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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.
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.
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*Former Professor, Department of Economics, Punjabi University, Patiala
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