EDITORIAL: Home truths from World Bank
NEW DELHI (The Statesman/ANN) - It made its position further untenable by insisting that the slowdown in government consumption was offset by solid investment, which benefitted from public infrastructure spending.
The inevitably of falling growth rates in India has been confirmed by the World Bank report released ahead of the twin annual meets of the Bretton Woods institutions. Even in April 2019, the World Bank was harping on an outlandish forecast of 7.5 per cent that it has now slashed to six per cent. Discovering hope where there was none, the bank then said that India would grow at 7.5 per cent in the next three years with support from robust investment and private consumption.
It made its position further untenable by insisting that the slowdown in government consumption was offset by solid investment, which benefitted from public infrastructure spending. Since the numbers and trends have not really changed, one wonders what brought about this change of heart with the bank now finding that “India’s cyclical slowdown is severe”. Why it took the pundits at the bank so long to realise that weak growth is being driven mostly by deceleration in local demand and that “in such a weak economic environment, structural issues surface and the weak financial sector is becoming a drag on growth”, is difficult to fathom.
Nevertheless, now that it is acknowledged, one should be able to accept the reality fostered by an appreciation that India’s severely emaciated rural sector cannot be the robust source of demand that once rescued it. The urban and corporate sectors too are still fumbling for road maps. It is understandable that the World Bank is keen to showcase India as a success story with its democratic ways, entrepreneurial spirit, poverty reduction and other laudable achievements that had positioned it very favourably to win the 21st century.
The story has changed considerably over the past half a decade, however, due to errors of commission and omission, which the bank should acknowledge publicly instead of celebrating errors, as it has. The Indian leadership too must understand that flippant remarks holding the success of Bollywood blockbusters as indicative of all being well with the economy are distasteful at best and downright dangerous at worst. Equally regrettable are the ostrich-like pronouncements from the RSS headquarters being lapped up by devotees. India’s problems are of its own making and it does not behove the country to argue that its entrenched economic straits are an inevitability in an ecosystem of falling global growth rates.
Indeed, India may do well to look at tinier economies in its neighbourhood to examine what they are doing differently because Nepal and Bangladesh seem to have bucked the global trend. It is not just a matter of comparing oranges and apples; New Delhi may be well advised to consider Dhaka’s real GDP growth at 8.1 per cent in 2019 (7.9 per cent in 2018) and its projected 7.2 per cent (2020) and 7.3 per cent (2021) with a modicum of respect.