Resources Research

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Posts Tagged ‘growth

It’s time to rid India of the GDP disease

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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GDP rah-rah club, environmental protection, natural reserves, watershed conservation, handloom and handicrafts are all outdated practices and ideas.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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Holding our breath in India’s cities

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India's cities and PM2.5 - the official response has been to reject the WHO findings

India’s cities and PM2.5 – the official response has been to reject the WHO findings

The findings by the World Health Organisation on the quality of air in India’s cities are the strongest signal yet to our government (old and new, for the results of the 2014 general election will become known on 16 May) that economic ‘growth’ is a weapon that kills citizens through respiratory tract diseases and infections.

Amongst the 124 Indian cities in the new WHO database on urban air quality worldwide, one city only is at the WHO guideline for PM2.5 and one city only is just above the guidelines for PM10. As a bloc, the quality of air in India’s cities are at alarmingly high levels above the guidelines, above Asian averages (poor as they are, and even considering China’s recklessly poor record) and above world averages.

This is not a singular matter. Already, the WHO has warned that India has a high environmental disease burden, with a significant number of deaths annually associated with environmental risk factors. The Global Burden of Disease for 2010 ranked ambient air pollution as the fifth largest killer in India, three places behind household air pollution. Taken cumulatively, household and ambient air pollution constitute the single greatest risk factor that cause ill health -leading to preventable deaths – in India.

The WHO database contains results of ambient (outdoor) air pollution monitoring. Air quality is represented by ‘annual mean concentration’ (a yearly average) of fine particulate matter (PM10 and PM2.5, which means particles smaller than 10 or 2.5 microns). The WHO guideline values are: for PM2.5 – 10 micrograms/m3 annual mean; for PM10 – 20 micrograms/m3 annual mean. The two charts show just how dangerously above the WHO guidelines the air quality of our cities are.

India's cities and PM10 - it is the latest amongst many signs that India's GDP growth fever is a killer.

India’s cities and PM10 – it is the latest amongst many signs that India’s GDP growth fever is a killer.

Half of India’s urban population lives in cities where particulate pollution levels exceed the standards considered safe. A third of this population breathes air having critical levels of particulate pollution, which is considered to be extremely harmful. “We are also running out of ‘clean’ places. Small and big cities are now joined in the pain of pollution,” commented Down To Earth, the environment magazine.

Typically, the official Indian response was to question the WHO findings (these were carried out in the same way in 91 countries, and we don’t hear the other 90 complaining) and to reject them. The reason is easy to spot. Global offender Number One for air pollution amongst world cities is New Delhi, a city that has been pampered as the showcase for what the Congress government myopically calls “the India growth story”.

Hence government scientists are reported to have quickly said that WHO overestimated air pollution levels in New Delhi. “Delhi is not the dirtiest… certainly it is not that dangerous as projected,” said A B Akolkar, a member secretary of the Central Pollution Control Board.

The same recidivist line was parroted by Gufran Beig, chief project scientist at the Indian Institute of Tropical Meteorology (which otherwise does good work on the monsoon and on climate change). He is reported as having said that New Delhi’s air quality was better than Beijing’s, and that pollution levels in winter are relatively higher in New Delhi because of extreme weather events. Beig said: “The value which has been given in this (WHO) report is overestimating (pollution levels) for Delhi … the reality is that the yearly average is around 110 (micrograms).”

The WHO database has captured measurements from monitoring stations located in urban background, residential, commercial and mixed areas. The world’s average PM10 levels by region range from 26 to 208 micrograms/m3, with a world average of 71 micrograms/m3.

PM affects more people than any other pollutant. The major components of PM are sulfate, nitrates, ammonia, sodium chloride, black carbon, mineral dust and water. It consists of a complex mixture of solid and liquid particles of organic and inorganic substances suspended in the air. The most health-damaging particles are those with a diameter of 10 microns or less, which can penetrate and lodge deep inside the lungs. Chronic exposure to particles contributes to the risk of developing cardiovascular and respiratory diseases, as well as of lung cancer.

Central and state governments show no inclination to join the obvious dots. These are, that with more fuels being burned to satisfy the electricity and transport needs of a middle class now addicted to irresponsible consumption, the ‘India growth story’ is what we are choking to death on.

Faster, higher, dearer – dizzying pace of food price rise in India

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The alarming tale of food prices, from 2004 January to 2013 August, that have squeezed the household budgets of cultivators and rural labourers.

The alarming tale of food prices, from 2004 January to 2013 August, that have squeezed the household budgets of cultivators and rural labourers.

