When Comrade Sitaram Yechury rails against GDP being a
true measure of progress, he is not supporting the Modi government in its hour
of need.
Quarterly GDP is presently at 4.5%, and the fiscal is not
expected to return much better than 5%. This is a low-ebb measured by some new
markers, as according to the old ones, the prognosis is much worse. But of
course, the worm is already beginning to turn, in a cyclic sense. Green shoots
of a recovery are beginning to show, and the economy in 2020 is expected to do
much better.
The reason why Comrade Yechury is not impressed by robust
GDP growth, even if it was to return, is because our per capita income is about
$ 2,000 per annum. This is approximately Rs. 140,000/- in round figures. But
this is only a division of the income of the country by 1.3 billion people. It
is askew. And it might be seen as rather good if one imagines the most
destitute Indian making Rs. 11,666.66 per month.
Of course, this is not true, because
the rich own the universe, and the poor don’t have anything. A simple sum of
division can’t change that.
At the same time, in recent years, since the mid
eighties, we have lifted over 400 million people out of abject poverty. Another
400 million of the population is, and has become, broadly middle class –more,
as it happens, than the entire population of the US. Some 50 million of us are
rather rich by any yardstick. The rest, unfortunately, are very, very, poor.
We add some 15 million people to our number every year,
most of them are, ironically, children of the poor.
But, even if we power on at 8 to 10% of GDP per annum in
the coming years, and take our economy, first to $ 5 trillion, and then to $ 10
trillion, at the present rate of population growth, our per capita will not
rise very much at all.
This, even as most demographics show that we are
producing more or less “replacement” quantities of babies now, except for some
fecund pockets in certain states, and more properly, districts within them.
Most people in the middle class and above have many
aspirations. They are not satisfied with just providing a full belly to their
children. This has brought down the number of children people are having
amongst this section, irrespective of caste and creed. But the per capita is another
matter.
To understand this better, we must recall that our
population in 1947 was at under 400 million. If we were still holding the line
at that number, even with the vastly better life expectancy of these days, our
per capita would have risen dramatically with the present size of the economy
at some $2.8 trillion.
But, the thing is, could we have grown as much as we have
since?
What would happen if we had a much higher per capita than
we have at present? Remember, in 1958, when we first started reckoning it, it
was just $70. We had a tiny economy, despite a much smaller population then,
attended by miniscule growth.
For growth to compute, you need low wages, and reasonable
efficiency to deliver high returns on investment. We are not much good at productivity per
worker either. A high per capita, on a low efficiency base, would make for a picky,
entitled, but not very good work force. Rather like the many in Europe or
America, as opposed to those in China.
Combined with many Indian infrastructure bottlenecks and expensive
land/ utility costs, we would not be competitive, even with generous government
subsidies for the domestic market, let alone the export ones.
The growth in the Indian economy truly began around 1985,
when the licence-permit raj started to be dismantled. These were multiple
chokes and fetters that saw capitalism as something to be kept on a leash.
Initially, and even nearly 35 years on, we are still
reaping the harvest of first stage economic reforms, with approaches to labour
and land yet to be revamped. A socialist, unionized, anti-technology labour
force can’t expect much of a rise.
Most industrialists are afraid to expand, and certainly don’t
want permanent staff with onerous commitments and near unsackability. And a
contract universe is not, inherently, particularly well-trained. Developing
their skills is expensive, and there is little stability in a contract worker’s
outlook.
But still, the Indian economy, powered as it is by
substantial domestic demand, in one of the biggest market places in the world,
trundles on. Others in the developed world with small populations and high per
capita income, see even our 5% growth rate as enviable.
We can, and will, become the 3rd biggest
economy in the world in due course depending on how fast we grow. But, the
growth here, as in China, is because we have a large population and immense
amounts of people joining the labour force at the bottom. This, even as huge
numbers move on up to the middle class.
It is true that GDP is not everything, but neither is per
capita. The Victorian Industrial Revolution could have never happened without
an ill-paid labour force with next to no benefits. In colonial times, it was
the use of slaves and indentured labour than fuelled the success of many
enterprises. It wasn’t fair or equitable. It was capitalism.
(901
words)
For:
WIONEWS
December
11, 2019
Gautam
Mukherjee
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