Distributive policy

India @ 75 India has failed to emphasize policy of growth with equity and grassroots development – Jammu Kashmir Latest News | Tourism

Nantoo Banerjee
Some may disagree, but India has failed to harness its fiery struggle for freedom from the more than 100-year-old British Raj to convert the country into an abode of peace and prosperity for its citizens for the past 75 years. Regardless of official claims, India continues to be a poor country with nearly 280 million people, or 20% of its population, living in poverty. The demographic failure of the country far exceeds its economic success in certain regions.
The total population of India was only around 340 million at the time of its independence. In March 2022, the population figure reached 1,417 million. Next year, it should exceed that of China. Massive population growth negated almost all of his achievements. Every year more mouths are needed to be fed and more hands are needed to work. On a per capita basis, each achievement seemed small and insufficient. The country’s two greatest achievements over the past seven decades have been its commitment to democracy despite much friction and its self-sufficiency in food grain production.
In fact, achieving “self-sufficiency” in food grains has been India’s greatest achievement. After receiving international food aid in the 1950s and 1960s, India became a net exporter of grain. The country’s total food production was only 54.92 million tons in 1950. According to the government’s Press Information Bureau (PIB), the country’s total food grain production was estimated at a record 314.52 million tonnes last year. “Production in 2021-22 is 23.80 million tonnes higher than the average foodgrain production of the previous five years (2016-17 to 2020-21). Record production was estimated for rice, maize, pulses, oilseeds, gram, rapeseed, mustard and sugar cane,” GDP said. It is certainly a major achievement.
In most other areas, the country’s achievements in the global context are either neutral or even negative, although India has done reasonably well in increasing power generation and distribution, urbanization, housing and rural development. According to the union ministry of energy, only 3,061 villages had access to electricity in 1950. In 2018, the government announced that all villages in the country – 5,97,464 in total – had been electrified. However, given the criteria for declaring a village electrified – 10% of households in a village having access to electricity, there are millions of people still living without electricity. Low voltage and frequent tripping pose a big headache for rural households. Until the country’s independence, negative economic growth was more common than after 1947. Growth was negative for 27 of the 50 years before 1947, compared to 11 in the following half-century.
Since India and modern China were liberated around the same time, the comparison of the economic progress of the two countries is natural. India is the second most populous country after China with one sixth of the world’s population. The UN has projected China’s population in 2022 at 1,426 million, showing a zero percent increase from the 2021 level, while India’s population would rise 0.68 percent this year from to the 2021 figure. Population growth, rising unemployment, rising imports and trade deficits, weak manufacturing industry growth, domestic inflation, high indirect tax rates and falling value of the Indian rupee’s exchange rate are among the most difficult areas of the country’s development. On the contrary, China, the world’s largest exporter and consumer of energy, has managed these challenges well to become the world’s second largest economy in terms of US dollars and the second largest military force as well.
In 1949, China, much more populated (541.7 million) than India (340 million), produced less steel and coal than this country. Today, China is the world’s largest producer of steel (1,337 million tonnes) and coal (4.07 billion tonnes). Last year, India produced only 120 million tons of steel and 778.19 million tons of coal. The comparison should provide a reasonably good picture of India’s extremely slow industrial progress and economic development. The two countries had long been neck and neck in terms of GDP per capita. According to both “nominal” and “purchasing power parity (PPP)” methods, India was richer than China until the late 1980s. In 2019, China was nearly 4.61 times richer than India in nominal method and 2.30 times richer in terms of PPP. The per capita ranking of China and India was 72nd and 145th respectively under the nominal method. Since 2020 was the year of the pandemic, the numbers for 2019 would be more normal and acceptable.
Nominal GDP per capita in India is expected to reach $1,850 in 2022 compared to $9,020 in China, according to Trading Economics’ global macroeconomic models and analyst expectations. Curiously, the number of wealthy Indians emigrating abroad is increasing almost every year, while Indians working abroad constitute the country’s main source of net annual foreign exchange earnings. In 2021, India was the top recipient of foreign remittances with US$89 billion. India has been the largest recipient of remittances since 2008.
It is important to note that in 1947, one US dollar was only equal to 3.30 rupees. Until 1980, one US dollar was equal to Rs.7.86. In August 2021, US$1 was equivalent to 74 rupees. Earlier this month, the exchange value of the INR fell to 80 rupees per US dollar. The Indian economy went through a very difficult period in the early 1990s. Interest payments accounted for nearly 40% of the national government’s revenue. The budget deficit was 7.8% of GDP. And India was about to be declared a failure in the international market. The crisis led to economic reform mandated by the IMF and World Bank and an official devaluation of the Indian currency. Since the middle of last year, the INR has been hammered by the systematic withdrawal of foreign portfolio investors from the market, rising oil prices and inflation. Factors such as these along with several others may cause the INR to depreciate further in the future. Clearly, the government has failed to manage the economy well, especially since the 1980s.
Despite rising foreign trade, India ranks 16th in terms of merchant fleet size with only 456 ships ply the overseas routes out of its merchant fleet of 1,463 ships combining gross tonnage of approximately 13 million GRT. India is the world’s eighth largest importer, importing goods worth nearly $480 billion. Imports are largely made on a fob (free on board) basis, causing the country to incur heavy losses in insurance and freight costs. Compare that with the size and strength of China’s merchant fleet. In 2019, China became the second largest ship-owning country in the world, controlling a fleet of more than 5,600 ships, totaling a capacity of 270 million dwt. There are several examples of how the Indian government and business community have neglected key sectors of the economy over the years despite their huge growth potentials.
Honestly, there’s not much to cheer about ‘Amrut Mahotsav’, a national government initiative to commemorate the 75th anniversary of India’s independence. Instead of bragging about India’s position as the world’s sixth-largest economy – now poised to topple the fifth-largest UK this year – the world’s most populous country must try to do some soul-searching to find out where he went wrong to meet his people’s expectations and try to fix it quickly. This will be the best way to celebrate ‘Amrut Mahotsav’. There is still a long way to go for India. (API)