ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Danger Zones of High Economic Growth

The powerful feedback mechanism of raising growth and inequality simultaneously combines restraint on government welfare spending, wilful default of bank loans by corporate houses and land acquisition for them. This creates not just a vicious circle but a rising and expanding spiral driven by a strategy of promoting the climate for private investment.

The Indian economy is like the proverbial glass with some water. For the optimist the glass is half full; for the pessimist the glass is half empty. According to the latest government calculation (base year changed from 2004–05 to 2011–12, Economic Survey 2015–16) the gross domestic product (GDP) growth rate increased from 7.2% in 2014–15 to 7.6% in 2015–16. When compared to the world GDP growth rate of 3.1%, it has been claimed that the Indian economy is the fastest growing major economy in the world. According to another estimate, GDP increased about more than sevenfold in current prices in the last two decades. With higher than world average growth, India’s share increased from 4.8% of the world GDP in 2001 to 7% into 2016 creating the impression that India is emerging as a global economic power. And yet, the Indian economy remains among the poorest economies in the world; even among its immediate neighbours. With a per capita GDP (on purchasing power parity basis) measured at $5,214 in 2013 this is 54% lower than that of Maldives, 44% lower than that of Sri Lanka and 27% lower than that of Bhutan (UNDP 2015). In other words, even ignoring all problems of income distribution implied by the per capita measure, India is still a very poor country.

Turning to the pessimistic side, the conditions of the majority of people in terms of health, education, housing, old-age security, gender, caste or religious divide are simply dismal. Infant mortality rate per 1,000 live births in 2013 for India was 41.1, lagging by far Sri Lanka (8.2), Maldives (8.4), Bhutan (29.7), even Nepal (32.2) and Bangladesh (33.2). Only Pakistan and Afghanistan among our neighbours did worse. The situation remains more or less unchanged with under-five mortality rates. Nearly two million children die every year of which more than one-fourth (28%) are linked to unsafe drinking water and poor sanitation. Over half (60%) are underweight, and nearly half (45%) have stunted growth. Approximately 60 million, that is, nearly half of India’s child population, are crippled by poverty in one way or another (Chakravarti 2016).

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