Across the Aisle: India at 70 – The Economy

It is time to do a health-check of the economy as free India completes 70 years.

Written by P Chidambaram | Published:August 13, 2017 12:00 am
india economy, india gdp, india economic growth, independence day, indian independence day, august 15, 70 indian independence day, p chidambaram, india, indian express news There is a steady decline in the growth rate of Gross Value Addition (GVA) since Q4 of 2015-16 and, correspondingly, in the growth rate of GDP.

Freedom, a written Constitution, parliamentary system of government, and rule of law have several purposes and objectives: one of the foremost is that they will lead to the social and economic progress of the people of a country.

Imagine taking responsibility for the governance of a country in 1947 when 83 per cent were illiterate, life expectancy at birth was 32 years, per capita income at current prices was Rs 247, and per capita consumption of electricity was 16.3 kWh per year. Lesser mortals would have concluded that India was ungovernable. The Father of any other Nation would have seized absolute power and done his best — or worst — to run a government according to his whims.

Not Mahatma Gandhi, who did not aspire to be in the government and preferred to serve the people in his own way. Not Jawaharlal Nehru, Vallabhbhai Patel and others who bravely shouldered the awesome responsibility of governing a vast and volatile nation.

Markers of Success

India has come a long way since August 15, 1947. Only the blind — and the bhakts (no intent to disrespect) — will argue that nothing, absolutely nothing, was accomplished in the last 70 years. They refuse to acknowledge —

the rise in life expectancy at birth to 68.34 years;

the rise of per capita income (at current prices) to Rs 1,03,219 per year;

the rise in literacy to 73 per cent;

the reduction in the proportion of people living in poverty to less than 22 per cent;

the self-sufficiency in food grains and the avoidance of famine;

the conquest of plague, kala azar, small pox and polio;

the advances in science and technology, especially space and atomic energy, with limited resources.

Every major political party of India had a role to play in the development story. The Congress was at the head of the Central government for nearly 55 years. Non-Congress parties ruled for 15 years; of these, the BJP was/is at the head of the Central government for nine years (Mr Vajpayee and Mr Modi).

Governance of India is not by the Central government alone. State governments have an equal responsibility. Matters directly affecting the lives of the people fall under the authority of the state governments (See Constitution, Seventh Schedule, List II). Because governance at the state level is so uneven, development at the state level is also terribly uneven. As on March 31, 2017, the per capita income of Delhi was Rs 2,49,004 and of Goa was Rs 2,42,745, while the per capita income of Bihar was Rs 31,380 (base year: 2014-15).

Who has been in the government in the poorest states of India? The Congress has not been in power in Uttar Pradesh since 1989; in Odisha since 2000; in West Bengal since 1977; and in Bihar since 1990 (it was a minor partner for 20 months until July 2017). The Congress can therefore be hardly blamed for their poor governance in recent decades. On the other hand, the BJP was in power in UP during 1997-2002 and again since this year; the BJP shared power in Odisha during 2000-2009; and the BJP shared power in Bihar during 2005-2014 and shares power again now.

Five Indicators

It is time to do a health-check of the economy as free India completes 70 years:

Jobs: There is more evidence that we have jobless growth. According to the Centre for Monitoring of Indian Economy (CMIE), between January and April 2017, the economy shed 1.5 million formal sector jobs.

GDP growth: There is a steady decline in the growth rate of Gross Value Addition (GVA) since Q4 of 2015-16 and, correspondingly, in the growth rate of GDP.

Investment: In the 12-month period from Q4 of 2015-16 to Q4 of 2016-17, Gross Fixed Capital Formation at constant prices fell from 30.8 per cent to 28.5 per cent. It was 32.6 per cent in 2013-14 and had touched a high of 34.31 per cent in 2011-12 (base year: 2011-12).

Credit Growth: 2016-17 ended with a credit growth rate of 8.16 per cent, which was less than one-half of the average annual growth during the last 10 years. Industrial Production: In the last three years, the Index of Industrial Production has moved, sluggishly, from 111 in May 2014 to 119.6 in June 2017.

Celebration without Joy

These are the five indicators that should be on the dashboard of the Prime Minister and the Finance Minister but, apparently, they are not. Both talk on everything under the sky except on the economy. The Prime Minister has the talent to turn attention away from a catastrophic economic situation to political issues. The Finance Minister is happy to throw out some inconsequential statistics that carry no credibility with economists of repute. There is no more than one person in the government who will speak truth to power at least occasionally.

Yet the government will lead the ‘celebration’ of India at 70. Who will join them? Not the 22 per cent at the bottom of the pyramid, not the farmers, not the manufacturers of goods or their workers, not the lenders or the potential borrowers, not the young job seekers, not those denied education loans and higher education, not women, not the Dalits, and not the minorities. It will be a celebration without joy.