For most of 2013, the central government broadcast, through important cabinet ministers and official statements, its worry about economic growth, that every effort must be made to steer India back towards a high economic growth rate. In the food and agriculture sector, that effort has led, in the last four to five years, to a gulf in growth rates between agriculture and the combination of processed and packaged foods and beverages (which the food retail industry is being arrayed around). While the agriculture sector (including fisheries and livestock) has been growing at or just above 4% a year for the last several years, the processed foods and beverages industry has been growing at around 15% a year.

The effects of this growth (setting aside criticisms of how such growth is measured) in both these allied sectors – the one much larger but the other which is a feature of urbanising India – may be seen in the transformation of cultivation and of food. That is why, not only has the consumer price index for rural citizens climbed without let every year for the last nine years, there is evidence in this index data to show that the rate of increase has accelerated in the last few years.

The trend we have all become painfully familiar with, in states and towns measured and unmeasured.

The trend we have all become painfully familiar with, in states and towns measured and unmeasured.

The consumer price index for agricultural labourers (usually abbreviated to CPI-AL) from 2004 January to 2013 August shows a steady rise for all the 20 states in the set (see the chart alongside). Compiled by the Labour Bureau, Ministry of Labour and Employment, the data shows that the average CPI-AL of these states has been rising around 50 percentage points a year for the last four years. Using quarterly averages (taken for June, July and August) for 2013, 2012 and 2011 and comparing them with the same averages a year earlier, we see that the all-India increases in the index for 12 months (2013 over 2012) is 12.96%, for 24 months (2013 over 2011) is 22.68% and for 36 months (2013 over 2010) it is 34.08%.

States that experienced the steepest increase in the CPI-AL over 36 months are Gujarat with 32%, Punjab 32.4%, Odisha 32.5%, Rajasthan 35.1%, Maharashtra 35.3%, Manipur 37.6%, Andhra Pradesh 37.9%, Kerala 38.4%, Tamil Nadu 39.2% and Karnataka 48.2%. That is why we have witnessed the widespread trend of migration by rural populations towards smaller urban agglomerations, with the impacts recorded in various data releases from Census 2011.

The Labour Bureau data contains evidence that for all states which have CPI-AL measured, the rate at which the index is rising is accelerating. This acceleration is visible when the period 2004 January to 2013 August is divided into five phases. These are represented by the circles in the illustrated chart (the main image above), the phases 2004 Jan to 2005 Dec, 2006 Jan to 2007 Nov, 2007 Dec to 2009 Oct, 2009 Nov to 2011 Sep and 2011 Oct to 2013 Aug). These points (five for each state) are plotted against not the ordinary scale of the CPI-AL but against a range of point increases in the CPI-AL. Hence this shows the rise in the CPI-AL and the more recent speed of that rise.

Energy, climate, growth, China, India – the World Energy Outlook 2012

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Inputs to the power sector to generate electricity accounted for 38% of global primary energy use in 2010, the single largest element of primary demand. In the New Policies Scenario, this share rises to 42% in 2035. Demand for electricity is pushed higher by population and economic growth, and by households and industries switching from traditional biomass, coal, oil and natural gas to electricity. The fuel mix within the power sector changes considerably, with low- and zero-carbon technologies becoming increasingly important. Graphic: IEA, WEO-2012

In four parts, 18 chapters, four annexes, illustrated by around 300 figures, the chapters supported by about 100 tables, a separate set of data upon which scenarios rest, the World Energy Outlook 2012 of the International Energy Agency (IEA) is a 690-page behemoth. I can only sketch its merest outline here, and in a fleeting way touch upon the knowledge and information it contains.

Drawing on the latest data and policy developments, the World Energy Outlook 2012 presents projections of energy trends through to 2035 and insights into what they mean for energy security, the environment and economic development. “Over the Outlook period, the interaction of many different factors will drive the evolution of energy markets,” said the WEO-2012. “As outcomes are hard to predict with accuracy, the report presents several different scenarios, which are differentiated primarily by their underlying assumptions about government policies.” We are told that the starting year of the scenarios is 2010, the latest year for which comprehensive historical energy data for all countries were available. What are these four scenarios?

Based on preliminary estimates, energy-related CO2 emissions reached a record 31.2 gigatonnes (Gt) in 2011, representing by far the largest source (around 60%) of global greenhouse-gas emissions (measured on a CO2-equivalent basis). Emissions continue to rise in the New Policies Scenario, putting the world on a path that is consistent with a long-term average global temperature increase of 3.6 °C above levels that prevailed at the start of the industrial era. Chart: IEA, WEO-2012

1. The New Policies Scenario – the report’s central scenario – takes into account broad policy commitments and plans that have already been implemented to address energy-related challenges as well as those that have been announced, even where the specific measures to implement these commitments have yet to be introduced.

