indicate that the economically weaker sections and even the
lower class are not capable enough to increase their expenditure except for
essentials of livelihood. Pertinently, it would not be out of turn to say that
there are two India’s within the country --- one comprising 5-6% or a little
more --- who are well off and increase their consumption expenditure on various
fronts and the other 80-85 % who are just making both ends meet. Within the
latter group, 50% are indeed struggling for existence.
Though former Prime
Minister Manmohan Singh recently maintained that the principle one-person-one-vote
has put unprecedented political power in the hands of a hitherto marginalized
90% of the country’s population is absolutely incorrect. This section votes
without knowing the political agenda of the Party and has little knowledge of
the candidate.
Further, as true
decentralization has not come into practice, the grass-root organizations have
little power to finalize and carry out projects that may be beneficial to the
masses.
The other point made
by him was that the Planning Commission now Niti Aayog was destined to ensure
that inequality did not increase with growth in the economy. But it is well
known that the Commission failed to achieve its objective, as various studies
undertaken from time to time have revealed.
It is indeed
surprising that a respected politician like Manmohan Singh would make such
theoretical propositions without outlining the causes of the failure of
development planning in the country.
Undeniably, economic
growth has benefitted the rich and middle income sections as everything has
been planned to suit their interests. They have such a high purchasing power
that even foreign manufacturers and traders want to enter India to sell their
consumer products. One may mention here that in metros and big cities, most
people have at least two mobiles, both costing above Rs 10,000 or higher.
Scandalously, most of
the measures the Government has been taking are not aimed at uplifting the
conditions of the poor and marginalized sections. Modernizations of airports,
bullet trains and various sops to corporates or even helping the private sector
by giving land etc. at cheap rates to set up schools and nursing homes, where charges
are very high, even beyond the capacity of the lower middle income groups, are certainly
not in the interest of the poor.
Any wonder, there is a
clamour for reducing the GST rates in some sectors. Sadly, there is no organized
force for helping small farmers and landless farm labourers.
Clearly,
real consumption of the masses is imperative which can increase if the earning
capacity of the impoverished sections goes up. For this to happen, the whole
plan and prgoramme towards rejuvenation of the rural sector has to change and
this can only happen if our politicians and planners have a genuine concern and
grass-root approach.
Notably,
our system of governance, real dedication and sincerity towards increasing
consumption levels for a healthy living has to be ensured. A plan has to be
evolved in this regard so that there is a steady increase in incomes in the
next two-three years.
In
sum, unless real incomes of the rural population increase, poverty would continue
to haunt villages. Hence, our leaders should focus more attention on trying to
remove farmers’ distress by doing what is necessary at this juncture along-with
strict monitoring of welfare schemes.
To
ensure good governance, retired Government officials, specially from the armed
forces, academics and senior activists could be directed to review various
welfare programmes at the district and sub-divisional levels, if necessary and
the block levels as well.
They
need to review the benefits received by stakeholders and try to address their
problems. This could improve performance and give a new direction to effective
implementation and might help in boosting consumption of the bottom 20% of the
population. ---- INFA
(Copyright, India
News & Feature Alliance)
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