Is Indian economy really progressing taking people at large with it?

Satyajit Kumar Sharmah Thakur

(sksharmahthakur@gmail.com)

As very usually found, people start looking at the figures of GDP of different countries while comparisons of the progress of different economies are made. That higher GDP means the better condition of an economy is a usually accepted formula. That under the prevailing system of calculation of GDP in India, a true picture of its impact on the economy is not at all possible was my contention all throughout so long I have been dwelling on GDP and its impact on the country's economy. But very interesting is the trend of projection of a rosy picture of GDP for the period ahead and thereafter a busy search for reasons of its actual achievement's failure to be even near to the projection made in the beginning.

That the economy of our country has not been able to do very well in almost the last ten years is a well-established fact based on the all-around achievements in the economy. We had our reason to blame the onslaught of COVID-19 for the downward trend of the economy for more than a year and a half. However, the accumulation of problems like an increase in the number of unemployed persons and closure of business establishments thus rendering some employed persons jobless, was having its own growth. Even during that period when our economy was suffering, there was no dearth of consolation that in fact, the economy was not performing so poorly and rather the immediate future was showing very bright sunshine, which was the projection of so many international forums not to speak of a number of forums and persons within the country. Projection of a rosy picture of likely growth of the Indian economy was made even by the World Bank and the International Monetary Fund. I then questioned the basis of such a projection and whether all the factors which if occurred, were likely to hinder the economic growth were duly taken into consideration in making such rosy pictures. Perhaps, in those projected figures, the probable impact of recurrence of COVID-19 or its further versions was considered as not very much probable.

While the Finance Minister, of India, presented the union budget for the FY 2022-23, the economic growth projection for our country for the period was 9.2%. In the wake of the serious onslaught of Covid-19, when the economy was expected to make a turnaround, that 9.2%, to me, was a very lucrative figure for the economy, provided that could be achieved. Even that was the figure which was earlier thought to be rather low because some of the international forums and credit rating agencies were of the opinion that India was all poised for achieving a GDP growth during that period which might be even within the proximity of 10% instead with a silver lining for even further growth in the days to come thereafter.

As reported, eight-core sectors' growth has slowed down to 4.3% in March 2022 from 6% in February 2022. In the meantime, it has also come out how the retail inflation has established its maximum growth in the last 8 (eight) years by clinching 7.79% in April 2022. As I have already mentioned, even though in the presentation of the Union Budget, 2022-2023, the Union Finance Minister expressed her great optimism about achieving economic growth of 9.2% during that period, astonishingly, even the first quarter of that FY is yet to be over, the World Bank has slashed the prediction of India's GDP growth to 8% from its earlier projection of 8.7%. Being a factual position, I am fully in line with any argument that in the meantime people of a section have become richer, but with further deterioration of poverty including an increase in the number of persons, should we interpret that the country is economically progressing well? True, in general connotation, an increase in export volumes is a very good sign for an economy, but the benefit of an increase in production and productivity must be enjoyed by the people at large in the country with an increase in their purchasing power satisfactorily. India's trade deficit has shown an increase to USD 18.7 billion in March 2022 from USD 13.9 billion in the same period last year, which is a preliminary estimate that has come out. Contrary to the expectation of the total value of exports to surpass the total value of imports that negative gap is likely to be due to the expected increase of exports to USD 40.4 billion as against an increase of imports to USD 59.1 billion. Again in April 2022, India's trade deficit has widened its gap between imports and exports to USD 20.11 billion. True, some impact of the ongoing war in Ukraine is there on this, but how to evolve measures to mitigate such a harmful impact on the country's economy, must claim the most serious and urgent attention of the government. More so, when the fearing turmoil in the Sri Lankan economy has proved how a lack of proper and timely action may lead an economy to great disaster, we must take a lesson for proper strategies to take people at large in economic progress.

That the purchasing power of the overwhelming majority of the country's people is going down rapidly, is crystal clear when we take a view of the present status of the economy. Even if our exports may increase, our trade deficits show narrowing down, and GDP shows an increase unless the problems in connection with the country's growing poverty are effectively addressed towards a meaningful solution, I am too sure that such growth in GDP and narrowing down of trade deficit will not imply a real turnaround of the economy. Has the government observed how burdens on the common people are growing relentlessly, with an increase in the number of poor people which is quite clear from the eligibility of beneficiaries for the government's beneficiary scheme like free distribution of rice? Is a continuation of such schemes like free distribution of rice and distribution of cash under the Orunodoi Scheme etc., a real solution to growing poverty in the society? The time has come fast for the government to avert very rapid disaster, which is quite likely if the government does not read the writing on the wall properly while the current disaster in the Sri Lankan economy has contributed vastly to that writing on the wall. Under the prevailing situation, abrupt withdrawal of any scheme of freebies may hit hard most of the beneficiaries because they are not at all ready to absorb that shock of withdrawal.