2. To illustrate the outcome of our current course, if unchanged, the Current Policies Scenario embodies the effects of only those government policies and measures that had been enacted or adopted by mid-2012.

3. The basis of the 450 Scenario is different. Rather than being a projection based on past trends, modified by known policy actions, it deliberately selects a plausible energy pathway. The pathway chosen is consistent with actions having around a 50% chance of meeting the goal of limiting the global increase in average temperature to two degrees Celsius (2°C) in the long term, compared with pre-industrial levels.

4. The Efficient World Scenario has been developed especially for the World Energy Outlook 2012 (WEO-2012). It enables us to quantify the implications for the economy, the environment and energy security of a major step change in energy efficiency.

In the New Policies Scenario, global energy intensity (energy demand per unit of GDP) falls by 1.8% per year between 2010 and 2035. Between 2010 and 2035, energy intensity declines by an average of 37% and 49% in OECD and non-OECD countries respectively. Yet average energy intensity in non-OCED countries in 2035 of 0.16 tonnes of oil equivalent (toe) per thousand dollars of GDP is still more than twice the OECD level. Chart: IEA, WEO-2012

I have extracted five important messages from the summary which are connected to the subjects you find in this blog – food and agriculture, consumer behaviour and its impacts on our lives, the uses that scarce energy is put to, the uses that scarce water is put to, the ways in which governments and societies (very different, these two) view food, energy and water.

Five key messages:
“Energy efficiency can keep the door to 2°C open for just a bit longer.” Successive editions of the World Energy Outlook have shown that the climate goal of limiting warming to 2°C is becoming more difficult and more costly with each year that passes. The 450 Scenario examines the actions necessary to achieve this goal and finds that almost four-fifths of the CO2 emissions allowable by 2035 are already locked-in by existing power plants, factories, buildings, etc. No more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2°C goal.

“Will coal remain a fuel of choice?” Coal has met nearly half of the rise in global energy demand over the last decade, growing faster even than total renewables. Whether coal demand carries on rising strongly or changes course will depend on the strength of policy measures that favour lower-emissions energy sources, the deployment of more efficient coal-burning technologies and, especially important in the longer term, CCS. The policy decisions carrying the most weight for the global coal balance will be taken in Beijing and New Delhi – China and India account for almost three-quarters of projected non-OECD coal demand growth (OECD coal use declines).

China makes a major contribution to the increase in primary demand for all fuels: oil (54%), coal (49%), natural gas (27%), nuclear power (57%) and renewables (14%). Its reliance on coal declines from 66% of the country’s primary energy use in 2010 to 51% in 2035. Energy use in India, which recently overtook Russia to become the world’s third-largest energy consumer, more than doubles over the Outlook period. India makes the second-largest contribution to the increase in global demand after China. Chart: IEA, WEO-2012

“If nuclear falls back, what takes its place?” The anticipated role of nuclear power has been scaled back as countries have reviewed policies in the wake of the 2011 accident at the Fukushima Daiichi nuclear power station. Japan and France have recently joined the countries with intentions to reduce their use of nuclear power, while its competitiveness in the United States and Canada is being challenged by relatively cheap natural gas. The report’s projections for growth in installed nuclear capacity are lower than in last year’s Outlook and, while nuclear output still grows in absolute terms (driven by expanded generation in China, Korea, India and Russia), its share in the global electricity mix falls slightly over time.

“A continuing focus on the goal of universal energy access.” Despite progress in the past year, nearly 1.3 billion people remain without access to electricity and 2.6 billion do not have access to clean cooking facilities. Ten countries – four in developing Asia and six in sub-Saharan Africa – account for two-thirds of those people without electricity and just three countries – India, China and Bangladesh – account for more than half of those without clean cooking facilities. The report presents an Energy Development Index (EDI) for 80 countries, to aid policy makers in tracking progress towards providing modern energy access. The EDI is a composite index that measures a country’s energy development at the household and community level.

“Energy is becoming a thirstier resource.” Water needs for energy production are set to grow at twice the rate of energy demand. The report estimates that water withdrawals for energy production in 2010 were 583 billion cubic metres (bcm). Of that, water consumption – the volume withdrawn but not returned to its source – was 66 bcm. The projected rise in water consumption of 85% over the period to 2035 reflects a move towards more water-intensive power generation and expanding output of biofuels.

Such is the barest glimpse of the WEO-2012. There are a number of aspects of the Outlook which deserve more scrutiny with a view to learning energy use and misuse, and this will be expanded upon in the weeks ahead.

