At the cusp of its third anniversary in power, has the Narendra Modi government succeeded in turning around the Indian economy? After all, as a prime ministerial candidate in 1914, Modi had, in rally after rally, lashed out at the Manmohan Singh government for its “lack of leadership” and “poverty of ideas” that led to a “policy paralysis” and “negative economic growth” in the country.
Modi, then Gujarat chief minister, used to say in the meetings that the Singh government, bereft as it was of innovative thought, looked at Gujarat model of industrial growth for ideas.
Now that Modi has been the prime minister for almost three years and he has had the opportunity to replicate the Gujarat model of industrial growth at the national level, has he succeeded in his mission? Has he been able to reverse the policy paralysis and dramatically improve on the parameters of the economic growth?
If one looks at the data released by the Central Statistical Office (CSO) last Friday (12 May) regarding the Index of Industrial Production (IIP), which is a major indicator of the state of economy, then it would appear that the Modi government has lived up to its promise.
The IIP data tells us that the estimated average annual industrial growth in the last three years has been 4.1 percent which is in sharp contrast to the negative or, at best, stagnant industrial growth during the second stint of the Congress-led United Progressive Alliance (UPA) government.
But there is a catch here. The data released on last Friday are based on the revised base year adopted by the CSO. Earlier, the base year for the IIP used to be 2004-05; so all estimates were then based on the basket of products considered significant in those years.
But, with rapid technological progress, many of the erstwhile products had lost its weightage on the industrial scale; and many new industrial products of the recent years did not find mention in the list of goods taken into consideration for tabulating the industrial growth.
This anomaly had to be removed if the IIP was to be a right indicator of the state of our industrial growth. The Manmohan Singh government had made the first move in this regard. It had set up a committee headed by Saumitra Chaudhuri, a well-known economist and former member of the planning Commission, to suggest changes in the basket of industrial products and the respective weightage to be allocated to them in formulating the index of industrial production.
The Chaudhuri committee submitted its report in April 2014, barely a month before the UPA government was voted out of power. It was left to the newly elected Modi-led National Democratic Alliance (NDA) government to consider the recommendations of the Chaudhuri committee and formulate a revised IIP that reflect the current trends of the economy.
That is precisely what the Central Statistical Office did last Friday when it released a new set of data about India’s industrial growth predicated on the revised base year of 2011-12.
In the new scheme of things, the number of items in the basket of goods has gone up to 809 compared to 620 in the old series. The relative weightage accorded to the items have also been changed in the new series.
The industrial outlook of the country, as per the revised data, looks far more reassuring.
If one takes a look at old series data, the average annual industrial growth in the last five years was estimated at 1.4 per cent. But the new estimates peg the average annual industrial growth of last five years at 3.8 per cent, which is just short of a three-fold increase.
But more revealing are the data if you look at the break-up of the last five years – last two years of the UPA rule and first three years of the NDA rule.
First, look at the performance of the Modi government. The old series told us that the Indian economy grew at 1.96 percent in the last three years that the BJP-led government has been in power. But the new series, as revealed last Friday, tells us that the average annual industrial growth in the last three years – 2014-2017 – has been an impressive 4.1 percent.
It is a spectacular story and the Bharatiya Janata Party (BJP), which has a well-oiled propaganda machinery, ought to have gone to town to advertise its achievements as soon as the new estimates were declared last week.
But the relative quiet in the BJP camp is on account of what the revised estimates say about the other side of the five-year break-up: the last two years of the Manmohan Singh government.
As per the old series, the Congress-led government had managed a paltry 0.5 percent average industrial growth in its dying years, 2012-13 and 2013-14. But new series estimate catapaults the industrial growth of this period more than six times and pegs it at 3.35 percent.
That has taken the wind out of the BJP’s hype. So far, the party was tom-toming the old series data. Even if 1.96 percent of industrial growth that its government had achieved in the first three years was not impressive by itself but the party had reason to boast that this figure was almost four times of the industrial growth registered in the last two years of the Manmohan government (0.5 percent).
But the new series of the IIP has knocked the base out of this boast: the revised estimates tell us that the Modi government’s performance in turning around the industrial growth is marginally – only marginally – better than that of the Singh government (4.1 percent compared to 3.35 percent).
This is a far cry from the 400 percent growth in the industrial production the BJP regime had claimed in the last three years of its rule compared to the last two years of the Congress rule. The BJP is silent because there is nothing spectacular to paint the town red.
If anything, the new series data have only punctured the BJP’s harangue about the policy paralysis of the Congress government during the run-up to the general elections and thereafter. As a matter of fact, the official data now reckons that the Congress had done reasonably well – at least as well as the BJP government is doing now – in the much-maligned final years of its rule.
But, unfortunately, the leadership of the Congress is just incapable of bringing home this point to the people of this country.
Updated Date: May 17, 2017 20:07 PM