Government, the business class and right-wing ideologues are beside themselves with joy. The economy is at last beginning to look up. Foreign exchange reserves have swollen to nearly $ 90 billion. The sensex has leaped forward to cross the 4500 mark — and still rising. Foreign Institutional Investment is riding an unprecedented crest of some three billion dollars. Crop prospects are reassuring. Exports are rising. So are imports. But there is plenty of cushion, so the balance of payments causes little or no concern. Indeed, the rupee is rising relative to the almighty dollar. There are signs of a revival of industrial growth. The economy will grow at 5.5-6 per cent this year, perhaps even higher, and, if everything goes swimmingly, there are those who talk of breaching the 8 per cent mark. The NDA’s Hindutva rate of growth, possibly the second highest in the world, is being contrasted with the Congress party’s “Hindu rate of growth”. Whoa, just a minute! Is it all that hunky-dory? The projected performance in 2003-04 needs to be evaluated against four bench-marks: first, the GDP growth rate in relation to key sectoral parameters of growth; second, the impact of the projected growth rate on the annual average performance over six years of BJP-led NDA rule (1998-2004); third, performance in the international league of comparative growth rates; and, fourth, the projected rate of recovery from last year’s drought in comparison to recovery rates after a comparable drought in the past. First, GDP growth rates in relation to other parameters of growth. There has been no revival of public investment in agriculture and irrigation. Nothing has more adversely affected the livelihood of two-thirds of our workforce than the falling off of public and, therefore, private investment in the rural economy in the last few years. Besides, industrial growth continues to be jobless growth. The Economic Survey 2003 confessed that employment growth in the recent past has been the slowest in decades. It has been worst in the organised private sector, net addition to employment last year being around 0.1 per cent. Worst of all, in the sector which employs the second largest workforce after agriculture — handlooms — the disaster that has overtaken the sector shows no signs of revival notwithstanding the projected rise in GDP. Moreover, slow rates of credit off-take reflect no palpable increase in investment in the industrial economy. FDI stagnates even if FII is rising. And apart from the Maruti IPO, the primary market remains inactive while the secondary market zooms, as in the bogus 1999-2000 stock market boom. Also, although household savings continue to be healthy, the net savings rate, which has been running at the lowest level in a decade, shows no signs of revival because government dissaving continues to undermine household savings. Which brings us to the second point: the impact of projected growth in 2003-04 on annual average performance since the NDA took office in 1998. Till 1997, the economy was delivering on the two key claims of reforms: higher growth and stability in growth rates. After 1997, however, growth rates have plummeted to as low as the bottom end of 4 per cent in three years (including 2002-03) and never once touched 6 per cent in the remaining years. In contrast to the high and steadily rising plus 7 per cent growth rates of the Manmohan era, in the last seven years (six of them NDA years), growth has not only been on a much lower trajectory, it has also been extremely volatile. Thus, notwithstanding the optimistic projections for 2003-04, the average annual performance of the economy remains stuck at the 5 per cent Hindutva rate of growth — the lowest in the quarter century since the second coming of Indira Gandhi. Third, much is being made of the likely Indian growth rate in the current fiscal being perhaps the second highest growth rate in the world. In itself, that is, indeed, something to give us comfort, but, as Arvind Virmani, the NDA government’s former chief economist, has pointed out, Indian growth rates have been amongst the highest in the world for at least the last twenty years. We have so much leeway to make up that merely being the second highest performer (Pakistan is the third!) in a world of low growth rates is just not enough: we have to grow at a steady 7-8 per cent at least if we are to overcome the grovelling poverty in which a third to a fourth of our people live. That is nowhere in sight. Fourth, odious comparisons. Last year’s drought was by no means an unique aberration of Nature. In the ’80s, western India experienced three successive years of terrible drought. Then came the disaster year of 1987-88, when drought hit not only the usual suspects — Rajasthan and Gujarat — but spread right across the country, invading even Assam and Nagaland, let alone Tamil Nadu, Orissa and Maharashtra. The next year, then, was the year of recovery, as this year is. But note: 1988-89 marked not only the most magnificent ever recovery of the economy but also the only year in the history of Indian economic development that the GDP growth rate zoomed to double figures: 10.7 per cent! That is the standard against which the NDA’s projected recovery in 2003-04 should be measured. If, as the most realistic estimates go, the economy grows at a sliver over 5.5 per cent, our recovery this year will be about one half of what it was fifteen years ago. If we grow at 6.5 per cent, as the more optimistic suggest, that would still be a good four percentage points below where we were in the last comparable recovery year. And even if the Walter Mittys of our right-wing are vindicated by a miracle 8 per cent growth performance this fiscal, that would still be 20 per cent below where Rajiv Gandhi’s government took us in 1988-89. There is thus no justification for the hype and hypocrisy that characterise the government’s plaudits to itself or the hosannas being sung by its lobbyists in the media. We need to recover not from one cruel year of Nature but from seven years without Manmohan Singh.
