Sober analyses of the economy
STORIES, ANALYSES, EXPERT VIEWS
The National Statistics Office (NSO) announced in August that the GDP had increased in the April-June quarter at an annual rate of 7.8%. The most euphoric cheerleaders predicted growth to accelerate to 8%. Even conservative forecasters routinely project GDP growth between 6% and 7%.
This GDP-centric framing of economic success according to Ashoka Mody (Visiting Professor of International Economic Policy at Princeton University) “is wrong-headed. GDP is a flawed metric of national economic welfare. It hides inequalities and deflects attention from acute job scarcity, poor education and health, unlivable cities, a broken judicial system, and environmental damage. Feverish celebrations of India’s large but unequally distributed GDP hide the struggles of large numbers of people; large GDP is not purchasing power.”
Need to bolster demand: In the glow of a fake high-growth story, “government policy has tried to rev-up supply rather than bolster demand through good jobs, more human capital investment, and functional cities. Unsurprisingly, the September 2019 corporate tax cut, sops like PLI schemes, and shiny flyovers and highways have failed to revive corporate investment. Increased fiscal reliance on indirect taxes, which erode purchasing power, has aggravated demand.”