Why our economic growth has been patchy

Parsa Venkateshwar Rao Jr

Senior Journalist

India in 2022 is a result of India in 1991, when economic reforms were brought in, and India in 1991 was the result of India in 1952, when the Five-Year Plans were launched. There is the general argument that India did not grow from 1947 to 1991 because it adopted socialism, and whatever good that happened was due to the reforms launched in 1991 by Prime Minister PV Narasimha Rao.

The second scenario is the theme song of Prime Minister Narendra Modi, who came to power in 2014, and his Bharatiya Janata Party (BJP). They claim that the economy has been transformed in the past eight years, so much so that India is poised to become an economic superpower.

The claims of market-friendly economic analysts in India in the first case and of Modi’s supporters in the second are forgivable rhetorical excesses.

It would be a good exercise to look at the figures of the past 75 years and make a sober assessment of what we have achieved because much has been achieved over seven decades rather than in the past 30 years or the past eight years.

The decadal growth figures give a general picture of the movement of Indian economy, though the figures are to be taken as general indicators and nothing more.

In their article, ‘Economic Growth in India during 1950-2015: Nehruvian Socialism and Market Capitalism’, written in 2021, Deb Kusum Das and Abdul Azeez Erumban mention that the growth rate from 1950 to 1964 was 3.9 per cent; from 1965 to 1979, it was 3.0 per cent; from 1980 to 1992, 5 per cent; and from 1993 to 2016, it was 6.7 per cent. It has been an incremental growth rate over the decades, except the one from 1965 to 1979 when it dropped to 3 per cent from 3.9 per cent of the previous 15 years.

In his address delivered in 2008, Rakesh Mohan, former Deputy Governor of the Reserve Bank of India, said the growth rate in the 1960s was 4 per cent, in the 1970s 2.9 per cent and in the 1980s0 5.6 per cent. And, he has rightly observed: “It is widely believed that Indian economy witnessed near stagnation in real GDP growth till the late 1970s. A closer review of the performance of Indian economy, however, suggests a continuing increase in real GDP growth over each decade since Independence, except for the 1970s.”

We must avoid the hypothetical criticism that if India had adopted the open economy system from the time of Independence, it would have resulted in a faster growth and that India would have become a wealthy country.

Even today, if India were to grow at a faster pace — and the country is not growing at a faster pace — it will remain a middle-income country. India will not become a rich economy because of the population factor. There may be some advantages of India emerging as the most populous country, overtaking China, but it does not offer economic advantages. Chinese leaders are aware of this fact.

Unfortunately, Indian leaders seem to be carried away by growth figures.

More importantly, the Indian private sector was not prepared to take up the challenge of economic growth after 1947. From the 1950s to the 1980s, the government had to handhold the private sector, and the seeds of crony capitalism go back to that era.

And as pointed out by economist Amartya Sen as far back as 1980, in his Coromandel Lectures, India, as a democratic country with a free media, had avoided the catastrophe of the Great Leap Forward of the late 1950s and early 1960s, when 30 million people are estimated to have died in famine-hit China. The role of democracy in India’s economic growth is not to be underestimated. It kept the relations between society, economy and polity on an even keel.

It was Abid Hussain, former Commerce Secretary in the Government of India, who argued the case well for economic reforms persuasively in the 1980s. Many people had not noticed the winds of change that were blowing through India in the 1980s, when Indira Gandhi returned to power, and when Rajiv Gandhi served as Prime Minister from 1984 to 1989. Hussain argued that the public sector was the need of the hour in the 1950s and the 1960s and the private sector was needed in the 1980s. He said that there was no need for ideological quibbles over socialism and market economy.

Many of the diehard Left ideologues refused to accept the opening up of the economy, and many of the market fanatics wanted to count economic history from 1991 and deemed the 40 years before that as the socialist ‘dark age’.

A great failure of both eras of the economy after Independence — the planned and market eras — has been on the social sector front, especially health and education. And between the two, education has been neglected more. India’s young population today is deprived of good education. Neither the government schools nor the private ones are bothered about making education the keystone of development. Education is seen either as a utilitarian or an ideological tool. It is being used for brainwashing.

The growth of economy is closely connected to education. And it is not enough to turn out technicians. We need educated citizens as well as educated workers: those who can think and who can question, who can change and who can create. India has failed to achieve this ideal.

Join Whatsapp Channel of The Tribune for latest updates.