Mitron, welcome to Kartavya Kaal!
Having tasted the uncertain fruits of a short-lived 'Amrit Kaal', we have now been ushered into 'Kartavya Kaal'—a time to repay our debts
Since the new era of Kartavyakaal is already upon us, it might be instructive to review what happened in Amritkaal. In 2017, NITI Aayog began putting together a five-year plan based on a call given by the prime minister. In August that year, Narendra Modi made a pledge—and asked others to join the pledge to create a ‘new India’ by 2022.
NITI Aayog, the reincarnated Planning Commission of the Modi era, consulted ministries and states and a host of other individuals and institutions before coming up with a 200-page document of objectives. A total of 1,400 ‘stakeholders’ were consulted and the strategy document signed off by Prime Minister Modi, with a characteristically grand invocation to “combine our energies to achieve the targets outlined in the strategy, thereby fulfilling the aspirations of our citizens”.
The 200-page Niti Aayog report that set targets for 2022, the panels formed to improve the ‘quality of data’ have disappeared from government reports and advertisementsAakar Patel
The targets for the economy were, in the main:
take GDP growth to 8 per cent
raise investment rates to 36 per cent
raise the tax-to-GDP ratio to 22 per cent
take female labour participation rates to 30 per cent
improve data collection on employment
double the manufacturing sector’s rate of growth through ‘Make in India’
double the income of farmers
What has happened on these fronts is now well known and has been reported and reviewed on this website, in the paper and in this column, several times over, but it seems germane to summarise again.
The near-sequential slide in GDP growth rates began in January 2018—for 13 quarters before the pandemic; by the last quarter of 2019–20, it had plummeted to 3.1 per cent. Some sleight of hand was suggested here ,and the former chief economic advisor said that the numbers were inflated by 2 per cent or so.
Then the pandemic arrived and economic activity stalled and GDP growth became negative, and we have now lost two years of growth. Even if we grow at 8 per cent this year, it may not make up that loss.
2. Investment rate
The investment rate remains where it was, under 30 per cent.
The tax-to-GDP ratio fell from 11 per cent in 2019 to about 10 per cent in 2020 and has gone back to about 11 per cent, despite significant increases in taxes on fuel. It is unclear how NITI Aayog assumed that a tax-to-GDP ratio of 22 per cent was even possible, especially after the big cut in direct taxes gifted to India’s corporate sector in 2019.
4. Labour force participation of women
The story of overall labour force participation has been documented at length by the Centre for Monitoring the Indian Economy (CMIE). The Economic Survey’s figures are similar and India is at a labour force participation rate of 40 per cent, the lowest in South Asia and about half that of China and Vietnam, both of which are over 70 per cent.
The government’s own data also suggests the same, and the worrying thing is that the rate has seen a long term and secular decline (explained by Santosh Mehrotra and others) which this government has not acknowledged and therefore not sought to correct.
Of course, one part of the problem is the very poor rate of female participation but even the male participation is anaemic because the jobs are just not there.
5. Data collection
On data collection, again this column has recorded the issues with the consumer expenditure survey, which was not released despite a plea from the previous chief economic advisor.
Specifically on unemployment data, the NITI Aayog itself discredited a National Sample Survey (NSS) report showing that unemployment had hit a record 6 per cent. Released after the election results were out, the data were then validated and unemployment has remained over 6 per cent.
On 29 December 2019, PTI reported that 'the statistics ministry has constituted a 28-member standing committee on Statistics (SCES) chaired by former chief statistician Pronab Sen to improve the quality of data amid criticism of the government over political interference', and quoted Sen saying that “the first meeting of the SCES is scheduled on January 6, 2020. The agenda would be very broad-based. We will come to know about that only in the first meeting next month.”
No further news or mention is to be found of this committee.
6. Make in India and the manufacturing sector
Manufacturing did not grow, and instead manufacturing’s share of GDP actually fell from 16 per cent before Make in India to about 13 per cent today.
Jobs in manufacturing have also fallen. The automobile sector, which is half of all manufacturing, has been flat for a decade.
India produced (for domestic and export markets combined) a total of 3.4 million passenger vehicles in 2014–15 and 3.4 million in 2019–20, before the pandemic. The average of the last three years, discounting the supply chain problems and catching up of demand lag, produces similar numbers.
The Society of Indian Automobile Manufacturers sent out an SOS in 2021 after assessing its growth rates for three years till March 2020 (before the pandemic). It concluded that “there is a slowdown in the Indian automobile industry that is long-term, structural and deep” and that “more research needs to be done on this slowdown”.
But research is only done on those problems that we acknowledge the existence of, and there is no slowdown in India, according to the government.
7. Farmers' income
The income of farmers did not double, of course.
The Reserve Bank of India’s Consumer Confidence Survey, tracking current perceptions compared to a year ago on the economic situation, employment and inflation, has been trending negative for seven straight years (except for March–April 2019).
Even exports, seen as a success story last year, climbed after being negative for most part since 2014. India had topped $300 billion in merchandise exports in 2014. A 23 per cent boom in global trade after Covid restrictions eased had lifted all boats in 2021–22. That boom is over and merchandise exports are again registering negative growth.
This then is the record of New India@75. Halfway into 2023, there is no further reference to this five-year plan. NITI Aayog has not said what the reasons were for having achieved or not having achieved what was sought to be achieved, or what lessons can be learned for the future.
Instead the prime minister has now renamed our time. Amrit Kaal, the eternal era, was apparently not eternal, and the era of duty is now upon us.
Views are personal