India is not growing at a seven per cent rate as being reported by the government, an eminent Indian-origin economist has claimed, citing flat growth in several key sectors.
“They (India’s national accounts) show India’s growing at seven per cent a year. But I along with many other economists, I’m afraid don’t believe the national accounts. They were redone in 2011,” Vijay R Joshi, Emeritus Fellow of Merton College, Oxford and Reader Emeritus in Economics, University of Oxford, told a Washington audience.
Joshi, the author of a book titled ‘’India’s Long Road - The Search for Prosperity’ alleged that India’s growth rate is back at 5.5 per cent, but the national accounts show a much rosier picture.
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During a discussion organised by the Carnegie Endowment for International Peace, a top American think-tank, the London-based economist gave several reasons to prove his point.
“I will say one thing, (India’s national accounts) is the only place where you can see seven per cent growth. You can’t see it anywhere else. If you look at exports and imports, they have been flat. Shrinking or flat or growing very slowly. If you look at employment in the organised sector it’s at a standstill,” he argued.
“If you look at industrial production, it has been growing very slowly. If you look at bank credit, it has been growing very slowly. Bank credit in the industry has grown poorly in recent years,” he asserted.
“And especially if you look at investment, it has collapsed. The investment ratio which was 34 per cent of GDP in 2011 is now 27 per cent of GDP. So investment has really collapsed. (Thus) it is hard to believe that national income is growing at seven per cent a year,” Joshi said.
Responding to questions, Joshi said that under the present trends, India is unlikely to grow at seven-nine per cent a year for the next 25 years.
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“Not on present trends. Not unless we really get our act together. We can probably continue to grow at 5-5.5 per cent a year,” he said, adding that a long-term growth rate of seven to nine per cent a year is a feat that has rarely been achieved by a democratic country like India.
“This is a feat that has been achieved very rarely. It has been achieved only by three countries. That is China, South Korea, and Taiwan and perhaps Singapore.”Responding to another question, Joshi said while the Indian government led by Prime Minister Narendra Modi has done quite well, but it has completely neglected the education and health sectors.