Resources Research

Culture and systems of knowledge, cultivation and food, population and consumption

It’s time to rid India of the GDP disease

with 2 comments

A woman in the Aravalli hills of Rajasthan carries home a headload of field straw. India’s National Accounts Statistics is completely ignorant of the biophysical economy.

On 5 January 2017 the Central Statistics Office of the Ministry of Statistics and Programme Implementation, Government of India, issued a note titled “First advance estimates of national income, 2017-18”. The contents of this note immediately caused great consternation among the ranks of those in business and industry, trading, banking anf finance, and government who hold that the growth of India’s gross domestic product is supremely important as it is this growth which describes what India is and should be.

In its usual bland way, the Central Statistics Office said that this was “the First Advance estimates of national income at constant (2011-12) and current prices, for the financial year 2017-18” and then proeeded, after a short boilerplate explanation about the compilation of estimates, delivered the bombshell to the GDP standard-bearers: “The growth in GDP during 2017-18 is estimated at 6.5% as compared to the growth rate of 7.1% in 2016-17.” [pdf file here]

To me, this is good news of a kind not heard in the last several years.

But India’s business and financial press were thrown into a caterwauling discord which within minutes was all over the internet.

An example of one out of the many messages in a daily barrage delivered by the Government of India’s ‘GDP First’ corps. This is from what is called the Make in India ‘initiative’ of the Department of Industrial Policy and Promotion, Ministry of Commerce. “Make in India is much more than an inspiring slogan,” the DIPP says. “It represents a comprehensive and unprecedented overhaul of out-dated processes and policies.” For this childish GDP rah-rah club, environmental protection, natural reserves, watershed conservation, handloom and handicrafts are all outdated practices and ideas.

‘GDP growth seen at four-year low of 6.5% in 2017-18: CSO’ said the Economic Times: “Most private economists have pared the growth forecast to 6.2 to 6.5 percent for this fiscal year, citing the teething troubles faced by businesses during the roll out of a goods and services tax (GST).”

‘7 reasons why FY18 GDP growth forecast should be viewed with caution’ advised Business Standard: “The fact that growth will be 6.5% is significant as it is even lower than the Economic Survey assumption of 6.75-7.5% for the year. Hence, it is not expected to be higher than the base mark which means that it would be lowest in the past three years. The effects of demonetisation and GST have played some role here.”

‘CSO pegs FY18 growth at 6.5%; why forecast is an eye-opener for Narendra Modi govt’ said Firstpost: “The healthy uptick in volumes displayed by many sectors in November 2017, is expected to strengthen in the remainder of FY2018, benefiting from a favourable base effect and a ‘catch up’ following the subdued first half. Accordingly, manufacturing is likely to display healthy expansion in volumes in H2 FY2018, which should result in a substantial improvement in capacity utilisation on a YoY basis.”

‘GST disruptions eat FY18 economic growth; GDP seen growing at 6.5%, lowest under Modi government’ huffed the Financial Express: “For a broad-based recovery the rural economy needs to recover and we can expect the upcoming budget to focus on alleviating some of the stress in the rural economy and concentrating on measures to augment the flow of credit in the economy. Overall growth is likely to improve in the coming year and possibly move up beyond the 7% mark in FY19.”

‘India’s GDP growth seen decelerating to 6.5% in 2017-18 from 7.1% in 2016-17’ said the Mint: “The nominal GDP, or gross domestic product at market prices, is expected to grow at 9.5% against 11.75% assumed in the 2017-18 budget presented last year. This may make it difficult for the government to achieve the fiscal deficit target of 3.2% of GDP in a fiscally tight year.”

‘India Sees FY18 GDP Growth At 6.5%’ observed Bloomberg Quint: “Growth in gross value added terms, which strips out the impact of indirect taxes and subsidies, is pegged at 6.1 this year, versus a revised 6.6 percent last fiscal. Both GDP and GVA growth were marginally below expectations. A Bloomberg poll had pegged GDP growth at 6.7 percent. The RBI had forecast GVA growth at 6.7 percent at the time of its last policy review in December.”

‘India’s FY18 GDP growth estimated at 6.5%, says CSO data’ said Zee Business: “Real GVA, i.e, GVA at basic constant prices (2011-12) is anticipated to increase from Rs 111.85 lakh crore in 2016-17 to Rs 118.71 lakh crore in 2017-18. Anticipated growth of real GVA at basic prices in 2017-18 is 6.1 percent as against 6.6 percent in 2016-17.”

