Skip to main content

Recession? India's govt economists 'don't understand': Growth rate isn't development

By Dr Gian Singh*

On May 31, 2021, the National Statistics Office under the Ministry of Statistics and Programme Implementation released the economic growth figures for the financial year (FY) 2020-21. India's Gross Domestic Product (GDP) grew by 1.6 per cent during the fourth quarter (January-March) of FY 2020-21, while India's GDP contracted by 7.3 per cent during FY 2020-21.
The Government of India has revised the figures for the second quarter (July-September) and the third quarter (October-December) of FY 2020-21. According to the revised data, the contraction in GDP in the second quarter (July-September) has been revised from 7.5 per cent to 7.4 per cent. The economic growth rate in the third quarter (October-December) was revised to 0.5 per cent from 0.4 per cent.
The contraction in GDP in the first quarter (April-June) was 24.4 per cent. This contraction in economic growth is the worst in the history of the Indian economy. This phenomenon has been linked to the lockdown caused by the Covid-19 pandemic.
In terms of economic growth, the only ray of hope for all the four quarters of FY 2020-21 was agriculture, forestry and fishing as the growth rate of this sector remained positive during all the quarters. The sector grew by 3.1 per cent during the fourth quarter (January-March). The growth rate of the industrial sector, which was 3.1 per cent in the third quarter (October-December), was 6.9 per cent in the fourth quarter (January-March).
The construction sector grew by 6.5 per cent during the third quarter (October-December), 14.5 per cent in the fourth quarter (January-March). The performance of the trade, hotel, transport, communications and broadcasting sectors remained disappointing throughout FY2021. These sectors recorded a contraction of 7.9 per cent during the third quarter (October-December) and a decline of 2.3 per cent during the fourth quarter (January-March).
In technical terms, India was facing economic recession as the contraction in GDP in the first quarter (April-June) and the second quarter (July-September) was 24.4 per cent and 7.4 respectively. Due to the positive economic growth rate in the last two quarters of FY 2020-21, some institutions are estimating India's economic growth rate to be 8 to 10 per cent during FY 2021-22.
With the onset of the second wave of the Covid-19 pandemic in April 2021, with large numbers of people falling ill and dying and the lockdown in various parts of the country, it is hard to estimate the economic growth rate during FY 2021-22.
The rulers, corporations, and government economists propagate the concept of economic growth and economic development as one concept having the same meaning. However, they are two different concepts having different meanings. Economic growth reflects changes in the value of goods and services produced and economic development reflects changes in the living standards of the people in the country.
The government economists seem to be propagating beyond their capacity that economic growth always leads to economic development for the betterment of the people. This is often seen at a time when economic growth is accelerating, but unemployment and poverty are rising for the people, their consumption levels are falling and at the same time economic and other inequalities between the rich and the poor continue to grow. As a result, the living conditions of the common people are deteriorating.
It is because of such a phenomenon that senior Punjabi journalist Sham Singh Ang-Sang uses the concept of vain economist for such economists. The Covid-19 pandemic has made it clear that humans can survive without cars, bungalows, aeroplanes, phones, and many other expensive items, but without food, their very existence is threatened. In order to sustain human existence, it is necessary to have agriculture and its development.
Agriculture in the third world countries including India is a major source of livelihood as it provides employment and income to a large number of people as well as produces a variety of food items for all people living in any country.
About 50 per cent of India's population depends on agriculture for their livelihood, but they receive only about 16 per cent of the national income. Many research studies conducted in India have revealed the fact that a large number of marginal and small farmers, agricultural labourers, and rural small artisans in the country are born in debt and poverty, and live their hard life in debt and poverty. They leave behind a mountain of debt and abject poverty for the coming generations, and either die a death of deprivation or commit suicide when all hopes for their lives are dashed.
Despite the fact that suicide is not the solution to any of life's problems, this tragic phenomenon continues in a state of despondency. In general, the living standards of all the agriculturally dependent sections in the country from different angles are much lower than those of the upper middle income and the extremely rich people.
