T N Ninan: Revisionist history

 

T N Ninan  |  New Delhi  

January 17, 2014 Last Updated at 22:50 IST

For the entire 10 years when Dr Singh has been at the helm, growth will average 7.8 per cent. Like it or not, these numbers will be hard to beat

History may or may not be kinder to Manmohan Singh than his current interlocutors in the media and critics among politicians. But one thing seems for sure: statisticians have been unkind to him and his record. If it is indeed true, as stray newspaper reports suggest, that GDP growth for 2011-12 is about to be revised upwards from 6.2 per cent to seven per cent, and for 2012-13 from five per cent to 5.5 per cent, that puts a gloss on the second Singh government's record that has been absent so far. For, if one takes the five-year period since the onset of the financial crisis that hit world markets in 2008-09, India's annual average GDP growth will stand revised to 7.44 per cent - well above the benchmark of seven per cent that is customarily used to categorise rapidly-growing economies. Even if you include the current year, which may end up with no more than five per cent economic growth, the average growth during this troubled six-year period will top the seven per cent mark. For the entire 10 years when Dr Singh has been at the helm, growth will average about 7.8 per cent. Like it or not, these numbers will be hard to beat in the coming decades; so some historians may well choose to be kind.

Are the statistics being cooked up belatedly to make the second United Progressive Alliance's record look better? Probably not. GDP numbers have been getting revised upwards virtually every year; the initial growth numbers are based in part on the monthly industrial production index, which includes data that often look distinctly flaky. The numbers get revised when more comprehensive data from the Annual Survey of Industries become available. The poor quality of the initial statistics must take some of the blame for the flak that the government has been getting; growth rates have been recorded as plunging more than they may in fact have.

How has India done in comparison with other countries? Taking the average from 2008, India has retained its position as the second-fastest growing among all economies that are at least one-eighth of India's in size. And the gap between India's and China's growth rates has dropped from 3.54 percentage points in the 2000-04 calendar quinquennium to 3.26 percentage points in the 2005-09 quinquennium and now to 2.48 percentage points in the four-year period 2010-13. However, it is also true that emerging markets as a whole have slowed down only half as much as India, and some small economies (like Ethiopia and Qatar) have grown much faster.

Do the better numbers absolve the Singh government of responsibility for macroeconomic mismanagement? No; as many commentators have pointed out, the main reasons for India's slowdown have been domestic, and unrelated to global trends. If the frenetic activity that the government is now indulging in - clearing projects, getting rid of an obstructionist minister, and so on - had been started a year or two earlier, and if the rupee had been prevented from its illogical climb against the dollar in 2010-2012, when the trade gap was getting steadily bigger, both the economy and the trade gap would have been in better shape today, as also the public mood.

Even in the last few months, the government failed to do the obvious in order to tackle inflation - it should have released some of its outsize hoard of grain stocks, increased supply in the market and broken the back of inflation in foodgrain prices. Timely steps on such fronts might have made it possible for the government to go to voters in the summer with a resilient growth record, lower inflation and the image of a purposive administration; it could even have claimed that India was shining!