P Chidambaram writes: Wishful Bharat is not Viksit Bharat

Terror of Numbers

Numbers have a way of befuddling the best minds. First, Mr Jaishankar’s proud take on the size of the economy: “today, we are a $4 trillion economy with a trade of $800 billion… if you look at Investments of foreigners in India…”. The reality is far different. We are not yet a USD 4 trillion economy. We are huffing and puffing to cross that number toward the goalpost of a USD 5 trillion economy — the finance minister and the chief economic adviser have shifted the goal post thrice in the last six years. On trade, at the end of 2023-24, our merchandise export was USD 437 billion and import was USD 677 billion. The trade deficit was USD 240 billion. Foreign direct investments in India have declined from USD 84.84 billion in 2021-22 to USD 70.95 billion in 2023-24.

Mr Jaishankar praised “our ability to deliver benefits… the food and nutrition support”. If he was referring to the 5 kg of grain per person that is distributed free, I would have thought it was an indication of the widespread distress and low wages, especially in rural areas. He also praised India for being the “most efficient producer and inventor of vaccines during COVID”. The sole vaccine that was invented in India was Covaxin that showed an effectiveness of about 80 per cent. The other vaccine, Covishield, had an effectiveness of nearly 90 per cent and was licensed by Oxford-AstraZeneca. Of the 200 crore vaccines administered, 160 crore were Covishield.

Not Strong Pillars

Mr Vaishnaw was no less effusive while he shared his views on India “achieving a sustained growth rate of 6 to 8 per cent”. He identified the ‘four pillars’: capital investment, manufacturing, inclusive growth and simplification. However, if we look at data, India’s real GDP growth rate has averaged 4.99 per cent in the last 6 years but that included the COVID-affected year. Capital expenditure by the central government and public enterprises actually declined from 4.7 per cent of GDP in 2019-20 to 3.8 per cent in 2023-24 (Mr Modi’s second term). Manufacturing as a percentage of GDP also declined from 15.07 per cent in 2014 to 13.46 per cent in 2019 to 12.84 per cent in 2023. Inclusive growth is a debatable issue that cannot be proved or disproved in a brief essay, and hence I shall pass. And, on simplification, there are more rules and regulations today than there were 10 years ago, especially under Regulatory laws. Ask any chartered accountant or company secretary or legal practitioner, they will tell you the massive addition of rules and regulations — and complexity — in the laws relating to income tax, GST, company law, RBI regulations, SEBI regulations, etc. Have you recently applied for a passport or registered a sale deed or opened a bank account? I am amazed by the number of signatures required.

Do Reality Check

Mr Jaishankar and Mr Vaishnaw can legitimately be proud of the progress we have made in the country since liberalisation in 1991. It was the dawn of economic freedom. There were setbacks especially during 1997 (Asian financial crisis), 2008 (international financial crisis), 2016 (demonetisation) and 2020 (COVID). Yet, successive governments stood on the shoulders of the previous government(s) and added more building blocks. No government started on a slate that was full of rubbish, wiped it clean, and started writing — as the Modi government would like us to believe. Take the Covishield vaccine: The Serum Institute of India was founded in 1996 and built vast capacity and gained enormous experience in manufacturing biologicals. When the COVID opportunity came, it was ready to absorb the AstraZeneca technology and become one of the largest producers of vaccines in the world. Take the vaunted JAM — acronym for Jan Dhan accounts, Aadhaar and Mobile. The seeds of the no-frills bank account (zero balance account) were sowed by two RBI governors, Dr S Rangarajan and Dr Bimal Jalan (1992-1997, 1997-2003) and millions of accounts were opened. The first Aadhaar number was issued on September 29, 2010 under the guidance of the Unique Identification Authority of India (UIDAI). The Mobile revolution started when the first call was made on July 31, 1995.

If you wish to know the current state of the economy, you must certainly listen to the praise heaped by the ministers (it will uplift your spirits) but also read the essay on the State of the Economy in RBI’s bulletin published every month.