Egoist Modi destroys India’s growth story

 

A statesman is one who admits when he has made a mistake 

and has the grace to correct it before it does any more harm. 

Prime minister Modi has shown no signs of having either of these virtues.

Illusions of recovery

• The growth of China and India at 6.9% and 7.3% are unsustainable because of their dependence on debt.
• G7 economies are growing at meager 1.8%.
• US growth is distressing with personal consumption growth of 0.3%.
• Indian banks with over 10% lending in stressed and non-performance assets, the growth rate is unsustainable.
• China's total debt by record 237% of GDP far above emerging-market counterparts raising the risk of financial crisis or prolonged slowdown in growth.
• While Trump promises fiscal stimulus, he does not have a concrete plan to ensure that this does not result in a substantial widening of the fiscal deficit. Then it is unlikely that Trump will win support of fiscal hawks in his own party. The result would be obstacles to implementation.
• Europe is still in the throes of crisis or vulnerable and its leading economy Germany is slowing.
• The dependence on debt makes boom in India and China unsustainable and when downturn occurs in these countries, deleveraging will accelerate the fall and make recovery even more difficult. So making these countries as growth poles is unwarranted.

My View:

Worldwide, middle class and lower classes [Over 95% of population] income remained stagnant during the past 25 years. Only upper middle class and upper classes incomes have shot through the roof. Middle & lower classes remaining stagnant and their consumption remaining low, how can the economy grow? The growth of China and India are superfluous without adjusting the impacts of debt burden, ecological destruction and pollution impact corrections. The growth of advanced countries like USA, Europe and Japan which are between 1-2% are real. During past one year our electricity consumption which hitherto recorded 6-8% compounded annual growth, has recorded negative growth of about 4% which is reflected in no load shedding, backing down of thermal generation & coal imports, piling up of coal stocks everywhere, reluctance of power buyers to sign long term PPA's in preference to spot cheaper purchases etc. How could India register economic growth of over 7% with reduced energy consumption? Every economic parameter is looking south while growth is looking north - strange. Fudging of economic data is not ruled out, which China did during the past 15 years. Indian, a asset rich and cash poor country, indicates asset value bubbling might burst anytime. But for the crude oil prices remaining low for consecutive three years, what would have happened to our economy with adventurists like Modi at helm.

Development

• Development is an emergent property of the economic and social system.
• Development is simply defined as ”good change”. Good change lies on a continuum and development is a process not a definite goal post.
• Development is not the sum of well-being of people in the economy. Development is not enrichment of of upper classes or GDP growth or growth rate or lesser inflation or combination of above but is the enhancement of living standards of lower classes on sustainable basis. 
• Early theories and strategies of development were more focused on achieving economic growth as compared to latter theories and strategies that emphasize social, political, ecological and other dimensions of development.
• Traditional welfare economics had focused on incomes as the main measure of well-being but poverty involved a wider range of deprivations in health, education and living standards which were not captured by income alone. 
• The challenge of development is to improve the quality of life, higher incomes, better education, higher standards of health and nutrition, less poverty, a cleaner environment, more equality of opportunity, greater individual freedom, and a richer culture life.
• The purpose of development is to create an environment in which all people can expand their capabilities and opportunities that can be enlarged for both present and future generations. The essentials to the enlargement are healthy life, education, and decent standard of living.
• Development is more than improvements in people’s well-being. It also describes the capacity of the system to provide the circumstances for that continued well-being. 
• Poor countries suffered from orientation to the past, strong kin relationships, superstition, and fatalism.
• Developed countries managed to move through industrial revolutions, research and exploitation of technology that resulted in an increase in the productive capacities of their societies and creating the conditions of modernity. 
• Developed countries was characterized by innovation, motivation, entrepreneurship, weaker kin relationships and not enslaved by tradition. 
• But economic growth need not necessarily require the displacement or abandonment of the traditional patterns of living and norms.
• Development is a system-wide manifestation of the way that people, firms, technologies and institutions interact with each other within the economic, social and political system. 
• Development is a characteristic of the system and sustained improvements in individual well-being.
• Development is defined as the process of economic and social transformation that is based on complex cultural and environmental factors and their interactions.
• Development must be judged by its impact on people, not only by changes in their income but more generally in terms of their choices, capabilities and freedoms; and we should be concerned about the distribution of these improvements, not just the simple average for a society.
• Development carries a connotation of lasting change. Development is not only the improvements in the well-being of citizens but also the capacity of economic, political and social systems to provide the circumstances for that well-being on a sustainable, long-term basis.

My View:

The present model of reforms & development in India during the past 25 years have resulted in expansion of government's revenues and spending thus offering stability of economy. Per-capita income grew a lot, the pertinent truth is that rich became ultra richer and poor remained poorer. Aberrations are increased corruption, tax evasion, black money, destruction of ecological assets and erosion of value systems. Reckless borrowing had reduced our nation's ratings to near junk status. Unbridled corruption had almost destroyed our banking system. Attempting to develop with export orientation or rapid industrialization without enhancing purchasing power of large number of poor people would be futile. China's economic growth is mainly due to its exploitation of labour for prolonged periods, destruction of ecology and patronizing by western countries which may not suit India with its democratic values and labour rights. Neglecting our agrarian economy will be short sighted approach. Even after 25 years of reforms, agriculture sector still not liberated with MSP dictating the produce pricing. Dilution of labour rights will only enable ruthless capitalists exploiting them. What we need is a development model suitable for country's all round development steadily & surely, especially focusing on lower classes advancement.