I return to you, yet again. You have been a constant support in times like these. I wonder if this happens with everyone- for days, you are the king of your small world, a world which you understand; then, all of a sudden, everything crumbles down, every fact which you thought was true becomes fiction, every emotion you had turns out to be shallow, every moment you lived seems worthless. I feel shelterless, the roof of meaning taken away from above my head. Hence, here I am, meaningless.
You must be used to my spiraling down of emotions by now. However, this time, it’s different (trust me). Unlike all my previous breakdowns, there is no particular person to blame, and this leaves me even more clueless. How puny us humans are, always looking for a guilty party, to make ourselves feel lighter!
On to the issue now. The reason behind my sudden disillusionment with the world is the new Indian GDP back series.
What is it? Oh, of course, I have to explain it, you are just a silly diary!
Basically, the GDP growth rate of our country over the past decade or so has been revised and updated. As per the updated GDP data, India grew at 6.7% between 2004 and 2014. This is in contrast to previous figures of 8.1% from 2004-09 and 7.46% from 2009-14.
What’s the issue with that?
I AM NOT SURE. That’s the issue.
I am not sure if we are a high growth economy or not. The world thinks so (or thought so). Even I thought so, till yesterday. However, the new data doesn’t. We never crossed the 9% growth rate, EVER. Some numbers here and there, and I am questioning my own country’s growth story, something which I was proud of (till yesterday, of course).
Does this mean we never grew at the pace we thought we had? But, I have seen luxuries become necessities for the consumer every five years, middle class getting richer, sons earning in their first year more than what their fathers earned throughout their lives. Doesn’t this count as exceptional growth? Or worse, what we experienced in the past decade was nothing exceptional, and the Indian economy, even after 70 years, has nothing to show for achievements. No, no, this cannot be.
But, if we didn’t achieve high growth (more than 9%), what explains the high inflation we faced towards the end of 2013? How can there be high inflation without high growth? Was the inflation JUST because of external factors like Oil? So much purchasing power wiped away by double digit inflation rates because a few countries (Read: OPEC) wanted to have fun with the world? The worst of my thoughts are yet to come.
The world knows that we have a highly indebted banking sector. Rising NPAs (non-performing assets, basically loans given by banks which don’t get repaid completely) have been the single largest threat to the Indian economy for the past 5 years, at least. It is widely acknowledged that banks lent rapidly (and sometimes indiscriminately) between 2008 and 2014, which has led to this problem today. However, in the short-term, this excessive lending helped us achieve exceptional growth rates, even touching 10.3% in 2010-11. All this, obviously, as per the old data. Now, the ‘excessive lending’ (should we still call it that?), which has created an unprecedented crisis in our economy, didn’t even help us achieve ‘high growth’ phase. Much ado about nothing. Why doesn’t the government also downgrade the NPAs in the economy? I am sure there is a way.
Oh Diary, spare a thought for all the poor foreign investors who were fooled into investing into this apparently ‘high growth’ economy which wasn’t! A decade of optimism, all for nothing. It was a lie. A scam. In case I haven’t made it clear enough, an economy is in a ‘high growth’ phase when it crosses 9% growth, which India didn’t (I know I have made it pretty clear. I just needed another reason to repeat it).
What’s interesting is that the new GDP data has been released by NITI Aayog, a government think-tank, and not by the Central Statistics Office, as is the norm. I feel sad for poor Adarsh, my close friend. He is working so hard to join the Indian Statistical Institute in Kolkata, only to find his dream job is being taken over by a bureaucrat run organization!
There are two beneficiaries from the new data, though, and this (somewhat) gives me a reason to smile: Unemployed youth and distressed farmers. These poor fellows had been wondering how did a high-growth phase not create enough jobs/ increase the standard of living for them. They now have an answer: there was no high growth economy to produce jobs/ increase standard of living in the first place!
Maybe I am just overreacting. Yes, yes. I am overreacting. Arvind Virmani, our former Chief Economic Advisor, has said that usually GDP data updates like this one lead to a downgrade of a country’s growth. He must know better.
Just, one thing.
Before this data was released, another revised GDP data was ‘leaked’. As per this particular leaked data, India actually grew at a faster pace than even previously estimated. Yes! We touched double digit growth more often than we had thought. However, the government (this happened a few months ago) had then said that the revision of GDP numbers is still under process and these are not the final numbers. What I understand is that there are several ways to revise GDP numbers, and the leaked and the newly released official version are only two of the many alternatives. SURELY, the government won’t intentionally recognize a methodology to discredit the growth rates under it’s political rival. Surely, it won’t. Not before an election year. Definitely not. After all, this government is known for respecting institutions (Read: RBI).
I am really sorry, I know I am going over-board. I just have a few silly questions to end with (Don’t laugh). If our percentage growth has been downgraded, our absolute GDP must have come down too, wouldn’t it? I was hearing that Indian GDP (nominal basis) will overtake United Kingdom’s in 2019. I suppose this won’t happen. OR will it? Why hasn’t our absolute GDP number been downgraded, yet? Data also shows that India did not recover from the global financial crisis as quickly as initially thought. Are we a resilient economy as we thought we were, or not?
Several international institutions have been coming up with research (using old data) showing the huge number of people India lifted out of poverty, something which I take pride in. A low GDP growth means more people must still be under poverty than previously estimated. ‘A stroke of a pen and millions are poor again’.
I won’t end on such a melancholic note. Hear this story:
Last week, I asked my philosophy teacher this, “What GDP number, what military capability, what standard of living, what cultural clout do we need to achieve in order to become a Superpower?”
My teacher’s answer left me thinking, and it seems relevant today.
“0?”, I asked confused.
He said, “What use is any of what you said to a nation whose soul is great enough to capture hearts of billions? Develop the soul of your nation.”
Diary, you know what’s the best part about developing the soul of my nation? No methodology can downgrade it.
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