Events
&Issues
New Delhi, 5 December 2018
New GDP Data
JUGGLERY OF GROWTH FIGURES
By Dhurjati Mukherjee
The recent
re-estimation of GDP using 2011-12 as the base year has created a controversy
and not without reason as this lowers India’s growth during the UPA regime. In
August, an expert panel set up by National Statistical Commission and headed by
economist Sudipto Mondle found that 10 years of UPA, propelled India’s growth
by an average 8 per cent per annum, but the new CSO estimation reduced it to
6.7 per cent in nine years against the 7.3 per cent in the four years of NDA
regime.
Whatever may be the
implications of the debate amongst the BJP and the Congress about the
legitimacy of the data, it is a fact that investment has been around 26 per
cent of total income now compared to 36 per cent during 2007. Moreover, States
such as Punjab, Maharashtra and Gujarat, once among the wealthiest are in
turmoil. Distress signals are evident in every corner of the economy, specially
the farm sector, where recently the farmers staged a demonstration just the
other day in Delhi, demanding a nationwide loan waiver and a few months back
launching a similar protest in Mumbai.
An economist friend
of mine regretted the fact that politicians talk about growth and try to
mislead the people by showing that growth is an indicator of development. It is
a fact that growth and development are not synonymous and the state of
grass-root development that benefits the people at the base level has been
rather poor in the country over the years. It is indeed surprising that even
educated people tend to believe that a high GDP growth finds reflection in
development matters.
As is well known, the
structure of our planning process is top down, i.e. centralisation is very much
manifest. The planners and politicians are all urban centric and have little
time to think of the villages in remote and backward districts of the country.
Moreover, it is an accepted fact that the problems that exist in these areas
are indeed immense and huge resources would be required to uplift their
conditions.
Political parties are
aware of these aspects but have little resources to revive these. Building
giant size statues, starting bullet trains, increasing defence expenditure
though not improving the conditions of soldiers, who are guarding our borders,
spending huge sums for building bridges, setting up toilets with or without
water and the like are gimmicks that go down well with the rich and the middle
class. Moreover, these expenditures ensure a cut in the money spent (commission)
for the party in power as interests of business groups are involved.
The highlight of all
talk relating to gearing up the economy lies in predicting a higher GDP for the
current year and also possibly the next. But over the years, there has been
very little development in the backward and tribal regions of the State if one
core areas such as considers health and nutrition, education, sanitary
conditions, shelter, child labour etc. Moreover, hunger still exists and there
is widespread malnutrition as even government surveys have indicated.
Moreover, high GDP
growth has unfortunately been accompanied by a slowing job growth, according to
a recent report titled The State of
Working India 2018 of Azim Premji University. Though much euphoria has been
generated by India jumping 23 places, Chairperson of the Centre for Informal
Sector & Labour Studies of Jawaharlal Nehru University and one of the
authors of the report, Prof. Santosh Mehrotra, observed that ease of doing
business or high GDP growth has hardly any correlation with job creation. One
may mention here that in early 80s a sum of Rs 1 crore of real fixed capital
(at 2015 prices) supported around 90 jobs in the organised manufacturing sector,
while in 2010 this had fallen to just 10 jobs. The most pertinent problem of
unemployment cannot be solved by high growth but only through grass-root
development.
It is not known why
Prime Minister Modi has been giving so much importance to the ‘ease of doing
business’ that helped to push the country to 77 in the World Bank ranking for
2019 that was published this year from 142 for 2015 and 100 in 2018. There is
no harm in necessary reforms in this regard and making procedures easier to
attract foreign companies to operate in the country but it should be ensured
that they adhere to the rules of the land and help the development process.
Just increasing the size of the economy to $5 trillion without any resultant
effects may not help the masses.
Possibly the only
positive decision has been the Prime Minister unveiling a 12-point action plan
recently for micro, small and medium enterprises (MSMEs), including subsidised
loans, higher procurement and easier labour along with green rules to revitalise
this sector which has been ailing for quite some time. In the plan, there is a
provision for a two per cent interest subsidy for new or incremental loans of
up to Rs 1 crore taken by MSME units through a new portal that promises to
approve loans in 59 minutes is seen to be the most significant. In a situation
of a credit crunch, sluggish manufacturing activity and increased competition
from imports, specially from China, this could help revival of micro and small
units and generating jobs.
Along with this,
incentives should be specially geared for micro units in rural and semi-urban
areas so that young entrepreneurs could not only make a living but also create
a few jobs. The spiralling effect would help improve the economic environment
which is what is absolutely necessary at this juncture.
Surprisingly, the
neglect of the rural sector – obviously to run after growth and big industry –
has been flawed idea of development. Nobody had the vision to point out that
with computerisation, heavy and even medium industry has the potential to
create increasing number of jobs to keep pace with demand.
In such a scenario,
it is quite obvious that the disparities in income between the urban and rural
sectors are widening as opportunities are more in cities and there is all-round
poverty and squalor in the villages. Even if one considers the much-talked of
city, Ayodhya (renamed from the earlier Faizabad), and compares it with that of
Nagpur or Bhopal, the wide per capita income will be manifest. And Modi talks
of setting up an airport without bothering to examine the condition of health
facilities existing there.
What needs to be
pointed out here is that some young politicians lately, including the Congress President
Rahul Gandhi, have been focussing the disparity that exists in the country. It
is now time not to harp on growth but to focus on inclusive development and
follow our late President Abdul Kalam, who voiced the need for PURA (providing
urban facilities in rural areas). How quickly this will become a reality
remains to be seen so that livelihood conditions improve through enhanced
earnings of the rural populace.
The focus thus cannot
and should not be on growth per se but on real development that takes place at
grass-root levels. The jugglery with growth figures does not impress the aam janata who are only interested to
see the actual results and the course of real development taking place in the
country, not just relating to the economically weaker sections but also the
lower income groups.---INFA
(Copyright, India
News & Feature Alliance)
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