A FUTILE DEBATE

There is much to and fro between the ruling NDA and the opposition UPA over the GDP growth numbers. Both parties seem to claim a better management of the economy under them. A fresh debate was triggered by the revision of growth by a committee since the beginning of 2000 which reportedly was a fraction higher than previously estimated. The former finance minister P Chidambaram was quick to jump into the fray, patting himself on the back only to get a strong riposte from Finance Minister Arun Jaitely. Whether the growth in the UPA years averaged 7.5 per cent or 7.6 per cent is of an academic interest, especially when the method of measuring it remains controversial. Indeed, GDP numbers of most countries, particularly China’s, are hugely suspect. As for India, GDP numbers barely reflect the true state of the economy. Given the size of the underground or parallel economy, the huge informal sector, largely unaccounted farm sector incomes, etc, it is hard to measure the true growth rate. Well-regarded economists believe the actual growth may be far higher than is reflected in the official numbers, though the sharp disparities tend to obscure the true picture. It is also true that the momentum for growth in the early 2000s was provided by the Vajpayee Government which undertook massive infrastructure works and opened up the telecom sector to private entrepreneurs. The telecom sector has since become a huge growth generator, employing tens of thousands in the service industry and facilitating several other allied businesses. The UPA in its first couple of years gained from the momentum provided by the Vajpayee Government. This was reflected in the near double-digit growth in 2004-2005. Soon, the Manmohan Singh Government was derailed by the corruption scams and retrograde policies pushed by the allies. Though the UPA-II found itself paralysed by corruption scams, the big scams had occurred in the first term. The Modi Government inherited the huge problem of stressed assets of banks and overcapacity in certain sectors due to reckless lending by public institutions. The Government, however, was lucky in a benign crude oil market with the price of oil coming down from a high of well over $100 per barrel to $30-35 a barrel. Modi, unlike Vajpayee, erred in not pushing for a major disinvestment programme or undertaking structural reforms. He applied himself to prevent theft of public funds and to set right government undertakings rather than privatising them. And he took a major risk in demonetisation, which shaved off at least 0.5 to one per cent of the GDP in 2008-09. The short point is that the record of both the Modi NDA and the UPA on the economy is not very remarkable. Both made huge mistakes. Yet, only some in the media and a few economists fuss over GDP numbers for these do not seem to make difference to the lives of a vast majority of the people. Decent growth sustained over a number of years alone can have a salutary trickle-down effect, improving lives of the poor and the underprivileged. Whether the UPA scored a fraction of a percentage more or less over the NDA’s growth rate is a wholly irrelevant exercise.