How the OECD dislikes poor Indians but covets their economy

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No you don't. Get your destructive sophistry away from my village and my community.

The OECD (Organisation for Economic Cooperation and Development) has just released its Survey of India, and has said that “India now has the opportunity to move towards sustained and socially inclusive double-digit growth if the right policies are put in place”. The OCED survey said India’s economy has ranked among the best performers over the past decade, and poverty has been falling faster than in many other emerging economies. Pending a detailed reading of the report I can’t see how “best performer” and “falling poverty” can be applied to India, but the social and environmental dimensions of India’s so-called eocnomic growth may not be within the OECD’s scope in such a survey.

OECD Secretary-General Angel Gurría presented the Economic Survey of India in New Delhi and there said: “Policymakers are to be commended on the remarkable catch-up achieved in recent years, making India one of main driving forces of the global economy. The priority given to more socially inclusive economic growth is appropriate and further reforms are needed to achieve it.” There are more such conceptual conundrums here – catch up with who? And for what? What “socially inclusive” growth is Gurria talking about – India has the world’s largest population of malnourished children and the world’s largest population of hungry people. This has been so for the entire period that the OCED said India was “catching up”.

To ensure strong growth continues and is sufficiently inclusive, the government needs to target public expenditure better on the poor, the OECD has said. “Although high growth has reduced poverty, progress could have been faster. Hundreds of millions of people still live below the official poverty line. Malnutrition and poor health are still widespread.” Evidently the OECD India Survey 2011 team saw no contradiction between what they have praised and what exists. Against this backdrop, the report advocates a strengthened welfare system and improved access to health care. “Government spending on health is only around 1% of GDP – among the lowest rates in the world. Private health care provision is increasing but quality is highly variable. Better regulation and oversight is needed.” This is true, but the Survey’s objectives lead all solutions away from more and better public healthcare.

The irrelevance of the GDP squiggle to most Indians goes unnoticed by the OECD

The report said that around 9% of GDP is spent on energy and other subsidies, most of which fails to reach the poor, and that diesel subsidies should be phased out. For other energy products, such as kerosene and LPG, susbidies should be transformed into cash payments targeted to the poorest people in society. The government needs to ensure that its plan to shift kerosene and fertiliser subsidies into direct cash transfers is implemented quickly. Here the roll-out of a Universal Identity Number will help ensure payments go to the right people.

The recommendations in this para are full of threat. A quick look at the full Survey itself shows that there is special mention made of the fuel subsidy and the targeted public distribution of foodgrain. If the free marketeer reformists were to have their way, these would both be scrapped overnight, to be replaced by a weekly or monthly dole, transferred electronically and validated by a new national identification number which is in theory supposed to prevent fraud and exclusion. This is dangerous for the poor, because it makes them directly vulnerable to the worst symptoms of profiteering and corruption – already rampant despite safeguards – and because it removes the responsibility from the state for providing good quality and cheap social services and provisions of daily living. In this, the OECD Survey sounds exactly like the IMF.

So tell me, OECD boys and girls, what do you know about guavas and cane?

The OCED report has otherwise welcomed the planned introduction of a nationwide goods and services tax and suggested that in order to keep the overall rate low, the base should be as wide as possible (there go more paisas from the cash transfer to the poor). “Further fiscal consolidation is also called for, making more funds available for private investment” – which means more cutting of the health, education and rural development programmes. “Cutting red tape for businesses and further lowering barriers to trade and investment will help both companies and households. The report also notes that while progress has been made to improve infrastructure, even greater investment in this area is necessary to boost growth.”

The Survey has said that strengthening the financial system and promoting access to financial services is essential for strong and inclusive growth. (We’re quite sick and tired of hearing about ‘inclusive growth’ when the Indian government and its foreign advisers do all they can every single day to prevent it.) The report noted that many Indians still lack access to bank accounts although microfinance is improving opportunities in many communities. “The financial sector proved resilient during the global downturn but there remains scope for greater competition.” Hear, hear.

The Survey has said that education has been given high priority by India’s central and state governments and enrolment continues to grow fast – we call them degree factories for the globalisation mill. The report recommends more effective government regulation and funding. Incentives and professional development opportunities for teachers need to be strengthened while student loans for higher education should be more widely available.

Now I expect the usual round of endorsement, referencing and studious quoting to begin. Within a few months, the recommendations of the OCED India Survey 2011 will assume an oracular hue, never mind the reactionary and anti-poor real nature of its advice. The multilateral lending institutions – the World Bank, the IMF and the Asian Development Bank – will cite the Survey repeatedly. So will state governments in India and the central government. The armoury of those who assault the poor and the marginalised of India has been strengthened by a new weapon – this is the OECD contribution to the people of India.

