A common man’s view of India’s progress
How do economists think India is doing? And on the other hand, how does the common man think India’s economy is doing? It depends on the numbers you look at.
In 2004, when India was supposedly shining, I was writing my book, Remaking India: One Country, One Destiny. I turned to R.K. Laxman for help. Laxman, for 50 years, had been posting a cartoon on the front page of India’s largest selling English daily newspaper, giving the common man’s perspective of India’s progress. He gave me some cartoons to use.
One shows some homeless people on a pavement. One of them is reading a newspaper, with the headline, “The economy”. He comments, “Terrific progress! In growth rate, in industry, in exports, and in exchange reserves—what a change from the miserable situation we were in!” Another depicts two beggars at the foot of the stairs to the stock exchange, down which five portly and happy men are coming. “Look we are really fortunate—the Sensex must have gone up still further!” one of the beggars exclaims. In 2004, the vast expansion of telephony in India was being celebrated. Another cartoon shows a minister berating a group of villagers who have surrounded him. “All the time you ask for drinking water. Don’t you ever want to progress? I’m telling you I’m giving you telephones.”
That was déjà vu. In 2018, India’s stock market is at an all-time high. Gross domestic product (GDP) growth is picking up again. Foreign exchange reserves are good. Smartphones and cheap internet data services are proliferating. Life for common citizens could not be better if these are good indicators of what matters to them. However, what seems to be on their minds is the difficulty of getting good jobs; affordable, good education; and affordable, good healthcare. While they have smartphones, clean water is becoming scarcer so they must buy bottled water. More expenses; not enough income.
India is amongst the most unequal countries in the world. While India’s economy is growing, inequality is growing faster. Since the 1980s, India is the country with the largest gap between growth of incomes for the top 1% and for the population as whole. Thomas Piketty has documented the growth of inequality in the world, and in India, in the last 50 years. Some Indian economists say Piketty has got it all wrong. They give their versions of progress. They point out that poverty has been reducing and give the numbers of people in India who have risen above the poverty line. They say globally inequality has been reducing too (primarily because of the remarkable growth of incomes in China).
These macroeconomists are worried that globalization and liberalization are becoming unpopular ideologies among common people around the world. With their “big picture” analysis, they try to convince the common man that globalization is good, and that liberalization of the economy is good. However, their headline numbers are too abstract. They are no comfort to an Indian farmer contemplating suicide because he cannot make ends meet, or to a young Indian graduate willing to do even a peon’s job because he cannot get any other.
These economists talk about people as if they are numbers. And they present a picture of progress in numbers which people do not understand and that do not relate to the realities of their lives. They seem to love data-mining and numbers more than they like listening to people. There is plenty of evidence today of the unhappiness, and even anger, among young Indians about inadequate employment opportunities. Their frustrations are spilling out into political movements. In spite of this evidence on the ground, some economists have recently reported with delight that, by mining data-bases, they can prove that the Indian economy is actually generating a large number of jobs! This information is unlikely to pacify the youth, and jobs will remain a hot political issue.
Politicians have to listen to the people, and economists should too. The government should not even try to convince the people with these numbers that enough jobs are being generated. It should recall the great anger against the United Progressive Alliance (UPA) government when it had tried to pacify people with numbers about millions of people having crossed the poverty line along with economic growth. The people reacted. They accused the economists in the Planning Commission who produced the numbers of being out of touch with reality.
Another cartoon by Laxman shows a minister surrounded by villagers in a rural area. One explains to the minister, “No, sir, this is neither a flood-hit nor a drought-hit area. We are only hit by bad government.”
While the growth of India’s GDP numbers is among the fastest in the world, its human development has been amongst the slowest. The government must work for the people to provide them public health services, public education, and public civic services. In countries in the West and East, which have the best human development indicators, these services are provided by governments, and not by for-profit private companies.
Some economists pooh-pooh the bally-hoo about inequality of wealth. They say poor people do not resent the wealth of the rich. It inspires the poor to become richer themselves. Poor people may not mind inequality of wealth, but they do resent inequality of opportunities compared to the rich, due to their poorer education, poorer health, and poorer access to the policy-makers who fix the rules of the game.
An Indian economist said the country’s economy works at night when the government sleeps. Many economists have been carried away with the international tide of pro-market and anti-government rhetoric. The truth is governments are required to make markets work, by protecting property rights, enforcing contracts, and creating healthy competition by preventing monopolies. The question is not whether there should be maximum or minimum government. But whether there is good or bad government.
Arun Maira was a member of the erstwhile Planning Commission.