How To Package The Indian Economy

 To Make It Shine

 Utsa Patnaik

WITH the certainty of general elections in a few months, the packaging and strident selling of the image of India’s economic performance under the NDA government has begun. The media, both print and electronic, are going berserk: they are full of an expected eight per cent growth rate of agricultural and foodgrains output, upwardly revised projected manufacturing growth rate of nearly seven per cent and the like. ‘India is shining’ according to the public relations managers of the BJP government, which is confident of coming back to power on the back of a good monsoon and the media hype it has itself generated, not to speak of the victories in recent state elections. There is supposed to be a ‘feel good factor’ going around: just who is shining and who may not be, who is feeling good and who might be feeling somewhat bad, are not however matters which are being too closely investigated.

SPURIOUS CLAIMS REGARDING GROWTH

What is surprising is not that the government should be making spurious claims regarding the performance of the economy, but that there should be no independent and objective assessment of these claims. No clearer example of the deliberate misuse of statistics can be provided than the throwing around of 7 to 8 per cent projected growth rates in 2003-04 as a great achievement even though there was an abnormal dip in growth in the year ended, 2002-03 which was a very bad drought year. In the following paragraphs, I will take up first the spurious nature of the claims on growth, secondly the reality of sharp deterioration in the largest spheres of livelihoods --- agriculture as well as manufacturing --- and, thirdly, explain why the claim that poverty has declined, is incorrect.

Take first the question of growth. In fact, an 8 per cent growth of fooodgrains output which is being talked of, seems high but means nothing given the unusually low base of the last, drought-year output on which it is calculated. An 8 per cent growth, even if actually achieved --- and the coming rabi season will determine that --- would bring the total foodgrains output in 2003-04 only to the level already achieved seven years ago, in 1996-97! This is because in 2002-03 foodgrains output had dipped sharply to 182.6 million tonnes, as much as 28 million tonnes less than the level of 211 million tonnes seen in 2000-01, and 17 million tonnes below the output level of 199.4 million tonnes that we had seen as far back as 1996-97. This drought year level of a mere 182.6 million tonnes was a 13.5 per cent drop compared to the preceding year. An 8 per cent growth from the greatly lowered base of last year simply means 1.08 multiplied by 182.6 million tonnes which gives us 197 million tonnes projected output for 2003-04, 14 m illion tonnes lower than before the drought and somewhat lower in fact than even the level as far back as seven years ago.

Is this order of growth a matter to be celebrated? It means a substantially lower per head foodgrains output in 2003-04 compared to 1998. The apparently bright and ‘shining’ brats who have been uncritically tomtoming the government’s claims of high growth, in the general news or the business news slots in the electronic media, are actually so dim, that they do not even mention this obvious fact, that a mere 8 per cent growth calculated on an output base, which was itself over 13 per cent lower owing to drought implies that 2003-04 output, would necessarily be lower than levels seen years before the drought. This will hardly provide the demand stimulus the economy needs after the pursuit of years of relentless deflationism in subservience to the diktat of the Bretton Woods Institutions (BWIs).

ANTI-DEVELOPMENT GOVERNMENT

No government has been more anti-development than the NDA. The great ‘achievement’ of the NDA government has been to lower agricultural growth in general and foodgrains growth in particular, not to speak of inducing industrial recession, owing to a sharp cutback it has enforced on development expenditures which include expenditure on irrigation and power. From an average of 14.5 per cent of GDP during the seventh plan period of 1985-90 before reforms, the sharp decline of public rural development expenditures has brought it to below 6 per cent of GDP in the last five years. In real terms the NDA government has been spending Rs 30,000 crore less annually on rural development since 1998, compared to the period before economic reforms. It is hardly surprising that through multiplier effects, both employment and incomes of the masses have declined sharply.

There can be no greater hypocrisy than the NDA government’s talking of “development” suddenly three months before elections when we consider its five years of anti-development misrule. Nor can there be more tendentious and incorrect headlines than seen on January 10 saying that the government is going to provide Rs 50,000 crore for rural development. Even a normally responsible newspaper like The Hindu, on January 10, carried screaming banner headlines misleading the public, which said “centre provides Rs 50,000 crore for ‘second Green Revolution’”. One wonders whether The Hindu, along with the rest of the bourgeois press, has become an election mouthpiece of the NDA government for propagating such a blatant lie. The government has not, and is not going to provide funds for anything through expansionary fiscal policy: it will shirk the responsibility of governance as it has done during the last five years. Nor can it undertake any development expenditure today if it has not done so in the past, because in its irresponsible and cynical pre-Budget proposals it is talking of giving further tax concessions to the rich totalling over Rs 10,000 crore, reducing the already low tax-GDP ratio. All the NDA government has actually proposed for infrastructure and agriculture is to set up an earmarked fund where the money for this fund is supposed to be borrowed from the domestic public and from foreign markets, with a target of raising about Rs 16,000 crore annually over the next three years. Even if it is realised --- which is rather doubtful --- these sums are far too small to compensate for the past drastic cuts in expenditures or to bring their level back even to that of 1990. Further, a government which is so subservient to imperialism and the deflationary agenda of the BWI, that it has exported nearly 20 million tonnes of foodgrains from June 2002 to date while the poor of India starved, is not going to actually undertake any expansionary programmes, though it is being permitted by its masters in Washington to make the appropriate noises to mislead the public for the purpose of retaining power and for the purpose of continuing to implement the imperialist agenda.

