In an interview to the Times of India (published on April 25), Prime Minister Manmohan Singh has claimed that if re-elected, he would bring the economy back on the path of high growth, to the point of 9 to 10 per cent. Well, it may not be an empty boast. After all, when he took command of the Indian economy in his second stint in 2004, he placed India on the ‘take-off’ stage by registering 9 per cent growth in 2005-06, followed by 9.4 per cent growth in 2006-07.(with per capita income growing at 8.4 per cent during that period).
This spectacular growth of the India economy may have faced temporary setback due to the global economic recession in the last year and a half, but that does not take away the credit that is due to Manmohan Singh for turning around the economy, first as finance minister in 1991-96 and deepening its effect while serving as the prime minister, almost a decade later.
As Manmohan Singh said in the interview with TOI, “Yashwant Sinha – when he was finance minister in the Chandra Shekhar government – sent the country’s gold abroad. When we came back to power, we brought the gold back”. The prime minister was referring to the developments in March 1991 when the Chandra Shekhar government was forced to sell 20 tonnes of gold to the Union Bank of Switzerland to tide over the immediate foreign exchange crisis. That incident brought India to the brink of a ‘basket case’ and there were speculations worldwide that our country would soon fall into the debt trap, as it had happened to many African and Latin American nations.
But barely three months later, Manmohan Singh, as Narasimha Rao’s finance minister, undertook the momentous challenge to prove the Cassandras wrong. He presided over a monumental economic reform programme. And his record was outstanding. India was able to stage one of the fastest recoveries from a deep macroeconomic crisis. The growth rate of India’s GDP which had fallen to an abysmal 0.8 per cent in the crisis year of 1991-92 recovered quickly to 5.3 per cent by 1992-93 and rose further to 6.2 per cent in 1993-94. Over the next three years, the India economy averaged an unprecedented growth rate of over 7.5 per cent, a rate closer to high performers of East Asia.
So, as far as growth rate was concerned, Manmohan Singh’s track record has been enviable. That is why, his emphasis in the TOI interview was high growth. It is worth noting that he did not mention about inclusive growth. It cannot be an oversight. There were many occasions in the past, when he has harped on the need to make growth more .
But he knows that his high-sounding statements have not been matched by bold decisions. That is why he did not want any debate to ensue on his patchy record on inclusive growth, when the elections are under way.
And that brings us to the central question: is growth a laudatory achievement by itself, or should growth with equity be our primary concern? Let us take a look at Singh’s track record in this regard. Well, the government records tell us that there has been considerable poverty reduction during the period the country was on a growth path, but the absolute number of people without the basic amenities has been still large. That suggested two things: one, the economic growth was not fast enough; second, the rising inequality did not allow the benefit of growth to change the quality of life for the poor.
Consider some basic facts: while India experienced spectacular economic growth, the benefit of that growth was hardly reflected in the improvement of the health facilities of the needy. The 2006 National Family Health Survey (NFHS 3) showed an immunization coverage of only 44 per cent – an improvement of just 2 per cent compared to the 1998 NFHS 2 data. Similarly, 46 per cent of children under three were underweight in 2006, again a fall of only 1 per cent over eight years. It was small wonder that India’s position in global Human Development Index (HDI) did not improve during the high growth phase.
As a matter of fact, the high growth was mostly registered in industries and services sector, where as agricultural growth remained sluggish. This had serious implications for the poor as 55 per cent of the total workforce in India is still engaged in agriculture.
The NREGA that the government launched in February 2006 had enormous potential in ensuring that funds reached the rural landless unemployed and the necessary rural infrastructure is built in the bargain, but its success has been only patchy. It has delivered results only where the social audit campaigns initiated by Jean Dreze, Aruna Roy and other social activists are strong. Elsewhere it has got lost in the proverbial bottomless pit of corruption, callousness and unaccountability.
Just see what Rahul Gandhi said while on a whirlwind election tour of West Bengal: “There are four lakh NREG cardholders in Purulia, but I have heard only 950 people have got 100 days of employment.” (Indian Express, April 25, 2009). The Congress leader might have said this to score a brownie point with the Left rivals during election time, but what is true of purulia is also true of most parts of India.
Education is supposed to be the key for social mobility of the poor. Rapid growth in quality primary and basic education as well as higher education is considered critical in providing access to a better life for the poor But Manmohan singh government could not provide for the right to decent education for all. The Right to education Bill was not passed in 2007 citing financial constraints! That showed the clear priority that the government had in mind when spearheading the economy with a spectacular growth rate.
The challenge before a new government today, unlike in the early decades after freedom, is not so much of trying to achieve high levels of economic growth. The challenge is to ensure effective governance that would harness the economic growth and make it sustainable and inclusive.
But Manmohan Singh does not seem to rise to this challenge. Because this needs very tough decisions about fiscal prudence, about allocating resources in a manner that allows the real poor to get benefit, and not those who speak in the name of the poor.