The UPA government has a mastery over the use of statistics to cure poor optics, whether it is eroding political capital or devaluing economic capital. Every time, it is critiqued on the poor state of the economy, it projects India’s growth as among the fastest in the world. Actually, depending on which source you choose, over 45 countries grew faster than India in 2012. Then, the Prime Minister and ministers of the UPA frequently present the average as an argument, that growth rate during its tenure was better than that of the NDA.
How well India has done is not only about how poorly it did earlier but how it has done in comparison with global peers. And the proof lies in the growth of per capita income.
What does the evidence say? Between 2004 and 2011, under the UPA, India’s per capita income grew (World Bank Data) from $643 to $1,509 or 234 per cent. Looks impressive? Truth is, 45 countries outdid India in improving the per capita incomes of their citizens. Every member of BRICS improved per capita income by over 300 per cent. China raised its per capita income from $1,490 to $5,445, Brazil from $3,610 to $12,594, Russia from $4,109 to $12,995. Even Sri Lanka ($1,063 to $2,835), Indonesia ($1,143 to $3,495) and war-torn Iraq ($957 to $3,501) did better than India.
It is instructive to see how India fared during boom and bust. Between 2004 and 2009 (when global growth boomed and India registered three years of 9-plus per cent growth), per capita income of India jumped from $643 to $1,131. Appears remarkable? Fact is, 51 countries had better per capita income growth than India. How did the India Story fare in UPA II and in global downturn? Between 2009 and 2011, all the peers in the BRICS group did better and so did Indonesia, Sri Lanka and Iraq. And 47 countries had better per capita income growth than India.
The reasons are not complex. India’s political system enables diversion of public resources to create private political capital, from productive outcomes to political ends. India’s contemporary history is littered with instances of the economy being held hostage by those in power. In December 1989, soon after assuming office, V P Singh—the reformist—declared that the coffers were empty. Finance minister Madhu Dandavate warned about risking “mortgaging hard-won economic independence” and then went on to announce a Rs 10,000-crore loan-waiver for farmers. Neither the BJP nor the Left which formed the crutches of the Singh regime protested. Nor did the Congress party.
In 2005, the UPA took the hugely successful EGS of Maharashtra. It rid the idea of all conditionalities on asset creation and repackaged it as a rural employment dole. Neither the BJP nor other parties questioned the jettisoning of conditionalities. In 2008, amid the global financial crisis, the UPA announced a loan-waiver of Rs 60,000 crore for farmers. Again no political party opposed. We now know, thanks to the CAG, the embedded disasters in these ideas and how they have impacted labour markets and growth.
Nothing, though, has changed. Take the new Food Security Bill. It promises less than what many states—including Chhattisgarh, Tamil Nadu, Punjab or Rajasthan—give their poor. The Bill offers the poor no more than what is already promised under Antyodaya. It proffers no solutions on prevention of theft—40 per cent of grains do not reach the poor. It says the Bill makes food security justiciable as if Kalavati will go to court. Worse, it expands the scope of subsidised food to 67 per cent of the populace without justification—unless it is based on the average voter turnout in past decades. Yet, no party will oppose the ‘Annapoorna Bill’ because it may hurt their ‘Votepoorna’ aspirations. Every party is a shareholder in this enterprise and profligacy is the route to market share acquisition.
In 1985, India at $302 had a per capita income higher than $292 of China. By 1989, India had a per capita income of $352 and China $307. Thanks to the crisis fuelled by political neglect, in 1991 India’s per capita income dropped to $308 vis-a-vis China’s $330. It took India three years to regain the pre-1990 level of $352. By 1995, China’s per capita income had shot up to $604 while India was stuck at $380. It is a lesson that wasn’t learnt.
China and India opened up their economies around the same time. In 1992, China had a per capita income of $363 and India $322. Two decades later, India’s per capita income has gone up 4.6 times while China has improved the income of its citizens by 15 times.
The regimes in China, Brazil, South Africa, Russia, Sri Lanka and Indonesia work to enlarge capacity for people to earn better incomes whereas in India the focus is to expand the scope of entitlement. Mind you, the argument is not against state intervention for the poor who are desperate and are denied, but about systemic subversion for votes. It doesn’t seem to matter that the middle-class taxpayer’s money is being wasted. This approach will only beggar the nation and its people. The culpability and complicity for this must be shared by the Congress and the Opposition.
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