GDP growth rate significance

ACCORDING TO DATA RELEASED BY THE Central Statistics Organisation on February 8, the country™s domestically generated national income aka GDP (gross domestic product) is expected to record a growth of 4.9 percent in the year ending March 31, 2014 compared with 4.5 percent growth in fiscal 2012-13. This is the first time since 1985 when annual GDP growth has slipped below 5 percent for two consecutive years. Although this dismal economic performance has received wide publicity, its implications have not been sufficiently explained to the lay public by the nation™s political leaders, academics or media pundits. Since 1978 when China™s visionary leader, the late Deng Xiaopeng decreed transformation of the centrally planned Chinese economy into a national free market, the country™s rate of annual GDP growth has averaged almost 10 percent. As a result, communist China has been transformed into a middle income nation with a per capita income five times that of India ($6,091 cf. India™s $1,489) and visible poverty ubiquitous in India, has been banished. The most significant outcome of sustained high rates of GDP growth is that millions of well-paid industry and factory jobs are created. This sets a virtuous cycle in motion as corporate and personal income as well as indirect tax revenues of the Central and state governments swell, enabling them to increase social sector ” education, health ” spending. This raises farm and factory productivity which in turn boosts agriculture and industrial output. Hence devising policies and processes for continuous high rates of GDP growth is not merely a subject of academic debate, but an issue which directly impacts the lives of hundreds of millions of citizens, particularly children and youth. Independent India™s pathetically inadequate investment in public education (averaging 3.5 percent of GDP cf. 7-8 percent in the developed nations for the past several decades) and public health (1.4 percent cf. 9-10 percent), is a direct consequence of the annual rate of GDP growth stagnating at 3.5 percent per annum for over 30 years (1950-80). Therefore GDP growth dipping below 5 percent in the past two years is ” or should be ” profoundly disturbing given that India adds 1 million people to its working-age population every month, and that by the end of fiscal 2018-19, 51 million new jobs will have to be created. This is the backdrop against which the now famous Bhagwati/Panagariya versus Sen/Dreze debate has been staged. What should be the national priority ” investment in education and public health which would lead to higher worker productivity, or investment in industry and agriculture infrastructure which would boost output and enable greater investment in HRD? Obviously, a balance needs to be struck to ensure both objectives are achieved in a mutually reinforcing manner. Voters exercising their franchise this summer should carefully weigh which political formation has the competence to strike this critical balance. AAP™s irresponsible populism Given his firm and determined stand on the issue of rooting out corruption within government and officialdom, there is much that is admirable about…