The new GDP and Indian state of Economy: an examination of Modi’s GDP Mirage
The advertisements on Indian television which are bursting with self-appraisal by NDA and talk of changing face of the Indian economy, try to provide a bleak hope to the common masses of this country. The new jingle of “Mera Desh Badal Raha Hai, Aage Bad Raha Hai” is as much contrary to the present situation as are the tall claims of our Selfie(sh) Prime Minister.
There has been a constant struggle by the government to give weight to their claims of better India by playing with the figures which instead of showing an improvement have declined in their two years of governance. Taking an undue advantage of the development model which never existed, the false claims of odi-led government need to see the broad daylight of deceit and futility.
It would be justifiable if we say that this government should think of renaming Gross Domestic Product (GDP) as Girta Domestic Product as the government is conveniently stubborn not to change the economic policies for larger good. To begin with GDP let the figures which have been either exaggerated or withheld by the government to suit their claims, do the talking. India’s inflation rate on consumer price increased 5.76 percent year-on-year in May 2016.
Moreover, since August of 2014 food inflation increased to 7.55% the most in 21 months13. The Ministry of Statistics with the help of time series data on CPI has revealed that since the Modi Sarkar took charge in May 2014, education cost has risen 13 percent, housing 10 percent, health care 14 percent and electricity eight percent3. This government is stretching the limits of patience of middle class by its erroneous beliefs of rising growth rate of the country, increasing investments and declining inflation. To our utter disbelief, all this is happening when the service taxes are on new high,
in fact, highest till date in the country.
The factual distortion, which has been cleverly displayed by Modi government to celebrate its two years of governance, has a different tale to offer.
The truth behind the facts The central statistical office’s (CSO) provisional estimates show that Indian 2015-16. This led people to conclude that 8 percent growth is around the corner. Of the growth of 7.6 percent in 2015-16, 2.4 percentage points were accounted for the “discrepancies”. This means if one excludes the discrepancies the rate of growth of GDP in 5.2 percent only in 2015-16, which is not a good one. As against this, in 2014-15 this discrepancy is only 0.1 percentage point. Thus, the growth rate after excluding the discrepancy would be 7.1 percent. If we compare both figures, this is
not a triumphant for the government. These discrepancies do not call for a celebration but for a constant vigil on the government which is trading false hopes to the young population of this country. The abbreviated GDP as Girta Domestic Product holds true for this administration.
The growth rate has been tempered from three ways. First, this 5.2 percent growth rate is inflation-adjusted growth rate. The CSO has shifted the reference year from 2004-05 to 2011-12 to adjust inflation. Second, earlier to this India has used factor cost of production for calculating the GDP, but in recent revision, CSO has used market price of commodities for GDP calculation. Third, for the estimation of GDP, this time sample was too large. This new tactic has not only been bewildering for the investors but has also made top Indian economists question their knowledge of the financial system of this country. We can well imagine the comforting optimism of Indian population who could only think of nothing else but Acche Din.
The Pro-Poor claims made by Modi government made people believe that inflation will be controlled. The average inflation rate measured by the WPI has fallen from 7.4 percent in 2012-13 to 2 percent in 2014-15 and further to (-) 2.8 percent in 2015-16. If this growth story is true, what the indicators from the latest economic survey are indicating?
The latest economy survey says that gross fixed capital formation has dropped from 33.4% of GDP in 2012- 13 to the level of 30.8% in 2014-15 and reached 29.4% in 2015-16. The growth in agriculture sector is merely 1.1% for 2015-16 after -0.2% growth previous year, also, the foodgrain production has stagnated at around 250 million tonnes for the last two years. Both, Exports and imports, have fallen by 17.6% and 15.5% respectively during 2015-16. In brief, Capital formation is slow; agriculture growth is diminishing, and fall in export is the basic features of BJP’s GDP mirage.Now coming to growth in the banking sector, in last two decade the bank credit for over 8.5 crore rupees by March 2015, which amounts over 6.7% of GDP. Furthermore, this ‘debt distress’ troubling the private corporate sector is acting as a blockage for fresh investments. These cannot be considered with any form of optimism and seen as the signs of a booming economy. The question which has started doing rounds in the Indian economy is when the lending capacity of Banking system is crumbling, how will Non-Performing Assets be included in the new GDP assessment?
Despite such distress indications, Mr Jaitly the finance minister of India has chosen the conservative fiscal stance in the successive budget priorities deficit reduction over everything else. The cut in total expenditure from 14.8 percent of GDP (UPA II) to 13.1 percent of GDP in 2016-17 (Economic Survey 2015- 16), reduced the fiscal deficit from 5.31 percent of GDP (UPA II) to 3.5 percent of GDP in 2016-178. The budget intends to regressive trend further when Mr Arun Jaitly announce a cut in the social sector including health and education which is also in Modi’s “NAMO 10 agenda”1, from 1.09 percent of GDP in 2014-15 to 1.01 percent of GDP in 2016-175,7.
Health and education play an important part in the progress of the country. The government’s claim of making India match development of the first world is a mockery of its own financial commitments. Which country has progressed with a sick and unhealthy population? How will the government control the increasing burden of diseased and unemployed youth? For how long will this growth model sustain the lies of Modi government?
An analysis of the NDA jingles of “Mera Desh Badal Raha Hai, aage bad Raha Hai” will reveal a story of deceit and forgery. There are few questions which need to be asked to the ruling party. First of all, what is the NDAs definition of desh? Is this a desh of Ambanis and Adanis or is this a dwelling place of people struggling for two meals in a day? Secondly, Badal Raha Hai but what is the change all about? Is it a huge picture of increased growth rate and success in global economy painted by the government or the change about increasing unemployment, increasing inflation and cuts on the public sector
investments? Finally aage bad Raha Hai but what are we heading towards? Are we making our country a strong economic power or are we heading towards growing burden of ill health and declining productive population? The Modi government has off course made a change in the social status of Indian middle class.
Previously daal chawal were seen as a poor man’s food but now it is seen as upper-class riches. The poor are the poorest now, and the rich are the richest in the regime of NDA. The government should be seen as an intelligent government because to alter the facts you need brains which understand that how stupidly intelligent they can be; you need a force who serves you a platter of lies by using best of their abilities; you need loyalists who do not question you but help you in spreading lies and creating confusions. The history sheaters of this government are now the ruling masters for whom the elite and influential are their election funding machines. The whole economic situation and figures justify the saying “You scratch my back, and I scratch your back”. Ache din have certainly arrived but only for boot lickers, proclaimed offenders and sightless loyalists. Mera Desh Badal Raha Hai ,Aur Picche Chal Raha Hai should be the new mantra of this “false hope throwing” government. They need to recruit new economists and policy makers who work for the country and not for the government. It is not very long when the Indian economy will be in a fiasco, and its stabilisation will need decades. We do not need British to colonise us again when our present leadership is plundering the wealth of the nation to suit its vested interests. It is apt to say that Modi government is a well-knitted family of lies and failures whose trading abilities have seen to be failing in its two years of (mis)governance