So great is the power of the School of GDP and of its regents, who are as priests of the Sect of GDP Growth, that the meaninglessness of GDP is a subject practically invisible in India today. Just as it has no meaning at all to the woman in my photograph above, so too GDP has no meaning for all, including the 2.7% (or thereabouts) who pay income tax.

This tweet shows us the scale of the problem. An article by Klaus Schwab of the World Economic Forum (a club of powerful globalists) is posted on the website of Prime Minister Narendra Modi ! The head of the ruling BJP’s information unit broadcasts it.

India’s National Accounts Statistics presents every quarter and annually, estimates of the size of the country’s GDP, of the rate of GDP growth, of the size of ‘gross value added’, to which GDP is bound in ways as complicated as they are misleading. There are wages, interests, salaries, profits, factor costs, net indirect taxes, product taxes, product subsidies, market prices, industry-wise estimates and producer prices to juggle.

For the most part, these are prices and costs alone, upon which various kinds of taxes are levied and whose materials and processes may qualify for subsidies. All these are added and deducted, or deducted and added, and finally totalled show a GVA which then leads to a GDP. The prices are arbitrary and speculative, as all prices are, the arbitrariness and speculative nature being attributed to something called market demand, itself a creation of policy and advertising – policy to choke choices and advertising to spur greed. On this putrid basis does the School of GDP stand.

The GDP and GDP-growth frenzy in India spares not a minute for a questioning of its fundamental ideas, which in certain quarters had begun to shown as hollow and destructive in the early 1970s, when the effects of the material and consumption boom in Europe, North American (USA and Canada) and some of the OECD countries after the end of the Second World War became visible as environmental degradation.

Over 30 years later, sections of those societies inhabit and practice what are called ‘steady state’ economics, ‘transition’ economics (that is, transition to low energy, low consumption, recycling and sharing based ways of collective living) and ‘de-growth’, which is a scaling down of economic production and consumption done equitably and to ensure that a society (or groups of settlement and their industries) strictly observe the bio-physical limits of their environment (pollution and pollutants, land, water, biodiversity, etc).

But the Central Statistics Office of the Ministry of Statistics and Programme Implementation, Government of India, is ignorant of such critical thinking. It is just as ignorant of the many efforts at swadeshi living, production, cultivation (agro-ecological) and education (informal learning environments instead of reformatted syllabi lifted wholsesale from countries whose exploitative economies installed globalisation as the default economics mode) that are visible all over India today. The CSO and MoSPI are not entirely to blame for this abysmal blindness, because the Ministry of Finance (like every other major line ministry of the Government of India, and like every state government) has decided to be even more blind.

To read the insensate paragraphs disgorged every quarter from the CSO (and Ministry of Finance, likewise the Niti Aayog, the chambers of commerce and industry, the many economy and trade think-tanks) is to find evidence to pile upon earlier evidence that here is an administration of a very large, extremely populous country which cares not the slightest about the indubitably strong correlations between ‘GDP growth’ and more forms of environmental damage than have been reckoned.

The GDP-GVA-growth fantasy cares not the slightest about energy over-use and CO2 emissions, about the effects of widespread atmospheric and chemical pollution on the health of the 185 million rural households and 88 million urban households (my estimates for 2018) of India, and about the terrible stresses that the urban households in more than 4,000 towns, district headquarters and metros are subject to as a result of their lives – through mobile phone apps, banks, the food industry, the automobile industry and the building industry – being micro-regulated so that an additional thousandth of a per cent of GDP growth can be squeezed out of them.

The GDP asura has brought ruin to India’s environment, cities, farms, households, forests, rivers, coasts and hills. Let 2018 be the year we burn the monster once and for all.

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2 Responses

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  1. Love this article! If only you could give it in a simpler form (yes, I know it’s already simple, but I meant for the lay people) I would like to share it.

    Bhanu

    January 9, 2018 at 00:49

    • Thank you Bhanu I am happy you find the article useful. Yes I can rewrite it. Environment and ecology, forests and water and their contribution to our well-being is not emphasised enough.

      makanaka

      January 9, 2018 at 21:33


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