Or, the kind of economic growth really matters?
Why our policy makers haven’t promoted all-round growth?
The Prime Minister talks of inclusive growth. Fine. But why the inclusive growth is not happening? Why some segments are outside the growth story? For instance, agriculture? Why even the rate of employment growth. As per the latest data there are signs of a sort of a definite recession in industrial production. Indian industry has recorded dismal growth for April-September 2007 period with almost 60 per cent of the 91 sectors surveyed recording a low growth rate of below 10 per cent. Basic goods, including cement, fertiliser, and polymer, steel as well as intermediate goods recorded either moderate or even negative growth, according to a recent CII-ASCON survey.
The only exception was consumer durables, with sub-sectors like scooters, electric fans, microwaves and air conditioners recording good growth of 10 per cent and more. Even here the utility vehicles, motor cycles showed negative growth rates. The automobile sectors did a bad job, with Tatas and Ashok Leyland and even TVS reporting moderate and negative sales!
The more important point here that even among the excellent rates for certain sectors, the rate of per cent ages for the good sectors had declined, while the percentages for the moderate and negative sectors had increased. The Central Statistical Organisation index of industrial production has growth only by 9.2 per cent during the first six months. The same period of last year saw a growth rate of 11.1 per cent.
Last year it was a dream run, a record of 11.6 per cent growth and there were hopes of a repeated performance this time of the year also.995 companies were surveyed and the Indian industry was hopeful of going to the next stage of the Indian economic growth curve and yet these hopes were belied by this sudden downward trend. Why? Explanations can vary depending upon who is the explainer! For the PM, it is rather an ironic silence that tells his predicaments or his own personal compulsions to remain silent. For an average official and even for the otherwise pretentious characters among them, some of them otherwise sport their expertise over their sleeves; the explanations can be based on some ideological mumbo-jumbo! As for our otherwise smart Finance minister, it is the story as usual. He would brush aside any discomfort able thoughts such reality would present and he would still go for a falsely confident tone and say that there is no cause for worry, the stock markets are performing and even delivering the results, as he seems them. For the FM, it is the 9 plus growth rate that matters, it seems.
That is why he pins his hopes on the financial sector performance and he goads the banks to lend, not to social and priority sector but to any sector that cares to borrow and give the minister and the government a sense of satisfaction. Can the government hope for such a satisfaction when the ground level realities are otherwise. There is a rather inadequate understanding and appreciation of the sort of economy India is promoting or moving towards. Indian economy is not like the American economy, not with such large MNSc and the social policy of regulating the large corporations with anti-trust laws etc. Indian economy is also not like any other developed economies like UK or France or Germany. These countries are with developed economies and yet they are so radically different from what Indian economy is like with a large segment of the population caught still in the poverty trap and also the large segment engaged in agriculture and our rural economy is also large, our youth population is again large and everyone who is entering the education and employment sector is getting the sort of education or job he or she dreams about.
Our economy is still a growing economy or rather a fast transforming economy and society. Yes, the difference between our economic activities and our social perceptions of how we make our living, this from the average common man’s perception is still very blurred or unformed. Thus, there is a mad rush to get into computer courses, from school to college levels and thereafter, a mad rush to get into software and BPO jobs. There is only one thought. How quickly one can make quick money, come what may.
Thus, already we see the squeezing of places, be it educational placed or job market and there is a skewed development with disproportionate number of persons who seek places in education and the job market left out of the race. So huge is the demand for education and jobs and yet there is huge unmet demand! This is no the sure sign of a healthy, all-inclusive and balanced growth of the economy.
One hopes the leaders, from the Prime Minister to the FM down to others, the vast army of expert panels that are supposed to report to the PM(where is the time for the poor man to keep count of how many panels he constituted and what they are really doing!),the harsh reality of the economy, be it agriculture or villages or the fast growing urban centres, the huge student population and the huge demand for jobs give them a sense of real perspective to come up with a growth path for the Indian economy.
Surely, our economy is not like the Russian economy today or the Chinese economy as it is evolving. So, we in India must have an idea and a deeper conception and vision for what we want the Indian economy as it is and as it would be evolving. Certainly, no one is telling us what sort of economic model Indian economy would be evolving into. India started as a planned economy with a large number of public sector enterprises. The era of the PSUs is gone now for good.
