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Celebration over fifth-largest economy is sentimentalism

UK’s population is at least 20 times less than India’s, which means that its per capital income is 20 times more than ours. This calls for introspection rather than celebration

Celebration over fifth-largest economy is sentimentalism

India becoming the world's fifth-largest economy after overtaking the United Kingdom is being presented as a great national achievement. Typically, the Narendra Modi government and the ruling Bharatiya Janata Party are trying to take credit for this.

A few facts will dampen the celebratory mood. First, at the time of Independence, our country was the sixth largest economy in the world, so in reality we have moved just a notch up in the last 75 years. In fact, for most of the time since Independence we were even below the sixth rank. In 1980 and 2020, India was the 13th largest economy.

Second, it is a well-known fact that in general developing countries grow at a faster pace than the developed ones, so there is nothing surprising in bigger developing countries marching past some developed nations at some point of the other.

Thirdly, the UK's population is at least 20 times less than India's, which means that its per capital income is 20 times more than ours. This calls for introspection rather than celebration.

This is not to say that India has not achieved anything substantial since 1947. The gross domestic product or GDP rose from Rs 2.79 lakh crore (at constant prices) in 1950-51 to Rs 147.36 lakh crore in 2021-22. Per capita income soared from Rs 12,493 in 1950-51 to Rs 91,481 in 2021-22. The foodgrain production rose from 1950-51 to an estimated 316.06 million tonnes in 2021-22.

The literacy rate climbed from 18.3 per cent in 1951 to 77.7 per cent in 2017-18. The rise in female literacy rate has been steeper - from 8.9 per cent in 1951 to 70.3 per cent in 2017-18. Life expectancy also rose from 31 years to almost 70 years.

This has helped a rise in the human development index (HDI), which reflects life expectancy, education, and standard of living. The HDI's range is between 0 (worst) and 1 (best). In 1950, India's HDI was 0.11; it went up to 0.64 in 2019. This is remarkable progress by any reckoning.

These figures, however, should not lull us into complacency. For one, in terms of per capita income, India was at the 145th position in a list of 193 countries.

One reason is that economic reforms are not being carried out with the pace and enthusiasm as needed. Wealth creators still suffer from excessive regulation despite over three decades of liberalization. India's rank in Cato Institute's Human Freedom Index declined from 75 in 2015 to 111 in 2020. Heritage Foundation's 2022 Index for Economic Freedom also ranks India 27 among 39 countries in the Asia-Pacific region. India's overall score is lower than not just the regional but also the world average.

Politicians cutting across parties are more interested in distributing freebies than restoring fiscal health and creating a business climate conducive for investment. Populist and often divisive issues figure high on the agendas of our politicians, whereas the matters related to business and investment are very low - that is, if they are there at all.

Worse, often good measures, like the three farm laws that the Modi government enacted, get caught in the political crossfire. The laws had the potential of redeeming agriculture in the country, but had to be abandoned because of intense resistance to them. The resistance was essentially sentimental, but that is how our politics is.

Indeed celebration of having become the fifth economy is also sentimentalism - how we have overtaken our erstwhile political masters. The problem with sentimentalism is that facts often get ignored, like the issue of per capita incomes in India and the UK. But then our political masters don't let facts come in the way of celebrations.

Ravi Shanker Kapoor
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