Out of these categories, the condition of marginal and small farmers, agricultural labourers, and rural small artisans is very poor. In general, the two rungs at the bottom of the ladder of agrarian economy -- agricultural labourers and rural small artisans who are more prone to wear and tear and who are more likely to be gravely affected are in a very pitiable condition because of their landlessness.
These two categories have no means of production other than selling their labour. The ever-increasing use of machinery and herbicides as a result of the adoption of the 'new agricultural strategy' package adopted to meet the country's food needs in the late 1960s has drastically reduced the number of working days in the agricultural sector.
The worst hit are agricultural labourers and rural small artisans. Due to the rapidly declining employment in the agricultural sector and non-availability of employment opportunities in the non-agricultural sectors, their income level is so low that they are compelled to borrow money to have two-times meals for their mere survival. Due to their low income levels their unpaid loans turn into debt which causes numerous awkward and unbearable problems.
Despite all these facts, the three farm laws enacted by the Union government would further aggravate the plight of all sections of the agricultural sector and the consumers in general. That is why for more than six months the country's farmers, rural labourers and other sections have been struggling in democratic and peaceful manners to repeal the three acts and legal guarantee of minimum support price of agricultural crops.
Various international organizations have released reports indicating an increase in the number of people living below the poverty line in different parts of the world due to Covid-19. India alone has seen a 60 per cent increase in the number of people living below the poverty line.
In general, people living below the poverty line are the informally employed workers. They make up about 93 per cent of India's total workforce. Migrant labourers among the informally employed workers in the country have been hit the hardest by the pandemic. The scourge has shattered the false propaganda of 'Corporate Social Responsibility'.
Gota-Kinari (embroidery) looks good only if the chadar (cloth sheet) on which it is attached is solid and strong. The kind of economic growth that has taken place in India since 1991 to the present day has shown that the Gota-Kinari (signifying the capitalist/ corporate world) has become much stronger, but the Chadar (signifying the working people) has weakened.
There are not just mines in it, but in fact, it is beset with huge mounds. Such a high economic growth rate can be compared to the phrase, ‘Let such gold be in the kiln that eats ears’ (Bhath Peya Sona Jehra Kana Nu Khave).
Economic and other inequalities have been increasing rapidly as a result of the adoption of corporate economic models around the world over the last 40-45 years. Even the international financial institutions, which are dominated by the capitalist/ corporate world, are now beginning to believe that the eradication of poverty is necessary for the proper functioning of capitalism.
American Nobel laureate in economics Joseph Stigitz, eminent French economist Thomas Piketty and Democratic senators Bernie Sanders and Elizabeth Warren of the United States of America are emphasising on public institutions to provide education, healthcare and some other services to improve people's lives. They are also advocating for increasing taxes on the rich people.
Our economic growth rate has to be marginally higher than our population growth rate so that we can reduce the economic and other inequalities in the country with the current economic growth rate and look after the interest of our future generations. In order to do so, it is necessary to adopt a pro-people and nature-friendly development model in the country. To do so, there is an urgent need to expand and develop the public sector and to monitor and regulate the private sector.
The importance of the public sector can be gauged from the fact that on May 28, 2021, the Punjab and Haryana High Court, in hearing a petition against the privatization of electricity in the Union Territory, Chandigarh, virtually called in question the Central government’s policy of disinvestment by asserting that privatisation is not a panacea for all the ills.
The High Court added that the public sector undertakings were created by the Government of India to make a self-sufficient nation and to become the master of our own destiny. It is important to ensure that the taxes levied on the superrich are increased and collected. The pro-people and nature-friendly development model will be one in which the basic needs of the people - food, clothing, shelter, education, health care, clean environment, and social security are met in a respectful manner.
---
*Former Professor, Department of Economics, Punjabi University, Patiala