The globalisation, the IT and later the Internet and now the BPO revolution is driving the economic growth in the critical sectors, creating well-paid jobs for a very fast growing professional class of society. In fact, this is the heart of the new India’s growth success story. Thanks to the IT industry, there is now a growing army of new generation and a new class of entrepreneurs, the very many start-ups in the high tech sectors, including in the biotech segment gives hopes that India would emerge as a knowledge economy power.
This part of the economic success story hasn’t caught up with the planners and the policy makers in Delhi. As far as the Delhi-centric view of the Indian economy is that we, Indians still seem to take our bureaucratic-controlled polity and economy as a sort of the Indian version of an emerging new economy. As the ‘authoritarian’-centric Russian economy or Russian capitalism is or as the state-controlled, on-democratic Chinese economy is. Luckily, ours is a democracy and a Parliamentary democracy at that.
So, we have here a fairly free voice for the peoples’s grievances given an outlet and as such we have to think hard and think aloud as to what sort of an economic model we are aspiring to.
Certainly, ours is now evolving fast into a full-fledged private capitalist economic model, and there is no doubt about it and almost every step taken by the government is about allowing the private sector players, in particular, the large players to dictate terms and follow the private sector moves, be it FDI or the finance flows from abroad into the rather uncontrolled and even chaotic stock market and we in a positive way seem to stand to gain by the new investments that are flowing into real estate and other basic sectors like steel, and other mining sectors and also in all the infrastructure sectors.
The question remains: are we achieving the inclusive growth as our current policy mix are or we consciously can spell out in what specific forms we hope to achieve the inclusive growth about which we hear often from the PM.
As it is we can all say clearly is that we don’t seem to be planning any hopeful policy mix to give a push to the inclusive growth. There is clearly no such policy in the larges sector, namely, agriculture, right?
Why the sudden loss of interest among our policy makers for this mass sector?
Simply because our policy makers don’t come through the legitimate democratic processes to the seats of power. The intimate link between the polity and the economy can be seen how the polity is largely sabotaged by a process of coalition building that saw the elevation of a non-elected leader to the highest seat of power and how the party leader also saw to it that persons with no claim to merit or mass base get into key ministerial posts. With this sort of setup what sort of new ideas or new visions would come into play in the higher policy making?
So, our economy is growing, yes, but not all that is glittering is gold. India is still growing and giving us the illusion of an India shining syndrome. Some segments are happy and prosperous, the middle class is growing, there is ‘ a sort of public prosperity and yet there is much private squalor’! This sort of economy we can also call ‘Manmohan Singh economy and its discontents’!
Yes, there is much misery and deprivation in the countryside. There is a poverty of ideas at the government level. We have too many economists and too little economists of the calibre of the olden times. Even after the giants of the types of Keynes and Schumpeter, we had men of the calibre of Kaldor and others.
Nicholas Kaldor comes to mind after he gave the Indian government the idea of an Expenditure Tax. T.T.Krishnamachari introduced the tax and I remember vaguely it had some effect. Now, we have so many taxes that one doesn’t have time to do any entrepreneurial ventures except to chase the tax dept to file the so many various forms. I am not sure all our current technological advances have helped us to simplify matters and make the lives of the citiezens any easier! Today our economists working with the government, most of them are retired persons who enjoy the new avatars as perks and their advices are not worth the time and energy for we can safely expect them to stand by the PM as a sort of crutch and they are not the people who are free birds and who only cane come up with new and unorthodox ideas that could change the present mindset, a sort of complacency(or helplessness?) that seem to inform our policy makers with their obsession(in the absence of any alternative visions)with the one track mind, the rate of economic growth and nothing else!
And I like to conclude with the advice given by Shashi Ruia, the Essar Group chairman to the IIM-A students the other day. India needs more entrepreneurs to take India forward. India’s biggest challenge is, says he, to educate and train 12 million youth every year and foster entrepreneurship among them. He said how his family started in a modest way, way back in Madras in 1969.I remember the times when the Ruias, left Chennai, their residence in Alwarpet I used to see now and then and one fine day the family migrated to Mumbai. After a long time we heard of Ruias emerging as a great industrial group. His speech at the IIM was very inspiring, very heart-searching and it gave India and the Indian youth a beacon light of practical wisdom how to take India forward.
May be this is the India, the Indian economy model we might all aspire to mould our country and focus our energies forward.
Image Source : money.cnn.com