Growth Mystery and
Imbalances
India has been the
cynosure’s eye in regard to the announced growth of 7.1% for 2017-18 in spite
of fall in manufacturing growth and wavering agriculture growth. Analysts have
various expectations ranging from 7.5% for the next fiscal even amidst fears of
rising inflation expectation from the RBI. For 2019, Goldman Sachs downgrades
its estimate of growth to 7.6% from 8% made earlier.
The much touted
macroeconomic fundamentals, EODB rankings not withstanding are shaken with
frauds and scams surfacing day after day in the financial sector. Good economy
and bad banking are strange bedmates.
Contextually, Kenneth Rogoff
aired concerns about ‘the ethical and social implications of material growth’
in his most recent Project Syndicate article. In a country where 500 billionaires
are expected to take decisions for 23-34% of the population that is poor, such
concerns surrounding inclusiveness of growth will be a concern.
The way we measure growth
appears faulty and the manipulative statistics to suit the political agenda
giving macro economy the look of strong fundamentals and the increasing focus
on the movement of share indices – that is basically an index of the corporate
wealth movement, are distortionary providing a lever for the rich to play upon
their resources adverse to the national interest of inclusive growth. We need
to measure the Happiness Index. Increasing focus of budgets on health and
education with definite measurable outcomes is the only route.
While the output related IIP
and the input related PMI of recent times are showing up in the manufacturing
sector, sustainability is on a weak wicket given the Corporate failures and
tottering telecommunication sector.
Focus on rural
infrastructure and agriculture at this point become relevant. It is a moot
point whether loan write off of some states is the right solution for the
farmers’ woes. Farmers are misled and they unite only under sterile leadership.
Little did they ever realize that by frequently demanding such write off they
created a deep mistrust in lending institutions and walked into the trap of
money lenders instantaneously because debt and farming are inseparable
universally. Solution lies in reforms to
the Agriculture markets, price discovery mechanisms for the farmers, crop
planning and efficient delivery of inputs. Government of Telangana could prove
a worthy model in this regard and the future would decide the efficacy of
institutional transformation results.
Another important aspect is
that the injustice to the weaker sections has regional disparities. Some States
like Tamil Nadu, Kerala, Telangana etc., have performed well while the others
did not on Human Development Indices. Best practices of some states are not
picked up by the other states that continue their feudalistic practices.
The Ma-Baap attitude of the
Union and State Governments is now being questioned for good with the people
asserting their rights due to higher literacy rates and visual media within the
easy reach. Though the earlier marginalised sections have occupied seats of
power both in politics and bureaucracy their contribution to correcting the
situation is minimal and this aspect is mainly responsible for the imbalances
in the economy.
In democracy, admittedly, consensus
on issues concerning the inclusive agenda does not get so instantaneous
approval as the salaries of Parliamentarians or gubernatorial posts. Whenever
Elections are ahead, the interests of the poor get widely discussed. This is
where ‘ethics’ come into play. This is manifest in unemployment growth;
inflation; rural urban disparities and the social unrest in areas neglected and
people unattended.
What worry me are the
technological innovations like the AI and MMT, IoT that take away more jobs
than they create. I love the technologies that really are helping access to
information in real time, transparency and more accountability. But the
perilous consequences of intrusion into privacy, scope for fraudsters and
manipulators getting an edge over the right doers, making persons and
institutions slave to technologies are no insurance for sustainable employment
growth in the economy.
I notice that there is
maturity in our democracy and more and more people are voicing their concerns
and political activism could be the answer if there is proper leadership and
mentoring of the activist groups. Protection to the activist groups from the
powerful also needs emphasis in such context.
In spite of 73rd
and 74th Amendments to the Constitution, those states who are
seeking legitimacy of the Federal structure have been found to be defaulting in
recognizing the power of local bodies both in political and financial terms.
In the Federal context, it
is the view of some political analysts whether the country can have two Deputy
Prime Ministers – one representing the North and the other South, as there is a
feeling of total neglect of Southern States in certain key economic
dispensations.
Alternate institutional
mechanisms, political stability, bureaucratic reforms and eternal vigilance are
the remedies and eminent persons of stature who have a vision for the future
would make a significant contribution in driving them. They would eventually
also reduce the sovereign risk and bring about stability in domestic markets.
Published by Telangana Today on 24th March 2018.
