Detached From Reality

Detached From Reality Aakar Patel Updated: February 5th, 2023, 07:30 IST in Edit 0 Share on Facebook Share on Twitter Share on WhatsApp Share on Linkedin I n 2018, the government of India published a report under Niti Aayog titled [email protected] In it the government set itself targets that it would achieve by the year 2022. The hefty 230 page document (one wonders how many people have read it) opens with a note from the Prime Minister. He writes: “The Union Government is an active partner in the people’s quest for building a New India by 2022.

In the spirit of Team India, let us now combine our energies to achieve the targets outlined in the Strategy. ” A strategy is defined as a general plan or set of plans intended to achieve something, especially over a long period. So that is what this document will give us.

After him the then Chairman of Niti Aayog wrote that “Change has been in the making over the last four years. The economy is finally moving out of the negative legacies of the past, specially the reckless credit expansion. ” These past four years (2014-2018) had produced results which would accelerate over time.

And the results would show in some areas where the government set itself targets. The first was to improve the rate of GDP growth. The document says it will do this by “raising the rate of investment (gross fixed capital formation as a share of GDP) from about 29 per cent in 2017-18 to about 36 per cent of GDP by 2022-23” and to do this “a slew of measures will be required to boost both private and public investment.

” Presumably these measures were taken, so what is the result? The latest figure the World Bank has is for 2021 and that is 29 per cent meaning no change. It was 30 per cent in 2014 so it has fallen. GDP growth overall began to collapse starting in 2018 and for nine consecutive quarters ending with March 2020 and the onset of COVID, growth fell.

Of course the writers of this document did not know this at the time. Next they say that India’s tax-GDP ratio of around 17 per cent is half the average of OECD countries (35 per cent) and is low even when compared to other emerging economies like Brazil (34 per cent), South Africa (27 per cent) and China (22 per cent). “To enhance public investment, India should aim to increase its tax-GDP ratio to at least 22 per cent of GDP by 2022.

” What was the result? Gross tax to GDP ratio was 17 per cent last year meaning no change. One reason for this is the fact that in 2019 corporate tax rates were cut. As another component of this growth strategy the government sought to fix the crisis in employment.

The results have been written about often including by me but briefly it is worth repeating that unemployment reached a record 6 per cent in 2018, according to a government survey and has remained above that. From 2017 onwards, every year, the share of people coming back to agriculture has increased. The document then turns to manufacturing and says the Modi government intends to “Double the current growth rate of the manufacturing sector by 2022.

” Manufacturing was 16 per cent in 2018 and it is today 14 per cent. Not only has it not grown it has shrunk. After this we have doubling farmers income and not much time be spent on that given that the farmers expressed their opinions quite clearly with their successful protest.

Financial inclusion, meaning opening bank accounts, linking Jan Dhan accounts to Aadhar and mobile and so on has made fine progress and one can accept that. Elsewhere the document says that it will “Increase India’s share in global international tourist arrivals from 1. 18 per cent to 3 per cent.

” This did not happen. It would “Increase the number of foreign tourist arrivals from 88 lakh to 1. 2 crore.

” This did not happen either and we can lay most of the blame on COVID. The document goes on, making promises that are detached from reality. Now that 2022 has come and gone we can see the results.

Have you heard anyone talk about this document recently? Remember that it was flagged off by the PM himself. At a literature festival in Kerala someone asked me, after I made a presentation of some data since 2014, why it was that such things were not better known. But they are known.

Much of this is information and data coming from the government itself. The Periodic Labour Force Survey agrees that more people have gone back to farming instead of entering the modern economy. Investment rates and tourism arrivals and GDP growth rates and tax to GDP ratios come from the Union government itself.

If we wonder why the government is not being held to account for what it promises and does not deliver we must not blame the government. It has no idea how to fix India’s difficult problems and, if we consider the Niti Aayog ‘Strategy’ and what came of it, the fact is that it may not even have a plan. Further, it does not seem to be under any pressure to be accountable for its failures.

We can debate about the role of the opposition and the role of the media but we have done that often. The reality is that it is hard to hold this government to account because it will just move on and ignore what it has said in the past. Hard even when its ineptness is as vividly documented as it is by this report.

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