Statistical half truths can be more misleading at times than untruths. And this might be one of them, insofar as the experiences of ordinary Indians contradict such statistical artefacts. Since citizens in India can express reasonably freely their views at least at the time of elections, their electoral verdicts on the regime of high growth should be indicative. They have invariably been negative. Not only did the “shining India” image crash badly in the last general election, even the present prime minister, widely presented as the “guru” of India’s economic liberalisation in the media, could never personally win an election in his life.
In contrast to earlier times when less than 4 per cent growth on an average was associated with 2 per cent growth in employment, India is experiencing a growth rate of some 7-8 per cent in recent years, but the growth in regular employment has hardly exceeded 1 per cent. This means most of the growth, some 5-6 per cent of the GDP, is the result not of employment expansion, but of higher output per worker. This high growth of output has its source in the growth of labour productivity. According to official statistics, between 1991 and 2004 employment fell in the organised public sector, and the organised private sector hardly compensated for it.
At the extreme ends of income distribution the picture that emerges is one of striking contrasts. According to the Forbes magazine list for 2007, the number of Indian billionaires rose from nine in 2004 to 40 in 2007: much richer countries like Japan had only 24, France 14 and Italy 14. Even China, despite its sharply increasing inequality, had only 17 billionaires. The combined wealth of Indian billionaires increased from $ 106 to $ 170 billion in the single year, 2006-07 [information from Forbes quoted in Jain and Gupta 2008]. This 60 per cent increase in wealth would not have been possible, except through transfer on land from the state and central governments to the private corporations in the name of “public purpose”, for mining, industrialisation and special economic zones (SEZs). Estimates based on corporate profits suggest that, since 2000-01 to date, each additional per cent growth of GDP has led to an average of some 2.5 per cent growth in corporate profits. India’s high growth has certainly benefited the corporations more than anyone else.
I wish I could summarize Amit Bhaduri’s critical take on India’s high growth rates in recent years-titled India’s Predatory Growth from last week’s EPW. It is, however, so succinct that I’d suggest reading the whole article. Here are a few excerpts: