A View from the Outside by P Chidambaram

Author:P Chidambaram [Chidambaram .P]
Language: eng
Format: epub
ISBN: 9788184752090
Publisher: Penguin Books Ltd
Published: 2013-02-13T00:00:00+00:00

What They Don’t Tell You About India Shining

Worrying signs on economy, human rights

Two reports arrived at my desk in the last few days. The first is the Reserve Bank of India’s ‘Report on Currency and Finance’ for 2002-03. The report is focused on the theme of management of the external sector, but deals with issues on a wider canvas. It was prepared by a team of young economists in the RBI.

The opening chapter surveys recent economic developments. It is the RBI’s version of the first chapter of the more familiar annual Economic Survey published by the Ministry of Finance. Since there will not be one published this February, the RBI’s survey is a reasonable starting point for a debate on the state of the economy.

As is to be expected, there is a high degree of confidence that economic growth will continue to be buoyant. Led by a record high in food grain production and sustained by the industrial recovery, overall GDP growth in 2003-04 is pegged at around 7 per cent. The surprise is that there is no mention of the figure of 8 per cent that has been put out by ministers and officials. There are also good tidings in bad news. The GDP growth rate for 2002-03 has just been revised downward from 4.3 per cent to 4.0 per cent, which means that the growth rate for 2003-04 will ‘look’ even better! I am glad that at least the young economists have taken a more balanced view of India Shining.

The downsides have been noted, but there is no intention to spoil the party. To quote the words of the report:

There is not yet adequate evidence of a clear increase in investment demand;

Resource mobilisation by corporates in the primary market has actually been lower during the year;

The fiscal situation still remains a cause for concern;

The tax GDP ratio in the economy continues to be low;

As the revenue deficit is high, the burden of fiscal correction naturally falls on public investment;

The public sector dis-saving, which began in 1998-99, has been rising over the years.

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