An analysis of the figure of retail inflation for the month of April 2022 gives us a very dismal picture of the poor who spend around 90% of their earnings on food because within that figure of inflation we find an increase in the cost of oil fats by 17.28%, vegetables by 15.41%, and spices by 10.56%. Contrary to that figure of 90% of the total income that is spent on food items by the poor, the people in the rich category spend only 30% on food items. If we turn our attention to wholesale price index-based inflation we shall find that increase as high as 15.1% in April 2022 keeping the figures of increase of wholesale price index-based inflation in double digits for the last thirteenth month in a row.

True, after the period of two years from starting COVID-19, the Indian economy is showing some promise of recovery. Efforts for formalizing the economy are a heartening step for more positive turns of operation of so many business units. Some start-ups have ensured phenomenal growth wherein, the upgradation of information technology in almost all the spheres of utilization is adding a glamorous chapter to the country's economy. While the divestment drive again invigorated is contributing substantially to the financial condition of the government, as the balance sheets have exhibited, some companies, most of which are blue-chip companies, have started showing satisfactory turnaround.

However, ascending inflation is throwing a great challenge to the RBI and for that spiralling inflation, it will not be proper to point the needle only to the war in Ukraine since apprehension of such an ascending trend was felt even prior to Russia's invasion in Ukraine. Moreover, the economy has not been able to cater to the growing need for employment satisfactorily and rather the trend of unemployment is very much on the rise, which is the most major impediment and hence a crucial factor having no satisfactory answer in the country's economy till now. Together with all those impediments, that inadequacy in power supply has hit those affected business units very hard, which is no exaggeration.

Consequent on various religious matters including the matter of the use of loudspeakers at some religious places, matters concerning evictions on alleged illegal encroachments with their occupation of the headlines in both print as well as electronic media, and revival of CAA etc., becoming much more important, as if the burning problems like steep rise in prices of various essential commodities, increase in unemployment, and closure of more and more number of business units etc., have started becoming insignificant to the people. For that, I am not inclined to blame the government only, the people at large, who are fond of forgetting the most serious issues on the economic front as I have dwelt on, are squarely blame-worthy. Unless the people of the country recognize the priorities of the problems, they cannot have any moral right to blame any other for their growing economic pain. That those migrated workers who were employed under MGNREGA Scheme were even not gainfully employed under that scheme was dwelt on by me when the governments took to that more vigorously aiming at compensating the economic suffering out of reverse migration exodus which took place due to the COVID-19 pandemic. This is now quite evident from the en masse resignation of 12000 MGNREGA workers in Chhattisgarh, which has occupied prominent places in electronic media very recently. Most remarkably, one of the reasons for such en masse resignation is stated to be poor salary. Now, in the present circumstance, while participation of the people to bring about a meaningfully positive change in the economy is indispensable, I am really dumbfounded at the number of people showing their inaction by preferring to keep mum over those most burning issues in the country's economy.

The time has arrived, people should analyse the impact of the government's failure to address the problems in the economy for equitable growth. It is also high time, before becoming uncontrollably serious in the near future, to set the course of the economy capable of arresting the problems like phenomenal growth of unemployment, price rises, and giving a positive twist to the furtherance of industrialization etc. Otherwise, that steep rise in debt burden on the people is absolutely inevitable resulting in a seriously deep economic problem in the country. Frankly speaking, till now, whereas government priorities seem to be not properly accommodative of most of those serious problems, a huge number of people's failed to rise to the occasion by identifying the likely dangers to them out of unabated growth of the problems, is also an undeniable fact.

Whatever may be the current status of our country's economy, we must start overhauling, starting by ensuring more favourable grounds for spreading knowledge, skills and means of more effective production and productivity. In a true sense, if our economy becomes a boom only for a section of people, ignoring if the benefits are flowing to the people at large, such an economy is not progressive and any claim of the progress of the economy will be a great farce only.