The Indian Miracle Lives...Really?

I was not sure how to react to this article by Shashi Tharoor. In his typical style he does not agree to all the questions being raised on Indian economy.

But then he uses just the right word. Going by how things are currently, one can safely say 2003-08 India growth phase was indeed a miracle. However, he thinks it is still living on:

To hear some people tell it, the bloom is off the Indian economic rose. Hailed until recently as the next big success story, the country has lately been assailed by bad news. 

Tales abound of investor flight (mainly owing to a retrospective tax law enacted this year to collect taxes from Indian companies’ foreign transactions); mounting inflation, as food and fuel prices rise; and political infighting, which has delayed a new policy to permit foreign direct investment in India’s retail-trade sector. Some have even declared that the “India story” is over.

But today’s pessimism is as exaggerated as yesterday’s optimism was overblown. Even as the world has faced an unprecedented global economic crisis and recession, with most countries suffering negative growth rates in at least one quarter in the last four years, India remains the world’s second-fastest-growing major economy, after China.

Hmm. What follows is nothing but overblown statistics:

Putting China aside, India’s economy grew by 6.5% in 2011-2012, with services up by 9% and accounting for 58% of India’s GDP growth – a stabilizing factor when a world in recession cannot afford to buy more manufactured goods.

McKinsey & Company estimates that the Indian middle class will grow to 525 million by 2025, 1.5 times the projected size of the US middle class. According to last year’s census, the country’s 247 million households, two-thirds of them rural, reported a rise in the literacy rate to 74%, from 65% in 2001. In just the last two years, 51,000 schools were opened and 680,000 teachers appointed.

An impressive 63% of Indians now have phones, up from just 9% a decade ago; 100 million new phone connections were established last year, including 40 million in rural areas; and India now has 943.5 million telephone connections. Nearly 60% of Indians have a bank account (indeed, more than 50 million new bank accounts have been opened in the last three years, mainly in rural India).

Some 20,000 MW in additional power-generation capacity was added last year, with 3.5 million new electricity connections in rural India. As a result, 8,000 villages got power for the first time last year, and 93% of Indians in towns and cities now have at least some access to electricity.

One could only smile at the varied stats he presents in this article.

• Much has been written on definition of literacy so no comments.
• As far as schools and education is concerned, we know how students in higher class cannot read stuff in lower classes which they have qualified. Education means exactly this in India – opening more schools and enrollments..
• Mobile Phone thing was indeed a revolution but was possible because of licences given at dirt cheap prices. With 2g licences being reauctioned, prices will only rise. It will be nice to see how these stats will shape going ahead. When it comes to mobile connections in India,  one always goes to the fact that why so many limited people have access to proper toilets (and other basic things in life). However, somehow mobile connections are seen as more important than basic necessities of life…
• 60% of Indians have Bank accounts! As per this Dec-09 speech by RBI Governor, 40% of population has bank account. And this was just 2.5 years ago and I don’t see it rising by 20% in 2.5 years..
• However, this info about 50 million new accounts is correct. As per this latest speech, Dr. KC Chkarabarty says around 54 million new no frill accounts have been opened up..
• On this power stats, one gets some data from planning commission. It says in 2011-12 target for power is 21247.5 MW, total achieved in first two quarters was  7155.5 MW. It would indeed be a miracle if the total target achieved in the remaining two quarters added to make the whole year generation to 20,000 MW. It could happen though so one has to wait till the data is there in public domain..
• 93% of Indians have some access to electricity! This is  simply unbelievable. What does one mean by some access?

A final point on all these figures which show how access has risen in the country. There is no doubt that this is the first step. However, the focus remains on this and then it becomes a problem. The main purpose is continuous flow of these services. Opening bank accounts do not matter till people do not use them. Same with schools and other such services.

This reminds me of a story. On a study on water provision in India, we discovered that many states claim 100% of their populations  have access to water. Further digging showed access meant just having a tap! Flow of water did not matter. On similar lines I do not know whether access to electricity is akin to having a bulb…

This is not to plain criticise development in India. India has indeed progressed in the last 20 years. However, we need to take the criticism positively and work on the failures. There are some chocking failures on delivering basics which are not justified no matter what it is. And if we claim we have grown we should have shown far more improvement in these social and health indicators.  This is something our government brass is unwilling to do.

And then we have articles which just ignore the basics and focus on the fancy stuff like mobile phones etc. I keep wondering whether his response would be any different if he had not joined the government.

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