Website: pchidambaram.in Twitter: @Pchidambaram_IN

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  1. R
    Raul
    Aug 14, 2017 at 2:24 pm
    Excellent, thought-provoking article by PC.
    Reply
    1. R
      Rathi
      Aug 14, 2017 at 8:14 am
      Calling Congress critiques/BJP supporters as Bhakt or Andh Bhakt is very offensive, insulting and humiliating. It is similar to me calling Chiddu a SICKLULAR or ANTI-NATIONAL or PAK STOOGE (Because he had changed the affidavit of an Islamic Terrorist named Ishrat Jahan who was mandated to kill a prominent Gujarat leader and current Prime Minister). By calling Congress critiques as AndhBhakt, Chiddu is insulting everyone who has voted BJP in 2014 and later on in assembly polls. Despite the big ROUT in 2014 and several humiliating defeats in states thereafter, Congress leadership is still showing huge ARROGANCE. All the Chiddus article are full of BOASTING and ARROGANCE otherwise he could have criticized the Modi Govt without calling the BJP supporters as AndhBhakts…………………
      Reply
      1. K
        K Venkatachalam
        Aug 14, 2017 at 6:59 am
        Let us not twist facts. Since independence UP has been ruled by Congress for more than or close to 30 years, beginning with stalwarts like Pandit Govind Vallabh Pant. Major Congress leaders have been from UP. What have they achieved? I am all in favour of Congress ideology, but the problem with them is that they are unable to become genuinely democratic and secular. Invariably they waver and that has been their problem since Independence. Nehru would have achieved secular and democratic objectives, barring some incidents in his long tenure as PM, but he was hamstrung by other seniors in his Party. Of course he had his weakness to achieve world moral leadership which resulted in his divided to govern nascent India.
        Reply
        1. G
          gopalakrishnan
          Aug 14, 2017 at 5:51 am
          It is a pity that truth is: During UPA -2 rule. dian Rupee nose dived fromRs.45 per US$ to Rs.64 per US.$ Effectively our foreign debt increased by 50 in a week !!
          Reply
          1. V
            Vik
            Aug 14, 2017 at 4:30 am
            Imagine China, imagine South Korea and then imagine India. Congress leadership caused so many opportunities to be lost. We fell behind in education, income, health... everything that mattered to the common man so Congress leaders could stay in power and gorge themselves while the common man suffered. The history of Congress is written in the blood of ordinary men. May it die an ignoble death.
            Reply
            1. k
              k 4329
              Aug 13, 2017 at 11:52 pm
              Excellent Analysis. You should be the next PM
              Reply
              1. V
                Venkataraman Jagadesan
                Aug 13, 2017 at 11:13 pm
                Unfortunately he was the FM during UPA and also stayed as Min in so many Cong and other Govts. He should be ashamed to state about our economy when he is almost finished in his career. Jai Hind.
                Reply
                1. R
                  Rohit Chandavarker
                  Aug 13, 2017 at 11:01 pm
                  Points to note, if you care to 1. The present day Congress can hardly claim credit for any progress post Independence since that Congress splintered a rump became today's INC. 2. Congress may not have been in power at the states as mentioned. But that's exactly the reason they failed to progress. Given the penchant for retribution, Congressmen at the Centre were miserly in helping opposition ruled states for decades. 3. The ills in the economy can be attributed to the acts of commission omission of past Govts. just as achievements are. Selective amnesia!!!! 4. The 'progress' achieved in 70 years compares poorly to countries like China or South Korea or Japan or Germany for the same period. Hence, would PC be gracious enough to accept that socialism was the cause for such monumental failure??
                  Reply
                  1. S
                    shahid khan
                    Aug 14, 2017 at 12:27 am
                    Congress has been in power for 55 years. It is right to claim credit for improving the illiteracy from 83 in 1947 to 27 , life expectancy from 32 yrs to 68 yrs, electricity consumption and higher per capita income. Congress liberalized the economy in 1991 which has accelerated the economic growth. Under congress rule India experienced growth rate of 8 to 10 . Social progress has been tremendous. Congress uplifted Dalits, OBCs and OSCs. Their education and economic progress has been stupendous. BJP is big on slogans and noise and little on achievements. Its biggest accomplishment has been pummeling Muslims.
                    Reply
                    1. A
                      ashok kumar
                      Aug 14, 2017 at 3:26 am
                      khan , please do your math . Under congress and muslims rule from 1947 to 1991 , the per capita income went from 200 dollar to 320 dollars while south korea per capita income went from 250 to $15000. In 1991 , before chidambran was minister in 1984 along with mukerjee. The economic reform were done not by choice but due to pressure from IMF when india had foreign exchange of 3 weeks imports. Vajpayeeji 6 year growth was much better than congress time growth past 1991. Also the situation in electricity generation and power reaching villages is 1000 times better today than when faruq abdullah like you a muslim was power minister 3 years ago.. So stop blaming bjp for your misery and start opening your eyes for a change. You should look at your brethren country next door where islamic economy has brought them to a total disaster and they have economy of beggars. obc and dalits are much better today then 3 years ago. I guess muslims are not getting there freebies anymore.
                      1. T
                        Tushar Kanta
                        Aug 17, 2017 at 1:40 am
                        It is easy to achieve, when you start from scratch. The real test comes when you reach a certain level and you have to find out new ways. Sadly, both BJP and Congress have failed in that. But what goes for BJP is, they are ready to bring reforms. And what Muslims you are talking about. BJP has been power for a total of 8 years, that too at a gap of 10 years. Where are Muslims now after 55 years of Congress rule. And how easily PC hide the fact that MP, Gujrat, Karnataka and Odisha had made good progress under BJP.
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