Growth rate deficit in Indian economy
Dr MK Bhat
A few days ago, while listening to a hot discussion on India’s economic growth rate, my mind was involved by the ill informed anchor who termed slow growth rate up to 1990 as Hindu rate of growth and post 1990 era as era of fast economic growth rate. Perhaps the anchor of the show was overtaken by the fashion of ascribing every thing wrong to the word Hindu otherwise I felt it illogical. The fact is that Hindu rulers have never adopted economic growth rate as a parameter of economic prosperity rather they always focused on economic development. They had stressed on happiness and good life for all.
The better interpretation of present day economic growth rate in the pre and post liberalisation era can be secular growth rate and westernised growth rate. The former was slow because the policy framers lacked focus, were indecisive in their decision making,obsessed with a vague interpretation of socialism. The failure of which worldwide made people to think for real solutions to the problem. The era of high growth rate was designed in a manner to throw everything to winds. It was a willful act to boost crony capitalism and at times the focus was shifted from domestic to international for solution to the various problems. A race for commission in each and every thing started in the name of modernisation. A minuscule portion of population got benefited but there was more inequality and flimsy ideas were put forward for the whole society. It seems that both the western and the socialistic models have failed to deliver at the ground level and it is now appropriate to find solution to our economic problems from our own models of economic development based on justice to all. People need to realise that every thing that works in America may not necessarily give the same fruits in India.
The high growth rate presented these days is just a jugglery of statistics and has nothing to do with the concept of equality, justice and fraternity. It needs heavy social investment to save the system from getting chaotic which a country like India can ill afford.
Any way the so-called high rate of growth is not only faulty but misleading too. Any decision on its basis will only lead to faulty results. Its way of measurement is highly objectionable and needs a complete introspection. It is used as a tool to hide the failures of the government. It is no doubt that the escalating rate of economic growth has helped some to have big malls, luxurious cars, five star culture but denied farmers their share leading to their suicide , swelled the number of people living below poverty line ,made good living a distant dream for the majority. The UN Human Development Report based on the basic facilities available to people has ranked India 134 out of 168 countries. It is no secret that the human development record of Bangladesh is much better than India. It would have been prudent to evaluate the growth of the country on the basis of employment, consumption, availability of basic facilities of life like clean drinking water, education, and medical facilities. A high growth rate without involving people is of no use.
The second biggest thing that is highly debated these days is the exorbitant fiscal deficit at the level of 4.5 per cent of the total GDP. This by all counts stands on a higher level and the only way put forward to reduce this gap between income and expenditure is by foreign investment which at present is hardly 2 per cent of GDP. It seems illogical to portray foreign investment in the retail sector as the only way out to do away with this problem. The foreign retailers have every capability to monopolize the market and it has been their experience in different countries of the world .To believe that they will improve the fate of agriculturists is to befool the innocent people because they will be in the market for their own self interest not charity. They can hardly be restricted to only 51 cities because of India being a signatory to WTO declaration. The goods from different countries of the world will be sold here and the local shopkeepers may have to wind up their business. Government is also advertising that the reduction of subsidies will solve this problem. It hardly thinks in terms of inflation and its catastrophic impact on the general public.
It is no doubt that oil prices comprise a bigger chunk of our import bill and deregulating the same is no solution to the problem. The escalation in the oil prices has a devastating effect in the form of inflation on people. The high excise duty levied on it makes oil a precious commodity and it fuels the inflation in the country. There has been a little attempt to find out the alternative sources of energy. The exports are not increasing and every attempt to curtail the imports is resorted by the authorities. This may only lead to black marketing.
It should control expenditure on populous schemes which are designed with the sole focus on vote-bank. These schemes are becoming the cess pools of corruption and are a burden on others. The country needs to increase investment level. The UN report puts India on a lower level of investment environment .There is a drastic need of good governance to boost the confidence of business. Good governance has been rightly termed as the essence of good economics. The government can overcome the problem of deficits by unearthing the black money in the country .This may require political will on the part of the government.
(The writer is Principal, Maharaja Agrasen Institute of Management, Sector- 22 Rohini Delhi).