Prime ministerial assertions should be taken seriously. But it is hard to take at face value some of the upbeat projections that Manmohan Singh offered on Independence Day. Take the promise that all households will benefit from banking in two years’ time. The 2011 census shows that only 58.7 per cent of 246 million households availed of banking services; that was twice as good as the picture 10 years earlier. But to believe that 58.7 per cent can become 100 per cent in two years involves a leap of faith — especially since more than one-sixth of all families last year owned not even one of three commonly owned assets: a bicycle, a radio/transistor, and a mobile phone. Are they all likely to go in for banking services in the next two years? In the ordinary course, almost certainly not. Two things could change that scenario: if all those making use of the employment guarantee programme (some 50 million have signed up for job cards) are forced to open bank accounts, and if the rollout of the Aadhaar programme is completed in two years and involves the mandatory opening of bank accounts. The first is feasible because it can be administratively mandated; the second looks like a tall order since only a sixth of the country has enrolled for Aadhaar so far. Still, this has the merit of pointing to how quick financial inclusion can be attempted.
What of the promise that all families will have electricity in five years’ time? This has the merit of a longer time frame, but still sounds like a stretch target, as only two-thirds of all homes had electricity last year. Coincidentally, a third of all houses in the country have walls that are made of grass, thatch, bamboo, mud or wood. If it is assumed that the one-third of homes that do not have electricity are also the ones that don’t have pucca walls, then the rate of progress is easy to track. Because the transition to a pucca house has been taking place at the rate of two to three per cent of households each year; at that rate of progress, it will take a good 10 years before all homes are likely to have electricity supply. Doing it in five years looks, therefore, like an ask.
The third upbeat forecast that the prime minister offered was GDP growth of “a little” more than last year’s 6.5 per cent. On the face of it, this seems the least likely to be achieved. Industrial growth in the April-June quarter has been non-existent, exports have moved from stagnation to sharp decline, and the poor monsoon puts a discount factor on strong agricultural growth. In the face of these trends, it is hard to see the services sector maintaining momentum. Most private forecasters have already dropped their growth numbers below six per cent, and even the usually upbeat deputy chairman of the Planning Commission has talked of it being no more than six per cent. So a prime ministerial forecast of more than 6.5 per cent stands in splendid isolation. This is of a piece with Dr Singh dissing the rating agencies for their pessimism, and his assurance from Red Fort that the present difficulties will not last long. One must hope so, but to suggest that the January-March quarter’s growth rate of 5.3 per cent will be improved upon when sector-wise numbers have got worse, is to ask for willing credulity. There was much that was true in what Dr Singh said on Wednesday, and some of the achievements of the last eight years that he listed are creditable. But he seems to be unaware of the fact that his government’s credibility is at a low point, and that he needs to win it back.
