Facts about India's GDP growth challenge the narrative of critics

An objective look shows investment-inflation low, real investments high and India's GDP growth exceeding expectations

- SURJIT S. BHALLA

The narrative of India's low GDP growth, overstated growth, mis-measured growth, K-type growth, etc, reached a crescendo just before news broke that economic growth was 7.4% in the first six months of fiscal 2023-24; much like Virat Kohli getting out, critics were rendered silent. And then the double whammy of state election results endorsing the current path of development and growth. Critics will need to regroup, re-assess and re-formulate. Of course, as general elections near, one should expect more disinformation and narrative peddling till May 2024.

Expert commentary on the Indian economy has changed since May 2014, and a convenient shorthand is the classification BM (Before Modi) and AM (After Modi). AM has a nice waking-up ring to it. Expert critics during the AM period are a who's who of economists and former policymakers. These experts, at various points, have emphasized the following facts about the economy in the post 2014 period.

One, GDP data no longer reflects reality; GDP growth is significantly less (about 2 to 3 percentage points) in 'expert' reality. Think of arguments made by Arvind Subramanian, former chief economic advisor, that were echoed by many.

Two, the recovery since covid, and perhaps continuously since May 2014, has been K-shaped; for those alphabetically challenged, this means the rich are getting richer and the poor are getting poorer. Kaushik Basu, former chief economist, World Bank; and also echoed by many.

Three, women have been particularly hard hit since 2014; there is the rich 'evidence' provided by a private data agency, CMIE, that female labour force participation rates in India are the lowest in the world, at 8-10 percentage points (ppt) lower than even Yemen. Raghuram Rajan, former RBI governor; also echoed by many.