All said and done, in the last couple of months, there is no visible and apparent change in India’s economic scenario. Literally, we have not witnessed any major developments regarding infrastructure projects, job creations or even for that matter any initiatives from the government that promotes the manufacturing and services sector.
Inspite of this, major rating bodies and multilateral funding agencies are pegging a neat 8% projection for India’s growth in GDP! Strange as it may sound, now we hear that the basis of calculating GDP has been changed to a more efficient statistical one! What may seem like tweaking figures, as is practised in China, is our government also heading that way?
Within a time frame of 10 months, our GDP projections changed from 5.5% to somewhere near 8% now. The Ministry of Finance’s economic survey projected a GDP growth of 8% for 2015-16. And we further hear that ADB has now projected a growth in GDP by 7.8% while Fitch’s projection is 8% for 2015-16!
Is not GDP growth an indicator of a growing economy, an economy health indicator? In that case, the purchasing power parity should increase too. Where do we see any positive indicator, in our day to day lives, where India is on a roll?
In every survey that we come across in the media or the internet, there is this uncanny knack to link India’s growth with China’s! There are crucial differences between the two economies which render such similarities as completely superficial. The basic fundamental of both countries are different. India is a capitalist economy while China is regimented and socialist. India is a more liberal country while China is a state ruled country.
China’s GDP (USD 11 Trillion) is double the size of India’s (USD 4 Trillion). India’s GDP per capita (USD 3900) is similarly smaller than China (USD 9300). The rate of unemployment in China (6.5%) is much lower than in India (8.5%). China (USD 202 Billion) has a higher current account balance than that of India (Deficit of USD 47 Billion). Then why compare? Let’s keep China aside.
Most economic pundits are speaking of a vibrant Indian economy. They are mostly claiming that the market size in 2015-16 will increase over 10% from 2012-13! Some say that India is now the preferred investment destination with mergers & acquisitions reaching USD 38 Billion in 2014! Big guys like the Boston Consulting Group have said that India will become the 7th biggest country in the world in terms of private wealth by 2017!
Furthermore the new 'Make in India' initiative is said to be a vital component in India's quest for achieving further economic development. Everything sounds so hunky dory! We are actually flying.
But who can run away from the grim reality? We are plagued and mired in corruption. We are a very populated lot. Our political class is busy at hitting and defending. And at last but not the least, what the hell is happening to India’s hydro sector? What happens to all the goody things we get to hear about having hydro as a clean, green and sustainable source of energy?
There is not one instance when the government has even thought of including any incentives for hydro developers in the Union budget. With over 148 GW of untapped hydro potential, India is just letting the water flow away! Literally!
Top it off with increase in diesel prices, hindered move on the Land Acquisition Bill, Unstructured R&R policy, slow movement on the manufacturing index?! Wow! Just where are we heading I wonder!
Disclaimer: I am no economist but am just frustrated.