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Raghuram Rajan is right, India’s growth can’t be measured by numbers alone

Suraj Kumar Thube
Suraj Kumar ThubeJul 21, 2016 | 10:52

Raghuram Rajan is right, India’s growth can’t be measured by numbers alone

"Getting overly fixated with growth numbers should not be the priority. Instead the priority should be to focus on structural reforms and ensure macro stability."

This is the view expressed by RBI governor Raghuram Rajan at a recent interaction with a few select journalists in Mumbai. The insistence on calculating the accurate GDP growth figures has indeed become more pronounced.

The eight per cent-mark looks the destined goal as the lazy bracketing of a growth story between 7.2 per cent and 7.6 per cent just doesn't seem to carry any hope and optimism. This is even when, as the RBI governor has rightly pointed, are figures that remain on the same, achievable horizon.

However, the larger development seems to be the growing fixation of the present government with numbers and the heavy reliance on quantifying the recent surge in economic growth. This can be seen not just with analysing the GDP rates but with practically all the major schemes and decisions taken by the government off late.

An incessant barrage of facts and figures, as if the post modern logic of multiple interpretations and possibilities do not apply to something that sounds as convincing as the sheer power of numbers.

Reducing every political, economic, social and cultural development to mere numbers veils the complexities ensuing a particular economic trajectory.

The problems with the latest methodology for tracking the GDP growth is already a case in point. Apart from that, the obvious prevarication that one can discern over here is its inability to showcase a holistic picture of economic and human development.

Issues like health, education, social inclusion, citizenship, communalism etcetera are pressing questions that seldom get answered through a bunch of macro-economic figures. The fallouts of this growth engine become increasingly problematic to explain in numerical terms.

The recent IMF report called "Neoliberalism: Over Sold?" points exactly to this predicament where considerable hurdles remain to realize inclusive growth amidst "increased inequality".

What this near infatuation with numbers has done is it tries to justify each and every decision made by the government through loud claims based on grossly untenable figures.

A peculiar feature that has emerged in the recent past are the glaring discrepancies propping up in the public domain between the actual claims made and the reality on the ground. Some of them can be briefly highlighted over here.

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Numbers are essential but they fail to give a comprehensive view of its wide ranging effects.  

Starting with agriculture, the government recently announced an increase of 7.5 million tonne of wheat production over the previous year's 86.53 metric tonne.

As Harish Damodaran has recently pointed out, this has happened when the government procurement has gone down and the market prices are up by 14-15 per cent.

The claims have stunned observers in the same way as the loud noises that were made about "doubling" the farmers profit margins without any concrete solutions on achieving the target.

A similar claim regarding the total afforested area in the country needs to be taken with a pinch of salt. In 2013, a CAG appointed audit report stated that the total afforested area was close to 57,000 hectares.

In 2015, according to the former environment ministers reply, this figure miraculously shoots up by more than 13 times to 6,74,749 hectares in 2015!

To this can be added the government's recent claim of saving almost 22,000 crore under cooking gas subsidy by two things, namely - direct bank transfers and voluntary surrender of subsidy by affluent consumers. The claim was rebutted by a CAG report which pegged the saved amount to only 2,000 crores and the rest actually coming from the fall in the prices of LPG.

If the government is so keen on analysing each and every "progress" accruing from  a specious data set, then it probably should also look at some other set of figures to acknowledge the unfulfilled nature of their flagship schemes. Pradhan Mantri Kaushal Vikas Yojana came out with a celebratory revelation of having had managed to get 17.58 lakh candidates "skilled".

At the same time, barely 81,978 of them have got placements is something that has got conveniently swept under the carpet. Reasons from an "incomplete data set" to how candidates getting placements was never an objective have all been made till now.

Moving forward, the 2014 Union budget had allocated 8,000 crore for rural housing scheme and 4,000 crore for urban housing scheme. Till last year, only 29 per cent of the rural fund was actually allocated for the scheme.

This story is a continuation of previously pointed out trajectories of schemes like the Swachh Bharat Abhiyan which clearly missed its first year objective of building toilets by a wide margin.

Further, 200 million bank accounts have been opened under the Jan Dhan Yojana. A small but important caveat here is the number of dormancy of these banks being too high as was pointed out by the World Bank.

This series can go on and on if one is to look at India's performance in specific indicators like per capita GDP( lower than Iran, Maldives and Bhutan); Human Capital Index of 105 out of 130; maternal mortality rate of 190 deaths per 1,00,000 live births (at a time when the Infant Mortality Rate has drastically declined) and the worrying decline of female labour force to 27 per cent as was pointed out by the ILO recently are figures that should spark concern.

No doubt that all of these latter set of figures do not necessarily spring from the policies dispensed by the present political dispensation.

It however brings out a wrong message of glorifying an island of prosperity surrounded by an ocean of perfect despondency. The spurt in farmer suicides and the perceptible rise in communal clashes in the last two years as has been pointed out by the NCRB are among the other dark spots of the much touted growth model.

Numbers are essential but they fail to give a comprehensive view of its wide ranging effects. Also, they become a handy tool to claim positives and deftly impose a prejudicial culture of measuring economic growth. As each of these growth stories unfold in the future, they might well turn out to be pyrrhic victories.

Last updated: July 21, 2016 | 10:54
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