India’s ‘growth’ and the lifting of showboats

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The doctrine of growthism as the best tonic for India has been given new impetus by Jagdish N Bhagwati, Senior Fellow for International Economics at the Council on Foreign Relations, an American think tank.

The CFR has reprinted an article written by Bhagwati titled ‘India’s Reform and Growth Have Lifted All Boats’, originally published by the Financial Times (available here if you have a subscription).

Bhagwati’s paean to an economy judged by whether it does 8% or 9% per quarter is the latest argument in a season of several, from economists and heads of industry, from policymakers and international finance experts.

What is different about Bhagwati’s short article is that it very quickly hits out at those he has called “the reform naysayers” in India. “Such voices present India with a double challenge: they misrepresent the successful way growth has cut India’s poverty, but more importantly their critiques stand in the way of a much needed new wave of reforms, which would further benefit India’s poorest.”

Bhagwati has said that India’s liberal reforms actually pulled 200 million out of poverty, that had these reforms only started earlier more would have been pulled out, that improvements are shared by nearly all underprivileged groups and that, most important for him, “being poor is now seen by India’s underprivileged as a removable condition”.

This trend, typified by Bhagwati’s recent article, of pointing to impressive quarterly growth rates and inferring their impacts on the poor and on wage labour by citing a few studies, needs to be understood and countered.

Writing in People’s Democracy (02 January 2011) C P Chandrasekhar pointed out that “India is a country still plagued by hunger with among the highest rates of malnutrition in the world” (‘Growth for Whom?’). Deprivation in other forms such as lack of access to clean drinking water, sanitation, basic health facilities and school education still afflict a large proportion of the population.

Chandrasekhar has said that the benefits of high growth for the best part of a decade must be accruing to a small minority, resulting in increased inequality. Unfortunately, data of a kind that helps us track inequality is difficult to come by. Surveys of consumption expenditure do not cover the rich and therefore tend to underestimate the extent of inequality.

It is such shortcomings in our ability to measure patterns of consumption that allow the trend, displayed by Bhagwati, to prosper. However, there are signs enough of increased inequality in India.

The first is that the high growth of the last few years has been accompanied by a sharp rise in the gross savings rate, Chandrasekhar has said, of 5.5 percentage points to 29.1 per cent between 2001-02 and 2004-05. The rate rose by another 4.2 percentage points between 2004-05 and 2007-08. “Since it is the richer sections that have incomes that are substantially in excess of their consumption needs which can be saved, this sharp rise in the savings rate points to an increase in incomes among the richer classes.”

This is but one among the many substantial realities whcih the proponents of growthism for India cannot reconcile with their arguments for more reform.

The benefits of a slower China

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The last days of old Nanjing: a resident's final nap before moving home. Photo: Economic Observer

“Can we slow down? In the year 2020, how will we interpret China’s historical changes up until 2010? Will we regret developing so quickly when we did not have a clear idea of our goals? If that’s true, how can we claim that we are in the process of creating a beautiful new world that justifies sacrifices?”

These questions are posed in the latest editorial of the Economic Observer, the English edition of the weekly Chinese newspaper. After listing several of the economic, infrastructure and trade achievements of the People’s Republic in the decade of 2001-10, the newspaper asks, is it time to revise China’s development model.

“We have exhausted our natural resources. Our environment will not recover even if we doubled our investment efforts in the future, and we have parted ways with our green hills and clear water. We have dismantled old walls but history will remain in our memories; our countryside has strived to enter the era of urbanization. But we will eventually learn that if we seize farmers’ lands in the name of establishing a new life, we are destroying not only their land, but their respect for public authority.”

The last days of old Nanjing-flyers advertising moving services pasted on the wall of a home for senior citizens. Photo: Economic Observer

The last days of old Nanjing: flyers advertising moving services pasted on the wall of a home for senior citizens. Photo: Economic Observer

We can slow down, suggest the Economic Observer’s editors, if we examine China’s rapid economic growth of the past three decades. “If we can have more dialogue with the world, if we can listen to the voices of the people and design development path that reflects their needs, if we give up fast profits for steady earnings, and a decent, happy life, why shouldn’t we slow down?”

“If we choose to maintain our current development speed at any cost, it will be impossible to slow down in the future. Slow growth does not need to signal failure; nor will China’s strength be overshadowed. If a country chooses to make its citizens happy instead of seeking recognition solely based on economic figures, it will receive more respect from the whole world. To its population of over a billion, China will be a kinder, more attractive place to live.”

Written by makanaka

January 5, 2011 at 19:57