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IS REAL GDP GROWTH REALLY 7%? GROWTH IN PER CAPITA AGRI INCOME IS ONLY 1% WHILE THAT IN SERVICES IS 8%
1* The CSO has released on 9th Feb 09 statistics giving estimates of GDP growth. According to CSO, GDP growth for 2008-09 is estimated at 7.1%, down from 9% last year. Per capita real income is estimated to grow at 5.6%, down from 7.6% last year.
2* Statistics are magical instruments. These can be used to interpret differently based on the base period and view points. Averages are misleading. Now, disaggregate estimated GDP growth for 2008-09 into two half years .The growth in the first half year was 7.8% and the growth in the second half year will be 6.3%. The growth in second half is the real trend indicator.
3* And again disaggregate sector wise. Steep fall in growth is estimated in the manufacturing sector by half from 8.2% to 4.1%.Same is the case with agriculture, fall in growth being by half from 4.9% to 2.6%. The only segment showing higher growth is community services, an increase from 6.8% to 9. 3% (+37%increase). And what this segment represents in terms of income growth? Growth in the salaries and perks of Government employees thanks to liberal revision of pay unconnected with improvement in public service and unconnected with increase in output of work and Government spending in social sectors such as NREGS and welfare measures where leakages are nearly by 50% and inefficiencies are legendary.
4* So there is 50% decline of growth in the real productive sectors like agriculture and manufacturing and steep increase in leaky, inefficient and unproductive government spending sector.
5* This conclusion is supported by data on expenditure pattern. It is estimated that Private consumption would grow only at 6.7% in 2008-09, down from 8.1% a year ago. The government consumption growth is, however, expected to jump sharply to 16.8% in 2008-09 from 7.4% in 2007-08.
6* The growth in per capita income in agri sector, where from 60% households derive their income, is not going to be 5.6%, estimated as the overall average per capita GDP by CSO. The per capita growth in agri sector will be just about a megre 1% when we take into account agri GDP growth of 2.6%. As for those dependent for their income from industrial sector, per capita growth in income is 3.3% when we take growth in industrial GDP at 4.8%. And for those who derive their income from services, there is a whopping increase in per capita income at 8%, taking services GDP growth of 9.6% into account.
So, while farmers per capita income grows just by a mere 1%, the per capita income of those in services increases eight times more to 8%.On what basis and logic these kinds of inequities and disparities in comes can be justified. Service sector is supposed to be support to primary and secondary sectors. But now it looks as if these two sectors are serving the service sector!!! Can any one justify with facts and figures that services of persons in service sector are eight times more valuable than the produce of farmers who provide the people of the nation with life sustaining food and essential raw materials for Agro Industries?
7* These disparities are persistently increasing year after year. Studies by the planning commission and others show that while the income ratio between agri workers and non-agri workers during 1951 was 1:1.8, it got widened during 1979 to 1984 to 1:2.8, it further widened to 1:5.2during 1999 to 2004 and it is estimated by the Centre for Development Economics that whereas agricultural sectoral GDP stood at nearly Rs.3 lakh crore in 2002-03, it will rise to no more than Rs.4 lakh crore(+33%) a decade later in 2011-12 at the agricultural growth rate forecast for the Eleventh Plan. Meanwhile, the combined manufacturing and services sectors would have soared from Rs. 9 lakh crore to around Rs. 20 lakh crore(+120%), further widening the gap between the relatively stagnant sectors of the economy and the boom sectors from Rs.6 lakh crore to Rs.16 lakh crore. The disparity between agri and non-agri sectoral GDP is going to increase from 1.3 in 2003 to 1:5 by 2012. This is what planned inclusive growth is going to achieve! Can a house divided against itself stand?
The Eleventh Plan candidly confesses: “GDP per agricultural worker is currently around Rs.2,000 per month, which is only about 75% higher in real terms than in 1950 compared to a four-fold (400%) increase in overall real per capita GDP.”
These are the real stark facts which stare at our face
unblinkingly.
So, will the economy really grow by 7% or less than that in real terms? The real growth should be measured by growth in productive sectors and number of people employed by these sectors.
HIGH TIME TO REDEFINE WHAT GROWTH REALLY MEANS. ONLY THE VOTERS CAN DECIDE THIS BY THEIR DECISIVE VOTES FAVOURING GROWTH IN PRODUCTIVE SECTORS. |
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