OPINION | India’s Growth Story – biggest rumor being propagated in the world
~~By Gaurav Tyagi
There are lies, damned lies and statistics. This phrase describes the persuasive power of numbers, especially the use of statistics to boost not so strong arguments.
India defied expectations by coming up with an annual gross domestic product (GDP) figure of 7 percent for the October-December 2016 period and following the several break downs that India suffered post demonetization, the figure projected raised doubts about the quality and reliability of India's official data.
DEMONETIZATION: IMPACT ON ECONOMY
Indian Prime Minister Modi's sudden decision to ban old 500 INR (Indian Rupees) and 1000 INR banknotes to be replaced by new 500 INR and new 2000 INR banknotes on 8th November, 2016 exerted a heavy toll on the Indian economy.
A vast majority of working population in India is paid in cash and purchase goods and services with cash.
Demonetization resulted in 86% of the currency in circulation being made redundant. India's vast informal sector suffered massive job losses.
Due to demonetization, cash strapped households held back on major purchases. Sales of consumer goods from domestic appliances to automobiles took a sharp dip. Consumer confidence touched rock bottom all across the country.
''The immediate withdrawal of a large volume of currency in circulation and subsequent replacement with new notes announced by the government in November contributed to slowing growth in 2016'' — A report by the World Bank.
THE UGLY TRUTH
India's main opposition party, Congress in March also dubbed these GDP numbers as 'surprising and 'highly suspect' which could dent India's global credibility.
Congress party accused the P.M and the finance minister of 'misleading the public'
These figures released by the Central Statistics Office (CSO) did not collate the data of impact of demonetization including losses in jobs and production especially in the micro, small and medium enterprises (MSME) sector.
The MSME sector accounts for approximately 40 percent of the production and 45-50 percent of exports in India.
The CSO uses the data only for companies listed on the stock exchange thus, all unregistered companies alongside informal manufacturers besides firms not listed on the stock exchange are excluded from the CSO data.
The public of India does not have access to the data used by CSO for its calculations neither does an average Indian know the names of manufacturing companies, the CSO used to generate these high figures.
This estimate of 7% GDP growth by CSO was highly inaccurate but for Modi government, it served as a strong platform to claim India as the 'fastest growing economy in the world' whereas in reality, India's growth story is the 'biggest rumor being propagated in the world'.
A CONVINCING LIE
Modi govt. changed the methodology to measure India's economic activity in 2015. This resulted in a sluggish economy being transformed into the world's fastest growing economy overnight.
The revision of Indian GDP was done in January 2015 by; changing the base year to 2012 from 2005 and shifting to a market price based model.
It resulted in high GDP figures but the real situation on the ground remains poor. This puts a very big question mark on the very credibility of the Indian economy.
BJP benefitted tremendously from this Public Relations (P.R.) exercise, as evident from the party's comprehensive wins in the provincial elections held during February- March 2017.
BJP attained absolute majority in Uttar Pradesh and Uttarakhand while in Goa and Manipur, it managed to form the government through 'under the table' dealings with some triumphant legislators of other political parties.
This cooked up figure of high GDP growth was extensively used by BJP during the election season to impress the masses during election rallies, speeches and meetings.
Joseph Goebbels, Hitler's Propaganda Minister during the Nazi Regime said, "If you repeat a lie often enough, it becomes the truth''. History it seems, does repeat itself.
The same GDP growth rate fell to a record three year low of 5.7% during the period between April-June 2017.
This is the lowest figure since, Modi government came to power in May 2014 with overwhelming majority.
Indian corporate houses and financial analysts have expressed large scale disappointment about the present plight of Indian economy.
INDIA'S FASTEST ECONOMY IN THE WORLD?
Former Reserve Bank of India (RBI) Governor, Raghuram Rajan, who was the head of India's Central Bank the RBI, from September 2013- September 2016, said that the Indian government should not have done 'chest thumping' on India being the fastest growing economy in the world.
He further added that Indian economy is still very small at USD 2.5 Trillion but the Indian establishment feels that India is a very big economy.
Rajan stated that there is no match between India and China.
China has to slow down considerably and India needs a rapid growth rate of 8-10% for the next 10 years in order to have any comparisons between these two nations.
Parliamentary elections are due in India, in less than two years time during 2019. Before that, several key provinces including Gujarat, the home base of Indian Prime Minister, Modi are scheduled to go to polls.
Modi government is fast running out of time to achieve genuine economic growth for India.
The author is a Master Degree holder in International Tourism & Leisure Studies from Netherlands and is based in China.
(Disclaimer: The views expressed in the article are the writer's own and TNT -The Northeast Today may or may not subscribe to the same views)