The Economic Survey 2011-12 showcases the dividends of economic liberalisation started by the ruling party. But admits: growth is not possible without agriculture
During the last financial year there were talks of the Indian economy finally decoupling from agriculture thus monsoon. The Economic Survey of 2011-12 disagrees with that. The survey has re-emphasised that whatever economic growth happened in the last fiscal it was due to agricultural growth. India recorded the lowest economic growth in 2011-12 since 2003 (2008-9 being the exception). However this growth rate was possible due to agricultural growth.
“At sectoral level, growth is estimated to be 2.5 per cent for 2011-12 for agriculture and allied sectors, a little lower than expected. However, this has to be seen in light of the high growth of 7 per cent achieved in 2010-11. Growth in the services sector is likely to be 9.4 per cent in 2011-12 as against 9.3 per cent in 2010-11. Thus, it is primarily the dip in growth in industry to 3.9 per cent in 2011-12 that has led to the slowdown in real gross domestic product (GDP) growth,” says the survey.
More to it, the survey points out the inevitability of agricultural growth to future 'inclusive' growth, the key economic principle of government.
“Growth in agriculture and allied sectors remains an important objective and a ‘necessary condition’ for inclusive growth.”
The survey has assumed political tone: it has put in extra efforts to show the economic dividends of the ruling party's liberalisation policy. Current budget marks 20th year of India's liberalisation. Prime Minister Manmohan Singh was the finance minister in 1992. In a departure from the practice of dealing with the current fiscal year, it has analysed economic growth trends pre-and post-economic liberalisation. The survey has articulated the dividends in terms of growth in economy and key sectors.
“The rate of growth between 1950-51 and 1990-91 was 4.1 per cent. In contrast, between 1991-92 and 2011-12 the economy registered a growth of 6.9 per cent,” it says. “The contributions of the agriculture and allied sector, industry sector, and services sector also underwent significant changes overtime. The long-term growth rate of the agriculture sector (over the last 60 years) has been 2.7 per cent. It was 2.3 per cent between 1950-1 and 1980-1 and 3.1 per cent during 1980-1 to 2011-12. Growth in the industry sector increased from 5.2 per cent in the earlier period to 6.4 per cent between 1980-1 and 2011-12. Similarly, growth in the services sector was 4.4 per cent and 7.8 per cent respectively during these two sub-periods.”
India's consistent low ranking in various human development indicators has drawn global attention, putting a question mark on the benefits of the huge economic growth to the poor. In January the Prime Minister said that malnutrition among children was a national shame. However, the survey has given it an interesting twist.
“An analysis of the trends during 1980-2011 shows that although lower in HDI (Human Development Index) rankings, India has performed better than most countries in terms of average annual HDI growth rate.”
As if to start relaying the UPA-II's achievements, there are assessments of achievements since 2006, the first of UPA-II's budget. On social sector expenditure and addressing unemployment, two key issues for the UPA's constituencies, such evaluation has been highlighted.
“A comparison between different estimates of Central government expenditure on social services and rural development (Plan and non-Plan) has consistently gone up over the years. It increased from 13.38 per cent of total central government expenditure in 2006-7 to 18.47 per cent in 2011-12. Central support for social programmes has continued to expand in various forms although most social-sector subjects fall within the purview of the states.”
Government has been facing tough challenges from its allies; most of the time forced to roll back key reforms. The survey has taken note of this. It has taken a clue from the Prime Minister’s periodic assertions. It has rewritten Prime Minister’s now infamous 'coalition compulsions' excuse as 'democratic politics'.
“There is no doubt that a part of India’s slowdown is rooted in domestic causes. The persistent inflation that remained over 9 per cent for much of the year and needed to be tamed played a role. There were also the pressures of democratic politics, which slowed reforms.”
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