A double-digit growth in GDP or being named the fastest-growing country in the world is nothing except if it results in a substantial increase in income for families.
In the next few weeks the annual ritual of quarterly releases will be played out. The Government will release the first quarter’s Gross Domestic Product (GDP) growth numbers with some chest-thumping and Opposition parties will hold press conferences to counter such bombast with rhetoric and nit-picking.’ – I wrote in an article titled Whose GDP Is It Anyway? on 27 July in The Hindu.
5 weeks on, precisely like I had predicted, the government claimed that India’s GDP increased the fastest of all major economies around the globe while the opposition Congress political party (my group) held an event in a press conference, jokingly saying that the government was “clueless” in economic management. The government claimed that GDP increased by 13.5 percent from last year’s figures, while the opposition pointed out that it had only grown by 3 percent over three years. The government was elated that Gross Value added (GVA) in the construction and services has seen significant growth, and the opposition complained that manufacturing and mining had not seen a rapid growth.
Read more Qatar will open Doha International Airport ahead of FIFA World Cup
I’d wager that for over 95 percent of Indians the debate over GDP with the government and opposition parties is a blatant incoherent and has no value or effect on their everyday lives. For the majority of the population, economics matter only when it is translated into employment, income and a better life. The economy may be the sole thing that everyone in Indian has to deal with, yet the metrics of the economy like GDP and GVA (Gross Value added) and the like have become irrelevant to people of average age. A double-digit growth in GDP or being called the world’s fastest growing economy is little as long as it is accompanied by a robust increase in income for families. There is a disconnect between the economic indicators and the actual income benefits for families of average size.
GDP isn’t equivalent to jobs
in the 80s decade, each percentage point increase in the nominal GDP of India created around two lakh job opportunities in the formal industry. In the 1990s, each percentage point increase in GDP generated just 1 lakh jobs. In the decade of 2000, it dropped to a half-lakh job. Also the GDP of India must expand four times faster to create the same amount of jobs it did in the 1980s. The idea that, in a qualitative sense the growth of GDP during the 80s could be better for an average Indian family than the current GDP growth might sound a bit odd and absurd to those who read this column, for whom lives are vastly better now than it was four decades ago. To be crystal transparent, I am not advocating a change of the policies for economic growth that were in place during the 1980s. However, it is crucial to be honest with yourself and recognize that current economic systems aren’t working for the majority of people when it comes to increasing their incomes and living standards. It is important to note that this isn’t an India story or an accusation of one party against one another, but an overall economic phenomenon that is not tied to the political ideology or nation.
” Overall, we have a problem because the employment elasticity of growth has come down over the years,” stated Bibek Debroy, the chairperson of the prime minister’s Economic Advisory Council, in an interview with. Simple as that, she acknowledges that GDP growth isn’t creating as many jobs as it was in the past. The lack of jobs in GDP growth is an issue of bipartisan concern for the country. In this regard the debates and discussions between the government in power with the opposition on the nitty-gritty specifics of GVA and GDP are just a bunch of nonsense. Instead it is better to have discussions about how many jobs the economy created each quarter, the kinds of jobs, the median incomes of newly created jobs as well as the wage growth in existing jobs. These are the economic indicators that are important to the majority of people rather than the rate at which India’s GDP increased by 13.5 percent in one year or at 3 percent in three years.
The government provided us with information that revealed that private citizens as well as companies were able to spend more than $20 lakh crore in spending during the initial quarter of FY23, while the government spent more than Rs 4 lakh crore during the same timeframe. We were also informed that more than 70 million rural families got wage and work in the framework of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) during the very first quarter of FY23 which is 20 % more than the families who received employment in the prior quarter.
Counting the things that matter
What is the reason we don’t know the way many Indians found jobs during this first period of the FY23? What was the median earnings they made during the period? What industries employed the largest amount of people? What kinds of jobs did they offer? Aren’t these not the most important economic indicators we should keep track of on a regular basis?
GDP is a well-known measurement of economic activity that can be measured every quarter. It’s also a global measure that is used to assess the performance of different countries , and also ranked by institutions like the IMF. Employment and incomes aren’t something we’ve been able to measure accurately and regularly in India even though other developed countries like those in the European Union or the United States frequently. We have an ongoing discussion each quarter about India’s GDP growth and its position within the world and so on , all with complete disregard for the fact that none of this is important to the majority of the population.
It is not possible to count everything that could be counted is, nor all that is countable be counted. There have been numerous reports issued by the then Planning Commission, now NITI Aayog and the finance ministry labor ministry and a myriad of economists in the field of labour about ways to create jobs. However, there is no guidance about how to quantify the quality of jobs, and report and analyse data regularly.
Instead of a series of speeches on ways to create jobs What if we start by reporting job-creation data each period with similar enthusiasm when we publish figures on inflation or GDP? What we are measuring matters. It’s not ideal at first, but we should make a beginning to report the one economic indicator every quarter that is essential in every Indian family that is jobs. It is in the nation’s best interest to shift some of the attention devoted to the discussion of GDP each quarter to a discussion about jobs. Since this is a nationwide initiative, a bi-partisan team composed of experts from a variety of ideologies and political parties can be gathered to put India on the right path towards measuring and reporting on the most crucial economic indicator that is jobs. The burden is on the government to start this endeavor.
The urgent thing that the nation requires is not GDP, but JDP (Jobs Data Please).
Read more India, US to hold the trade policy forum in the near future PiyushGoyal