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An Unkept Promise: What Derailed the Indian Economy
Author: Prasanna Mohanty
Publisher: Sage Select
Pages: 308
Price: Rs 595
A book with such a title must be able to demonstrate that its premise is sound. Is the Indian economy derailed? If we were to ask this of the finance ministry or the Prime Minister’s Office or the NITI Aayog, the answer would be no. India will grow at 9 per cent this year and be the “fastest growing major economy” and that is that. The 24 months of growth lost because of the hole left by the nationwide lockdown is behind us. On issues such as the declining pattern of growth before the pandemic, the frightening labour force participation and unemployment numbers, the government’s own consumer expenditure survey data, the flat investment rate, the record demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act and such things, there is no wisdom on offer from the government.
It spoke of “world’s fastest growing economy” during the Jaitley era, then went silent after January 2018 for four years, and now we are back to the same rhetoric. The problem is that, as this book demonstrates, it is actually a derailed economy. And to prove this does not require rhetoric so much as just putting the numbers and facts on the board. This the author does competently.
The book charts the history of India’s economy after 2014 through a dozen chapters. Some of these look at the institutions and the issues with them, such as the disbanding of the Planning Commission and setting up of the NITI Aayog and the folding of the previously autonomous National Sample Survey Office and Central Statistics Office into the government.
Others tell the story of the major events that shaped the economy after 2014: Demonetisation, the introduction of the goods and services tax and the lockdown of 2020. Still others look at the effects of the new laws and codes, some of which, like the farm laws, had to be rolled back under pressure, some of which, like the import substitution policy (Atmanirbhar Bharat), are playing themselves out. Each chapter has a concluding portion in which its “takeaways” are listed in point form.
A short and sharp foreword has been written by the right man: Pronab Sen, former chairman of the National Statistical Commission. He writes that “data became the stuff of politics” during the 2014 campaign that brought Narendra Modi to power. But as the government began executing, “the narratives started to come unstuck” because the data did not support the claims. And since the data could not be changed, he says, the narrative did and a famously convincing prime minister carried on.
The book shows that the data was, in fact, managed. One way in which to manage this was to hide the data. This was done, as reported by this paper, for the consumer expenditure survey, but also for the survey of the services sector 2016-17, which was abandoned, survey of debt and investment 2019 and survey of multiple indicators 2020 both of which were completed but not released, and the survey on the domestic tourism sector 2020, which was suspended. The other way was to delay the release of the data, as was the case for the unemployment survey, which was first thoroughly discredited by the NITI Aayog’s CEO and then released after the election results of 2019 without change or comment. Still other ways included changing the way in which gross domestic product (GDP) was calculated, reducing the growth of previous years before 2014. Officially, the highest growth in GDP was achieved in the financial year 2016-17, the year of demonetisation. And two years later, the government “acknowledged what was known to the rest” and this was that “one engine of the economy, that of public investment, was working” while the other three — private investment and expenditure and exports (discounting the post-Covid bump from a spike in global trade) —had dwindled. This made the slowdown a structural and not cyclical one, something groups like the Society of Automobile Manufacturers have also warned.
The book is worth buying for the chapter on statistics called “Masking the Reality” alone. The final chapter looks into the future and lists three takeaways. They include: First, that “India is passing through a massive livelihood crisis that needs to be addressed before expecting economic recovery”; second that “India’s challenges are aplenty — from the pandemic mismanagement to fiscal mismanagement and misdirected policies”; and third, that “medium-term growth prospects seem low.” All of these are, of course, true.
As books examining the history of India after 2014 are wont to do, this is not a happy story. But it is vital that these books be written and that these books be read.
