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Controversy Over GDP Futile – OpEd


While it is true that the high GDP growth can mean that many more people are lifted out of poverty, it does not mean equitable growth. The rich have benefited a lot from the high GDP growth under both the UPA and NDA regimes. But very few poor have risen to high positions of wealth and power during both times.


By Jayshree Sengupta

What a controversy over a small difference in GDP growth! Ministers of the ruling NDA government and the past UPA-I and UPA-II governments have been at loggerheads over who performed better. What difference does 0.9 per cent GDP growth rate (between UPA’s 8.1 per cent and 7.2 per cent of NDA) make to the common person on the street? None! Most people won’t even know the definition of GDP or Gross Domestic Product and how it is measured, leave aside who has measured it and how.

Why is the ruling NDA government so sensitive to what the GDP numbers say? Because the truth is except for a few professionals and rating agencies — no one really cares? People only care about their own well-being and the welfare of their families. Most people, however, get taken in by political slogans and high-performance promises like ‘India Shining’ or ‘Achhe Din,’ but in the end are disillusioned by the government in power. They realise that whether it is the UPA or the NDA, it is the same story with whosoever is in power.

Fortunately for India, we have an economy which is more or less on auto-pilot. As Adam Smith said, the economy works as though by an invisible hand. We have a hardworking bureaucracy and labour force and people are not bothered about holidays or getaway weekends — things that bug the West. India has a hardworking agricultural population which keeps producing food despite intolerable hardships.

To most people, their own health, children’s education, old-age security, jobs and inflation matter. We don’t have reliable data on jobs yet and so we’ll have to wait till the elections to see whether the government’s claim of creating several million jobs in the last few years is true or not because people with jobs will vote for it. Regarding education, primary education is still not up to the mark and the dropout rates have continued to be high in both UPA’s and NDA’s times. The same is the state of healthcare.


Primary healthcare remains in doldrums and the strides made by India have been in private healthcare where one has to cough up a lot of money for state-of-the-art treatment. The Modi government has initiated a health scheme (Ayushman Bharat) which promises access to healthcare for all. Whether it actually delivers what it has promised only time will tell.

All these indicators about which the common man or woman is worried about during one’s lifespan can be found in the human development index. If one looks at the improvement in it during the span of both the governments in power, it is quite shameful. The progress has been at a snail’s pace, with India ranked at 131 out of 188 countries in 2016, based on the 2015 data.

Similarly, if one takes into account the safety of women and protection of girls, India fares very poorly and is the most unsafe place for women in the world (Thomson Reuters Foundation, 2018). This has been the case under both regimes because despite high rates of GDP growth, crimes against women have continued.

High GDP growth can be wonderful if the fruits of growth are distributed evenly and the poorest are included. While it is true that the high GDP growth can mean that many more people are lifted out of poverty, it does not mean equitable growth. The rich have benefited a lot from the high GDP growth under both the regimes. We have 131 billionaires today. There is a huge concentration of wealth among a few who wield disproportionate power and clout. Their wealth is apparent in their lavish lifestyles. This has created a huge mass of aspirational Indians, but only a few ever become millionaires or billionaires. The poor have fewer chances as they are handicapped by lack of proper education, capital and connections. Very few have risen to high positions of wealth and power during both the regimes.

Corruption became a hallmark of the UPA regime and expansion of credit, given indiscriminately to people of influence. The present government has been saddled by huge NPAs and a fall in investment, as a result. But the core stimulus of an economy lies in its new investments, which fared better during the UPA times and so also gross fixed capital formation and savings. One can say that the UPA was helped by the global boom and falling oil prices, but it, too, suffered a huge current account deficit which it managed to shrink towards the end, accumulating forex reserves at a faster rate than the NDA.

Today, we need not worry about capital flight bringing the rupee down to scary levels when our forex reserves are high due to both the regimes.

Regarding the quality of life that the average person longs for, the most important is the air we breathe. Both the regimes have been unsuccessful in controlling air and water pollution. The rivers and water bodies are as polluted. The quality of public transport is below par and it forces people to go for their own vehicle which has led to traffic congestion and air pollution. Other contributors also have remained unchecked.

So what is the difference between the two regimes and is this controversy worth giving a thought? Also, GDP growth does not measure so many things such as the growing intolerance of the present regime towards minorities and political dissent. Similarly, the policy paralysis of UPA-II is not reflected in its higher GDP growth.

This article originally appeared in The Tribune.

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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