The Reserve Bank Governor’s warning!

Was it worded in the politically incorrect language?

Raghuram_RajanThe highly-rated RBI Governor, Raghuram Rajan had made the very insightful remark on India’s economic growth claims claiming that because only the Indian economy is reportedly growing at 7.5 plus rate that we, Indians, shouldn’t feel complacent nor should we imagine that we are tat the top of the world! India is only reporting such high rate. But then, the hard reality is that in terms of per capital incomes we are at the bottom of the scale, China is reporting four times such growth in per capita incomes.

Mr.Arun Jaitley and Ms.Nirmal Sitharaman, the two ministers pounced upon Mr.Rajan to say that the RBI Governor should not have used a language that was hurtful to a section of the people. Certainly, the RBI Governor is a public official and a high profile one at that and any remark that provokes people and divert attention from serious issues must be avoided.

Fine. Point taken. But how the two high profile ministers in the government conducted themselves? Did they help to enlighten the public with the inside knowledge of the Indian economy?

This is the real question. Unfortunately, the two seniors didn’t help the public good, in our opinion. Why?

The Finance minister, not an economist, but only a clever lawyer, but a competent person, had been giving the impression that everything is good with the economy.Also, Ms.Sitharaman is also a highly competent minister in charge of commerce and trade.

We all know and it is public knowledge that exports from India is decelerating. From the peak of 390.5 billion dollars recorded in March 2013 to 22 billion dollars in March 2016.Almost for more than a whole year. The RBI Governor in his Ramnath Goenka Lecture delivered recently has dealt with the reasons for such an export deceleration. He cited, among others, there major reasons how the countries as they grow and expand their trade the growth of the GDP and the Exports don’t match.GDP might grow but the exports might change patterns depending upon the growth of countries. As GDP grows, as say in China its non-traded service constitute a greater share of GDP, also trade-intensive capital goods investment muted etc.

The point here is that the structure of the trade and exports components change and we have to learn to live with a new normal growth and the old double digit growth in exports, says the RBI boss, is at best would be a memory!

Anyway, the RBI Governor on his part had made clear that if India is to reach a level when poverty of the vast mass of the Indian people are to be removed and a new level of prosperity and a decent living for the vast majority of the people is to become a reality then, the RBI Governor candidly said than the Indian economy must be growing at a higher rate for the next 20 to 30 years or more!

This is the reality of the Indian economic policy making challenge.
Till now, this harsh troth was not said so simply and openly.
The professional economists of the earlier era, under the UPA regimes, the economists who also indulged as politicians (!) did a great disservice to the Indian people by not talking so openly or candidly.
By keeping mum all the time as the chief executive of the country the ones who pretended to promote India’s economic growth only kept their jobs safe only. Not the lives of the people from the endemic poverty.
Now, we have a real change for the better. Now, we see under the Prime Minister Narendra Modi a new bold initiative, Transforming India by a series of reforms the Indian government wants to promising a faster growth.

They have put forth ten new promises. Aadhar number for 90% of the ration cards. Increase rural tepeldensity 100% by 2020. 175 broad band connections by 2017.Deregulation of GM crops by March 2018.WTO-compatible norms by March 2018.Third party scrutiny of road project execution agencies by end of 2016.

Of course a grand promise of 10% growth in GDP.175 million jobs. A 10 trillion dollar economy.

Bravo! It is needed such a grand vision. Then only a sceptical and doubting Thomases-filled nation can be rejuvenated!

We welcome the government’s rush to think big and do things with great hopes. A nation succeeds by the scale of its own beliefs.

One Thought on “An inflated economic growth rate?

  1. ajitsolanki on May 21, 2016 at 8:28 pm said:

    it is heartening to know govt intentions let us be optimistic that vision will materialiize but through centurys govt have promised utopia and magic wands forproblems but only if structural bottlnecks could br overcome by annoncements of policy formulatons or selling dreams need is to change mindset implementaton is by society let us hope for best

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