People's Democracy

EDITORIAL

HDR 2003: Botswana Moves Up, India Slips Down

AS WE go to press, the 2003 Human Development Report (HDR) of the United Nations Development Programme (UNDP) has been released.  This report confirms, once again, what we, through these columns, have always held -- India's rate of economic growth is not adequate to meet the needs of its people. What is worse is the fact of not only the low pace of growth but also the growing inequality between the rich and the poor. The report confirms that India is home to the largest number of hungry people in the world -- 23.3 million! (a gross underestimate going even by the Government of India’s own official statistics). It also expresses grave concerns over the disparity in income levels, rising unemployment and low life expectancy.

The report ranks 175 countries of the world on the basis of a comprehensive Human Development Index (HDI).  According to the latest report, which contains data for the year 2001 (much before the acute agrarian distress which affected crores of people, as noted in these columns earlier), India has been pushed down three rungs on the index and ranks at number 127. The previous year’s ranking was 124. The official explanation for this was interesting.  The report says, India slipped down the list because of Bosnia and Herzegovina and occupied Palestinian territories joining the list and Botswana moving up the order. No comment is necessary. India ranks below the occupied Palestinian territories in terms of the HDI!

One need not go far to look for reasons behind India's slipping down the HDI.  The situation may be worse if the latest statistical information about the health of the Indian economy is taken into account.  Despite all hype and hullabaloo by this Vajpayee-led government, the Central Statistical Organisation (CSO) has confirmed, once again, that India turned in a mediocre performance in 2002-03.  The CSO's revised estimates have placed the growth of the Gross Domestic Product (GDP) at a mere 4.3 per cent.  This is merely a half of the bombastic claims made by prime minister Vajpayee when he announced that during the tenth plan period (2002-07), India will achieve a target of 8 per cent growth!

The CSO statistics mean that for three consecutive years -- from 2000-01 onwards -- the Indian economy has grown at far less than 6 per cent a year.  This compares poorly with the record of the nineties when some years had seen a growth rate of more than 7 per cent (1994-95 to 1996-97).  Even this growth, however, was accompanied by an alarming rise of inequality. 

The official explanation (read excuse) for the slow growth is to put the blame on the drought last year. As we argued earlier, the drought came on top of a miserable agrarian scenario where growth rates were sharply declining in the last three years.  Last year, the value added in agriculture contracted by 3.2 per cent.  What is worse is a sharp decline in rural investment is leading to a 14 per cent fall in foodgrain production.

The per capita availability of foodgrains in 2002-03 was, in fact, lower than the period of the second world war, which led to the savage Bengal famine and the consequent food riots.   The opening up of agriculture to the ravages of globalisation and the withdrawal of the quantitative restrictions have wreaked havoc.  This comes on top of the continuous neglect of capital investment in agriculture.  Unless these trends are reversed, slogans of 8 per cent growth rate will remain a pipedream. 

Much is being made of the growth in manufacturing during the course of the year -- from 3.8 per cent in the first quarter (April-June), the sector grew to 7.1 per cent in the last quarter (January-March). The index of industrial production, however, shows a deceleration in April 2003. Clearly, what is happening is not an industrial recovery. 

The basic weakness in the Indian economy has been the low levels of capital investment. This can, however, only increase if there is a substantial growth in domestic demand -- a point that we have repeatedly argued in these columns. The entire gamut of economic policies pursued by the Vajpayee government, succumbing to the pressures of foreign capital and imperialism, are, on the contrary, constantly contracting domestic demand by imposing greater burdens on the people. Merely making capital available in abundance and at cheaper cost (through cuts in interest rates) will not automatically lead to growth.  Capital will be invested only when there is a demand for the products that are produced through such investment. With economic policies aimed at the contrary, there is little hope, under the present dispensation, for increase in capital investment.

Much is being made out of the huge accumulated foreign exchange reserves.  This is being paraded as a reflection of the health in the economy. Balance of payment's current account surplus increased for the second consecutive year -- it was $780 million in the current year, but in the last year, it was a huge $ 3.7 billion.  This led to a growth of $17 billion in foreign exchange reserves  last year.  There is a catch in this -- the largest contributor to this increase has been the remittances being made by NRIs.  The largest single contribution in this category came from banking capital where nearly $8 billion came in terms of net receipts in the Indian banks.  This is more of a case where unaccounted money launched in foreign banks is being brought back because of the relaxation in the regulations given by this Vajpayee government, which, actually, is a reward for money that was illegally accumulated abroad without paying any taxes. This is nothing but legalising corruption and sleaze and allowing the culprits to go scot-free. 

Clearly, unless the present course of surrendering India's economic sovereignty and embracing unbridled liberalisation and permitting the loot of public assets is reversed, the Indian economic growth cannot accelerate enough to meet the needs of its people  -- this is the real import of the HDR, 2003. 

In the passing, it must be mentioned that the HDR was particularly appreciative of West Bengal and Kerala where it notes that the decentralisation has brought significant improvements.  With regards to Kerala, it reconfirmed its earlier observations that the HDI indices compared favourably with the most developed countries in the world.  The health indicators of Kerala were similar to those in the US despite an annual spending on health being just $28 per person.  The per capita income in Kerala is 1 per cent of that in the USA.  The basic infrastructural developments undertaken by the Left governments in both these states, much to the dismay of our critiques and adversaries, are showing glowing positive results as far as the people's welfare is concerned.