We all today are extremely proud of that fact that India is showing such high growth. But looking closely one cannot avoid being suspicious at these figures of 7%-9% growth. How ? Lets c .....
Economic growth is calculated upon GDP that is gross domestic product , or in lame language value of final goods and services produced in year on Indian territory. What there is to closely look in this definition is the term 'on Indian territory'.
Liberalism as we all believe and know and taught as reason behind this growth. What does it mean actually ! MNCs investing in India (other factors account for less). Still further clarifying it, MNC setting up business in India. Since its MNC ownership business, revenue/profit is taken by them or lets say goes to people sitting outside India or non-Indians.
But all this revenue generated by MNC is accounted for in GDP, hence the growth (because of the term in GDP definition 'on Indian territory'). What does it mean ? It means foreigners using our resources, converting into financial resources and taking it outside India and we here are all going gaga over growth indicator of 9%.
Ohh yes !! a substantial part of our GDP is actually income of foreigners, money which we never ever get to see.
Yet not convinced ! let me throw some more facts on you .......
1. Going by calculation of growth, we showed growth during British colonial times.
2. If India goes into war, our growth would increase. GDP includes government expenditure which will go up due to war spendings.
You must have heard about jobless growth and eventually inclusive growth. Jobless growth now you understand as poor India showing growth numbers on paper. And obviously govt had to do something about it, hence the slogan of 'inclusive growth'.
Remember the slogan of BJP - India Shining ! India for the first time showed high growth of 9% and yet BJP lost the elections. Why did that happen ?
BJP told common man - "see look the growth figure of 9%" and got a slap on the face ...... "I am suffering here from poverty and you are boasting of your growth numbers".
All growth was on paper only, none on ground. So don't get so excited over the numbers 7%-9%.
What we really need is actual indicator which shows our true growth and Alas! there is none.
PS: Don't get too influenced by this picture as there is other side of the story too :)
This was an eye opener!
ReplyDeleteI must appreciate the way you have explained GDP and how it might not be the right indicator of economic growth. But an eternal question remains unanswered. What then should be the real indicator of growth. One might want to consider GNI as a better indicator than GDP which might give us a real picture in case of your war example. Or per capita income, HDI.... the debate is on...
ReplyDeleteThough it was a good attempt to pen down your own views regarding India's growth and the role played by MNC's in India's GDP, but this I would say is not 360 degree view of the problem.
ReplyDeleteMNC's are creating loads of job opportunities in the Indian market. Loads of people are getting trained and exposed to the new technologies and methodology and eventually they are starting their own business . And which in turn is contributing to India's GDP .
I think you should look at the bigger picture for the role of MNC's. The picture of India is changing as people are getting higher salaries in these MNC's . Their increased purchasing power is reflected by the malls and supermarkets in the cities which has enhanced the outlook and standard of living of people.
Now higher educated Indians are staying back and working in these MNC's and are extending strong hands in developing this nation.
To conclude I would say that globalization has helped India to mark it on the world map and obviously affected the GDP as well.
Agreed ! Globalization and MNCs have done much good in India. And if this article brings a leftist face of me, I must assure you I am one among the liberals :)
ReplyDeleteThis article was an effort to sensitize people about the real picture of our GDP growth numbers.
The arguments u have laid here are all correct but are common knowledge to all of us. My aim was to bring in front that picture thats still unknown to people.