Editorial 1 : The recovery debate
Introduction: The Indian economy has shown a consistent improvement in growth rate in the years of last decade. This has generated curiosity among experts on the performance of the Indian economy.
Two views on India’s growth story
- The first argues that the fall in growth in the 2010s, worsened by the collapse during the pandemic, was because of fundamental flaws that persist. And that growth cannot sustain without an entirely new set of policies.
- An alternative interpretation is that sufficient reforms have been undertaken to set off a virtuous growth cycle. To sustain this, it is important that counter-cyclical policy smooths over the shocks, while cost-reducing supply-side actions continue.
The argument and counter-arguments on India’s growth trajectory
1. The better data will downgrade the growth rate
- Critics’ initial position was that as better data comes in, growth figures will be revised downward.
- Unfortunately for them, the revisions have been upwards.
2. The growth was overestimated because of low inflation deflators
- A second argument was that since wholesale price index-based inflation had become negative in April 2023, high growth last year was spurious because CPI inflation was higher than the partially used WPI deflators.
- A lower inflation measure overestimates growth. But if low WPI overestimates growth, then high WPI inflation should underestimate growth.
- WPI inflation was in double digits for two years between April 2021 and March 2023.
- According to their logic, the average post-pandemic GDP growth over 2021-24, measured at 8.1 per cent, should actually be even higher.
- Bogeys such as the absence of double deflation are raised.
- This is not feasible since India, along with other major countries, does not yet have a services price index.
- Research finds that the use of double deflation can either under- or over-estimate GDP.
- So it is not a solution to all problems. Of course, improvements in measurement and movement to global norms are and have to be a continuous process.
- But critics choose to question improvements also on grounds such as non-comparability with the past.
- This is inevitable. As India changes, so must measurement practices.
3. The quarterly growth data show growth is decelerating
- Third, there is an attempt to over-interpret quarterly results that are subject to seasonal and base effects as well as measurement issues, to declare growth is collapsing.
- The steep fall in growth to — 23.2 per cent in the first quarter of 2020-21 created a base effect that made first-quarter growth relatively higher in the following years.
- Growth rebounded to 23 per cent in Q1 2021-22, 12.8 per in Q1 2022-23, and 8.2 per cent in Q1 2023-24.
- The lower growth in the quarters that followed does not mean growth is decelerating.
- The base effect is fading. In Q3 2023-24, growth exceeded Q1 for the first time at 8.4 per cent, implying growth is accelerating, not the reverse.
4. The GVA data is a better growth predictor than the GDP
- The fourth strategy is to question the data.
- The lower third-quarter gross value added (GVA) growth of 6.5 per cent was said to be more reliable since the sharp rise in product taxes minus subsidies that led to the difference was suspect.
- By definition, net product taxes have to be added to GVA to get GDP, since these taxes are applied after the production process.
- Else it would not fully capture the government’s contribution to GDP.
- GDP measurement in India is more robust from the production side.
- The difference with the expenditure-side measurement is given as a discrepancy.
- Since these are independent measures of a complex total, other countries also have discrepancies.
- Nevertheless, critics had cast doubt on the first quarter growth figure because the expenditure side measurement was lower by 3.3 per cent of GDP.
- In the third quarter, the discrepancy was only 0.2 per cent, implying GDP growth from the expenditure side was close to that from the production side.
- Predictably, there was no mention of the discrepancy this time.
- A strategy of highlighting only data that supports priors and ignoring contrary evidence is itself suspect.
5. Global growth is the main contributor to Indian growth
- It is argued that India did better than expected because global growth was higher.
- But India did not do well in 2019 despite good global growth.
- Appropriate domestic policy is essential.
6. The fall in household investment points out low growth expectation
- Fingers are pointed at the fall in household financial savings arguing that a fall in investment and a rise in current account deficits (which must equal investment minus savings) will follow.
- This ignores the rise in household physical savings, which is measured as identical to household investment.
