Satyapal Menon (India’s Contrived Growth Story, THI, May 10, 2024) joins all of the country’s great naysayers who will never believe India can be an economic powerhouse. A layperson finds it frustrating when experts juggle the same set of “facts” to present exactly opposite interpretations. To all the naysayers, the question is: if we were so poor, why did the whole world come sequentially to plunder us when we should be doing so in reverse? If we are a poor country, why does the world still come to us? India never had the need to go out to invade and loot; we did venture out, but only for trade or spreading knowledge.
The famed GDP, the subject of maximum mutilation and interpretation in India, was always high. However, the GDP per capita, i.e., the GDP divided by the population of India, was never so high. The high population in the denominator always seems to be a factor pulling the numbers down. Is a high population good or bad?
The second half of the 20th century, with broadly two phases: 1950–1980 and 1980–2000, holds an amazing Indian economic story. By 1991-2000, an economic liberalisation standing on the shoulders of a huge agricultural revolution increased the GDP to 6.2 percent, while population growth slowed to 1.8 percent—a per capita income growth of 4.4 percent a year. Successive governments built on their previous successes.
There were serious naysayers, such as Raj Krishna (1978), who coined the “Hindu rate of growth” to denote the slow rate of GDP growth from the 1950s to the 1980s. The slow rate had more to do with governmental licensing policies and an inefficient political-bureaucratic machinery. Raghuram Rajan reaffirmed this theory. Angus Maddison’s research shows how India (very Hindu in its character) was consistently contributing to almost 35–40% of the world GDP from the beginning of the common era to the 17th century, when the East India Company landed. Colonial plunder ensured that, at independence, India was contributing a pathetic 1.8% to the world GDP. Of course, the word GDP needs to carry some meaning. To add to the confusion, there are figures such as the “growth rate of per capita GDP,” where India appears to have performed well.
Economists also confuse people by constantly changing the definitions of poverty. Some different methodologies include income-based calculations, consumption- or spending-based calculations, purchasing power parity (PPP), nominal relative basis, multi-dimensional poverty index, and global hunger index. The prevalence estimates of poverty in India, using various definitions, range widely: from 6.7 percent to 60 percent of the population.
The rich 1 percent may hold upwards of sixty percent of the total wealth, making it one of the world’s most unequal countries. A more equitable distribution of wealth and decreasing the levels of corruption in both the public and private sectors should be our goal. Of course, Robin Hood-type money distribution would be a social disaster. Irrespective of political alliances, one would rather believe a better story than the perennially dark economic story of the present author. Despite all the disputes, one can safely agree that the Indian economy stood on strong ground, with a mix of the good and the bad, like for all countries, across the centuries.
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