The actual performance of the NDA government is that it has cut real (at constant prices) development expenditure by at least Rs 30,000 crore annually since taking power, compared to the pre-reform levels. If we assume a plausible multiplier value of between 4 to 5, the order of real annual income decline, would be between Rs 1,20,000 crore to 1,50,000 crore in rural areas alone, and it is this which has sharply affected the level of demand for necessities like foodgrains and for simple manufactures. This income decline along with the price declines faced by producers, is consistent with the fall in the share of the nation’s income which is contributed by agriculture, to barely above a quarter of GDP compared to a third a few years ago. In manufacturing, the recession induced by deflationary reform policies of the NDA and the strongly anti-small enterprise bias of its input and credit policies, has not only lowered growth but also induced both de-industrialisation and a process of centralisation of capital. The fact of de-industrialisation is clear from the fall in the share of GDP contributed by industry, from 28 per cent in 1990 to just over a quarter today, and the centralisation process is marked by small scale industries being driven to the wall, extensive closures and loss of employment particularly in textiles, a process in which only the big sharks have a chance of surviving. The many small producers are bankrupted, while the few sharks with access to corrupt NDA ministers and to privileges, are indeed shining. Others who are shining are a handful of stock market speculators; it is very likely that the present abnormal bull run on the stock markets will turn out to be the same kind of rigging the market with the collusion of one or two unprincipled bank managers as was seen in the early nineties. 

AGAINST THE POOR AND VOICELESS

Let us see what else is not so shining in the NDA’s attempt to brightly package and sell the Indian economy’s image, which might be likened to a Cadbury’s or Nestle chocolate bar covered in shining foil but with maggots crawling inside. If both agriculture and manufacturing are contributing less to GDP, it is the services sector which has been booming --- but not shining. As income distribution has shifted towards the top 10 per cent or so of the population, a modern version of the Mughal economy is emerging with dozens of service providers for each member of the elite, whose activities range from eating out much more than before to reducing their adipose tissue in slimming clinics. The 65 per cent of the urban population who live in slums and do not get enough employment or food to eat are not shining, nor are the 80 per cent of rural population shining, who similarly cannot get enough work and food to reach the minimum nutrition norm of 2400 calories.

The NDA government has Guinees book-level, first-ever record  “achievement” to its discredit, that 40 years of painfully slow rise in the per capita availability of basic foodgrains for the population, has been wiped out in just five years of NDA misrule: and this is a government which dares to talk of India ‘shining’ and of ‘development’! To be precise, between 1950-51 and 1997-98 the annual foodgrains absorption per head of population rose from 150 kg to 174 kg. By 2000-01 even before the drought, it had fallen to 151 kg, and in the current year, 2003-04 is likely to be at about the same level. The average Indian family is absorbing annually nearly 100 kg less of foodgrains today than a mere five years ago --- a phenomenal drop, an unprecedented drop, never seen before in the entire last century of India’s history: even during colonial rule such a drop took place only under the abnormal conditions of the second world war, yet it has taken place in independent India under NDA misrule because it has implemented severely income deflating economic policies including the sharp reduction in development expenditures mentioned earlier.

In short it has not been a business as usual scenario during NDA rule: it has been an utterly unprecedented period of cut in mass purchasing power combined with rise in the purchasing power of the Indian elites including the professionals and the salariat. Deepening undernutrition and starvation of segments of the population combined with hedonism and a consumption orgy for the top five to ten per cent of the population greedily accessing modern consumer goods: this has been the scenario of increasing dualism. Since it is the latter who are the vocal controllers of the media, we see --- with one or two honourable exceptions --- correspondingly the most determined effort to ignore, rationalise and paper over the deepening distress of the majority of the working population. The tiny minority of the population who are beneficiaries of reforms, have lost all reason and humanity, and are saying along with Louis IV: “L’etat, c’est moi” (The State, it is I).

PLAYING THE NDA GAME

Antonio Gramsci had put forward the idea that intellectuals as a ‘socially crystallised category’ cling to old ideas, and fail to articulate the needs of the society: “it is evident that the “crystallised intellectuals are conservative and reactionary” (Gramsci, The Modern Prince). This idea helps us to understand the strange sight of apparently liberal intellectuals playing the NDA game by putting forward logically absurd poverty estimates showing a decline in poverty in recent years, which is an utter travesty of the true state of affairs since nutrition poverty has risen substantially: at least 75 per cent of the population failed to access the minimum calorie intake norm by 2000 according to the NSS consumption data and there has been a steady fall in per capita calorie intake in the 1990s, which has speeded up in the last few years. The NDA government in its usual lying mode, claims a sharp decline in the proportion of population in poverty to below 30 per cent and the academic poverty estimators at most give us three to four percentage points higher, but the reason for these low figures is that they make use of the quantities of food items consumed by people over 30 years ago rather than the actual current quantities even though these are available from the current NSS surveys. There is no rational reason, except probably the desire to be part of an existing global discourse on poverty --- albeit an intellectually second rate one --- which leads our academics to follow this absurd procedure, and thereby they help to feed untrue propaganda into the mill of the BJP. They are not shining either as intellectuals, for intellectuals should be committed to the truth and to the cause of the voiceless, not to reinforcing ruling class lies through their laziness in not altering untenable estimation procedures.