Comments

TRENDING

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam* RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

Did Netaji turn blind eye to Japanese massacre while in Andaman during World War-II?

Dr Diwan Singh Kalepani museum off Chandigarh By Rajiv Shah  Did Netaji Subhas Chandra Bose ignore the massacre carried out by the Japanese army in Andaman and Nicobar islands during the Second World War? It would seem so, if one goes by the account of Mohinder Singh Dhillon, who authored a book in memory of his father, 'A Titan in the Andamans, Dr Diwan Singh Kalepani'. Dr Diwan Singh was tortured to death by the Japanese soldiers in the cellular jail in Andaman in 1944.

A golden goose, GoI bent on selling LIC 'for pittance' without consulting stakeholders

By Thomas Franco*  In spite of strong opposition from all sections of the society, the Finance Minister (FM) recently asked her Ministries to speed up Life Insurance Corporation (LIC) Initial Public Offer (IPO). Does she realise that this can lead to collapse of the economy over a period of time because LIC is a golden goose which is giving golden eggs regularly to the economy, development projects and providing social security to the majority of the marginalised people of this country.

Sweden-backed study: India won't achieve 2030 UN goals, officials can't recognise SDG

By Rajiv Shah  A Swedish Society for Nature Conservation (SSNC)-sponsored study, carried out by the advocacy group Consumer Unity & Trust Society (CUTS) India, seeking to analyse the United Nation's Sustainable Development Goal (SDG) No 12, Responsible Consumption and Production (RCP), has regretted, it is "very unlikely" India will achieve any of the targets of SDG 12 by 2030 "unless some serious measures are taken by the government to reverse the present trend."

Modi's Gujarat 'ignores' India's biggest donor of Azad Hind Fauj, Dhoraji's Habib Sheth

By Dr Hari Desai* One surely feels happy that the statue of Netaji Subhas Chandra Bose is being installed near the India Gate in New Delhi. Every Indian and even Netaji’s 79-year-old daughter Prof Anita Bose Pfaff feels happy about the statue at the most important area of the capital. In an interview with an Indian TV, Anita, who is a German citizen, mentions that she thinks if not Netaji’s only Mahatma Gandhi’s statue should have been there. She may be aware that there existed a plan to install life-sized statue of the Father of the Nation at that place.  Even after differences with Mahatma Gandhi and Sardar Patel which led Netaji to leave the Indian National Congress, Bose was the first person to call Mahtma Gandhi Father of the Nation on July 6,1944 in his Ragoon Radio broadcast, and sought Bapu’s blessings as the Supreme Commander of the Indian National Army (INA). Till 1968 there was statue of King George V at India Gate. It was removed and placed in the Coronation Park, New Del

Savarkar 'opposed' Bhagat Singh's, Netaji's dream of India, supported British war efforts

By Shamsul Islam* In a shocking development, the student wing of the RSS put the busts of martyrs Bhagat Singh and Subhash Chandra Bose with Savarkar's on one pedestal at the University of Delhi late in the night on August 20, 2019. Bhagat Singh sacrificed his life for a socialist-democratic-secular republic and Netaji raised Azad Hind Fauj (INA) consisting of people of all religions and regions for armed liberation of India.

Why Church in India today needs a Rutilio Grande, martyred for stance on social justice

By Fr Cedric Prakash SJ*  For the people of El Salvador, January 22, 2022 will be more than just a red-letter day. Three of their sons, Jesuit Fr Rutilio Grande and his two lay associates 72-year-old Manuel Solorzano and 15-year-old Nelson Rutilio Lemus (and Italian Franciscan missionary Fr Cosme Spessotto who was also martyred) will be beatified in San Salvador.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

'Dargah site was a temple': Claim in Gujarat following post-Babri verdict demands in UP

By Rajiv Shah  Will Gujarat also see demands to replace mosques and dargahs with Hindu temples? It would seem so, if a new fact-finding team conclusion is any indication. Apprehending the “danger” of communal conflagration, it has cited the claim on a 15th century dargah was originally a Hindu temple – allegedly quite on line with what has been happening in UP following the Supreme Court verdict on Babri Mosque.

Is it time to celebrate India's 'improved' sex ratio? Reasons to question NFHS data

By Aditi Chaudhary*  The recently published National Family Health Survey (NFHS) factsheet brought cheers amongst the public and the government. With Child Sex ratio (number of females per 1000 males in the age group 0 - 6 years) and overall sex ratio (the total number of females per 1000 males), both showing an improvement, NFHS-5 (2019-21) got applauded by all around.