- Households include informal enterprises and they are borrowing to invest.
- But, liabilities are rising to finance investment more than consumption.
- This is healthier and more sustainable, unlike the borrowing financed consumption binge of the 2010s.
- Moreover, the current account deficit has fallen below 1 per cent of GDP, partly because financial savings are better intermediated and available for domestic investment.
- There is healthy investment and credit-led growth supported by a strong financial sector that will raise savings as incomes rise.
- India’s private credit ratios are much below its peers.
- Gross capital formation was 32.2 per cent of GDP in 2022-23.
- This is not low and is mostly contributed by private capex, which is rising sustainably in a virtuous cycle that will become clearer after the elections.
- Policy continuity is important for private capex.
- CMIE data shows new private sector projects in Q4 2023-24 were at Rs 9.8 trillion — the second-highest level ever.
Conclusion: Growth for the fourth year after Covid, contained inflation and poverty reduction suggest that sufficient reforms have been undertaken.
Editorial 2 : Together, step by step
Introduction: The journey for women’s equity in public discourse is not linear, measured by the steps taken, not taken or the two steps taken backwards. It is a constant churn in a systemic process that must squeeze out latent misogyny. Women around the world have begun to understand that. That’s why, despite repression or regression, women’s movements are only gathering steam on a slow burn.
Focus on global solidarity among women
- Iranian women got support from marginalised women in Afghanistan.
- They even fearlessly resurrected the Kurdish women’s movement chant of “Women, Freedom, Life!” and galvanised it as a mantra for all women to speak up.
- Women in Mexico are helping their US counterparts negotiate abortion bans.
- Meanwhile a Chilean protest song, ‘The Rapist Is You’, has become a collective chant on violence against women everywhere across the world.
The woman in ‘Woman’s Empowerment’ has no agency of her own
- Truth is, the term “women’s empowerment” is the hand-me-down of an egotistical male largesse or guilt-tripping.
- The agency never lies with the women, who are never asked what they want, but who are given what men think they need as a dole.
- If anything, it only ingrains in women a sense of powerlessness.
- Besides, traditional cultures have always upheld inequity as a norm rather than the exception.
- That’s why women have to be more strategic than exceptional, stay within the system and fight their way to leadership, earn it on their terms and never exit midway.
- If they quit, that would be the real end-of-the-road dreariness, worse, hopelessness.
A case study for woman empowerment: Prevention of sexual harassment at the workplace
- Problem: Sexual harassment in the workplace, even with reporting systems, causes women to quit due to mental trauma and a hostile work environment.
- Consequence of quitting: Women lose their stake in leadership positions, allowing the issue to persist.
- Motivation for harassment: Not sexual desire, but a way to eliminate female competition who are outperforming men.
- Impact: Harassment affects not just the survivor but also the entire workplace environment.
- Solution: Change the approach from protecting victims to punishing perpetrators.
- Need for change: Existing male leadership may be unable to address this effectively.
- Call to action: More women in leadership positions are needed to create a countervailing force.
A reality check of women's status across the globe
According to UN Women reports,
- There are gaping holes in women’s leadership.
- With just 27 per cent of parliamentary seats, 36 per cent of local government seats, and 28 per cent of management positions held by women, the decision-making process continues to be disempowering.
- A staggering 8 per cent of the global female population survives on less than $2.15 a day.
- Only 61 per cent of prime working-age women participate in the labour force, compared to 91 per cent of prime working-age men.
- By 2050, women globally will still be spending 9.5 per cent more time (2.3 more hours per day) on unpaid care work than men.
- At least 28 countries do not have laws granting women equal rights to enter marriage and initiate divorce, and 67 countries lack laws prohibiting direct and indirect discrimination against women.
Conclusion: This is not just about the gender divide. Women are taking on a bigger battle of reversing normative behaviour, a far tougher climb that men have never had to negotiate or know about. And for that, women need to push back collectively, not become another dropout or a beneficiary.