Tracing the ups and downs of the country’s economy
Dr CK Mathew | August 16, 2017
India began her tryst with destiny almost seventy years ago, in the midnight intervening 14th and 15th August 1947. The country the British left behind was but a collection of over 600 native states and principalities, driven by internal differences, caste prejudices and severe social infirmities. The idea of India was yet to emerge. The literacy rate was 18% and the average life expectancy was less than 40 years. Half the population lived below the poverty line. Education and health services were restricted to cities and towns, with the large hinterland dependent on native schools and local medicine systems.
The first measures of economic reforms began with the devaluation of the rupee in 1966 and nationalisation of 14 private banks in 1969. Even more significantly, the start of the green revolution to free our country from the threat of hunger forever sent a clear message of a more confident country determined to stand on its own two feet.
A dramatic change in the country’s fortunes arrived in the unlikely shape of PV Narasimha Rao, a compromise prime ministerial candidate of the Congress party, who allowed and encouraged finance minister Manmohan Singh and finance secretary Montek Singh Ahuwalia to change the course of destiny of the nation. In swift and fast-moving changes, occasioned by the severe balance of payment crisis, they rewrote the rules of economic engagement, dismantling the permit raj system in the country and unleashing the creative energies of the nation. The new economic policy encouraged enterprise and the nation responded in kind. Market reforms were the flavor of the day, with liberalisation, privatisation and globalisation being the three catchwords on everybody’s lips.
The five-year plans continued to guide the economic and social progress of the country, they were finally delivering an economic growth rate ranging from upwards of 6% to even 9.48% in a certain year.
Financial reforms, including the elimination of revenue deficit and the reduction of fiscal deficit, were helping to set new developmental priorities.
But overall, the economy of the country over the journey of the last seventy years has not shown the year-on-year growth that was expected of it. There have been ups and downs, only to be expected in a country of this size and with such diversity. Currently, it hovers around 7% making it the fastest growing economy in the world. The black market holds a threat that has not been diminished despite the bold and innovative move of demonetisation. The fear of inequality has increased with the country’s economic growth, as 1% of the population holds more than 58% of the wealth of the nation.
That is the moment in time that we are at. There is a quiet debate raging in drawing rooms and discussion groups as to whether we need economic growth and high investment in infrastructure and industry or whether it is the social sectors that have to be given priority. Admittedly, it is never one or the other exclusively, but the mix to be adhered to, and the priority to be assigned to each, is indeed being hotly discussed. It is the Jagdish Bhagawati vs Amartya Sen debate all over again. The Niti Aayog seems to be in favour of the former, while Sen’s recent statement comes as a severe indictment: “India is the only country in the world which is trying to become a global economic power with an uneducated and unhealthy labour force. It’s never been done before, and never will be done in future either.”
And the statistics support Sen. Yes, as a nation we have the seventh largest economy in the world with a growth rate that is one of the highest. Our technical labour force is one of the best in the world, with our IT manpower the envy of our neighbours. We have the scientific capacity to send a space craft to Mars and deploy satellites in a number and a manner never seen elsewhere. And yet, when it comes to vital statistics that affect the quality and dignity of life of the people, especially those at the bottom of the pyramid, then we have to pause and reconsider the growth strategy we are currently following. Some of these disturbing facts are given below: The numerator is the rank of India and the denominator is the total number of countries surveyed amongst whom our standing has been compared.
Per capita income: 122/183 (IMF, 2015)
Quality of life: 66/80 (Economic Intelligence Unit)
Gender: 108/145 (Global Gender Gap report, 2013)
Literacy: 168/234: (M=80.9%; F=62.8%; Gap=18.1%)
HDI: 131/188: (UN, 2017)
MMR: 55/184; IMR: 49/225 (World Fact Book)
Education for All: 105/128 (EFA Global Report: UNESCO, 2006)
Health Related SDG: 134/188 (UN 2016)
Global Nutrition report: Stunting in children: 114/132 (2016)
Global Nutrition report: Anaemia in women: 170/185 (2016)
Global Happiness Index: 122/155 (World Happiness Report, 2016)
These are serious issues, and the imperative need to focus attention on these aspects of our growth story should not be lost sight of in the glitzy temptations of economic growth and burgeoning investment. The complexities of governing a country as vast and diverse such as India need no reiteration. As the largest democracy in the world, we have to follow an inclusive model of development without the luxury that many other countries enjoy, that of taking decisions that are implemented top down and no questions asked. We are all argumentative Indians and each step in our developmental story is debated and discussed ad nauseam before it is implemented, if at all.
The role of our political leadership and our bureaucratic machinery has to be all that more sensitive and responsive to include all sections of society – especially the voiceless and impotent, the ones at the end of the line – in our developmental narrative. Deep on the heartland of our country, there are dark places and evil practices that debilitate us as a nation. Our child sex ratio declines with each census. There are unspeakable crimes committed on our women. We hope to reap the bounty of the demographic dividend, where 65% of our population is below the age of 35. But they have to be enabled and empowered with quality education and sound health. It is only then that we can make our story sustainable and long lasting, durable and permanent, both deep and expansive.
Governance in the nitty gritty details of the everyday life is tedious and slow, backbreaking and endless. Ask any district collector or assistant engineer and he will tell. These issues magnify a hundred fold at the last point in the delivery chain. While we have well-considered policies in place, with even the financial resources to implement them, it is when we reach the last mile, and are at the point of handing over the public good to the citizen, that the glitches arise. Much has been written about the quality of the delivery of services at the last mile. And yet, the problems remain, often insurmountable. And so, as we enter the eighth decade of our freedom, the challenges are clear and indistinct, sharply focussed and fuzzy. We are great in some parts and horrendous in others. But that then is the challenge that the nation must face and overcome. Some day we may get there. Into that heaven of freedom, my Father, let my country awake.
Dr Mathew, IAS (retd), is a former chief secretary of Rajasthan, and now senior fellow, Public Affairs Centre, Bengaluru
(The article appears in the August 16-31, 2017 issue of Governance Now)
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