Optimism, undoubtedly, is a contagious disease and it is spreading very rapidly. The euphoria about India’s high growth rates never seems to cease. However, the prospects about India’s future are not as rosy as they are being made out to be. The quantum of celebration about the growth rates is totally unwarranted. We have been blinded by the glitz of pomp and show, forgetting to look at all the gross ills that exist in India and worse we even think that India is ready for take off the radiant heights of becoming an economic super power.
To put things in perspective consider the facts. Firstly, around a third of India’s children suffer from under nutrition. About a fifth of them will lose a major organ before they attain the age of 25. The malnutrition levels in India are higher than many nations in Africa. Children are supposed to be the future of a nation and by looking at India’s under nourished children we can safely conclude that India’s future is quite bleak.
Secondly, a third of the people in India do not even know how to read and write. Quite a few of the 2/3 who are literates can barely read and write. Coupled with it is the fact that not many people pursue higher education. Besides higher corporate salaries have added to this trend and thus pure science and basic research have taken a beating. Without R&D a nation can not develop and sustain its growth rates, leave aside the dreams of taking off and becoming a superpower.
Thirdly, the rate of decline of poverty in the post reform era has been lower than the rate of decline of poverty in the pre reform era. This has invariably led to an increase in relative poverty and inequality. If this trend is not reversed total consumption may fall and this will lead to fall in the growth rates of GDP.
Fourthly, the India’s growth is highly skewed and looks unsustainable given the state of affairs of the economy. The manufacturing sector is growing at over 10% while the electricity sector is growing at barely 7.6%. There is already a mismatch between the two and the gap is increasing. Therefore the growth can not be sustained unless alternate viable sources of fuel are recognized soon.
Fifthly, the agriculture sector which employs about 60% of the workforce continues to grow at very low rates. This has made agriculture an unviable activity for many. Thus there has been an exodus from the rural areas to the cities. More than 100,000 farmers have committed suicide in the last ten years. Blatantly put this amounts to one farmer suicide per hour. The growth process has by-passed this sector. In short, the trickle down has not happened. Development has not taken place.
No doubt that the growth rates in India have been bullish but India still ranks very low on the Human Development Index. The buoyant stock exchange reflects the state of the corporate sector and not the economy as a whole. It is corporate India that is “poised” for a take off, India as a nation isn’t. We still have quite a few problems to solve on earth first, why take off and go to the moon then?
To put things in perspective consider the facts. Firstly, around a third of India’s children suffer from under nutrition. About a fifth of them will lose a major organ before they attain the age of 25. The malnutrition levels in India are higher than many nations in Africa. Children are supposed to be the future of a nation and by looking at India’s under nourished children we can safely conclude that India’s future is quite bleak.
Secondly, a third of the people in India do not even know how to read and write. Quite a few of the 2/3 who are literates can barely read and write. Coupled with it is the fact that not many people pursue higher education. Besides higher corporate salaries have added to this trend and thus pure science and basic research have taken a beating. Without R&D a nation can not develop and sustain its growth rates, leave aside the dreams of taking off and becoming a superpower.
Thirdly, the rate of decline of poverty in the post reform era has been lower than the rate of decline of poverty in the pre reform era. This has invariably led to an increase in relative poverty and inequality. If this trend is not reversed total consumption may fall and this will lead to fall in the growth rates of GDP.
Fourthly, the India’s growth is highly skewed and looks unsustainable given the state of affairs of the economy. The manufacturing sector is growing at over 10% while the electricity sector is growing at barely 7.6%. There is already a mismatch between the two and the gap is increasing. Therefore the growth can not be sustained unless alternate viable sources of fuel are recognized soon.
Fifthly, the agriculture sector which employs about 60% of the workforce continues to grow at very low rates. This has made agriculture an unviable activity for many. Thus there has been an exodus from the rural areas to the cities. More than 100,000 farmers have committed suicide in the last ten years. Blatantly put this amounts to one farmer suicide per hour. The growth process has by-passed this sector. In short, the trickle down has not happened. Development has not taken place.
No doubt that the growth rates in India have been bullish but India still ranks very low on the Human Development Index. The buoyant stock exchange reflects the state of the corporate sector and not the economy as a whole. It is corporate India that is “poised” for a take off, India as a nation isn’t. We still have quite a few problems to solve on earth first, why take off and go to the moon then?
2 comments:
Alright.. point noted .. but a mere acknowledgement of the facts won't get us very far will it?.. the real question is the solution.. high growth rates are an indicator of wealth creation by the wealthy (it seems), this is *supposed* to have a trickle down effect..what are the alternatives? More accountable expenditure on infrastructure and welfare programmes? My personal take on the situation is (and this may make me sound like a heartless bugger) that the agriculture sector just cannot support so many people with a sufficient stardard of living (not to mention the associated risk).. Agriculture becoming less and less lucrative i think is part of the solution till sufficient parts of the population move to other sectors. What other sectors? I suppose services for one. Manufacturing may too be a possibility. This is again contingent on conspicuous consumption by the rich. The requirement is that the sectors that people move into should have minimal educational requirements and must work in large numbers.. Just a thought
PS> I'm adding a link to your blog on mine.
optimism is a contagious disease..true...but,pessimism is fatal...i think this article is too pessimistic eventhough i dont deny a word of what u said...i cud even add to the pessimism...but,as george rightly commented if we cud concentrate on the solutions rather than the problems,we dont have to take off to the moon or mars in search of life...and sadly enough,i think we economists mostly concentrate on problems than solutions...i don understand,for eg, y we concentrate so much on measuring poverty using a lorentz curve and complicated econometrics while i can see and hear poverty right next to me?? well,with that i leave it to 'scholars' ;)
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