The issue is not about India’s GDP, but its JDP

General Studies Paper 3

Introduction

• India’s Gross Domestic Product (GDP) growing in double digits, the Indian economy being the world’s fastest, and also highlighted glowing reports by foreign institutions such as the International Monetary Fund (IMF) and Morgan Stanley. The whole debate among India’s leading economic policymakers has revolved around whose GDP growth was higher (i.e. the National Democratic Alliance or the UPA), or what must be done to achieve higher growth.

The issue is job potential

• India’s economy is growing so rapidly, but the demand for minimum wage work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme also growing fast.
• That is, when India was apparently the fastest growing economy in the world, more and more people were also clamouring for MGNREGA work.
• If the economy is doing well, it should be creating many jobs, which should then lower the demand for minimum wage MGNREGA work. MGNREGA demand should be inversely proportional to economic growth.
• Clearly, there is a big dissonance between GDP growth and its translation into actual jobs and incomes for people.
• Further, even the jobs that are being created tend to exacerbate India’s social fissures.
• People from higher castes constitute nearly three quarters of the formal service sector jobs that GDP growth produces while 80% of workers under the MGNREGA programne are from the oppressed castes of Dalits, tribals and backward castes.
• here is an alarming decline in the number of jobs that are being created with every percentage growth in GDP. This is a function of the poor quality of GDP growth, rapid increase in productivity and extreme automation.
• Thus, it is important to focus on the job intensity of economic initiatives rather than merely chase headline GDP growth.

The Mines and Minerals Bill, India’s future

• The MMA Bill can be a potential booster shot in India’s economic arm, if administered properly.
• The world is in the midst of an inevitable transition to electric mobility. While electronic chips and equipment are key to this transition, the fountainhead for this change are minerals such as lithium, cobalt, graphite and other ‘rare earths’.
• These minerals are the foundation for the whole electric mobility supply chain which countries such as China are pursuing aggressively.
• China dominates this supply chain through a belligerent geo-economic policy of sourcing, extracting and refining these minerals from various parts of the world.
• Various studies have shown that India’s topography is very conducive to finding similar mineral deposits as found in Afghanistan and Western Australia
• But India has not explored even 10% of its potential mineral deposits below the earth and has mined even less.
• With a coastline that is over 7,000 kilometres long, India’s potential in finding rich strategic minerals can be even greater through deep sea mining.
• However, lack of access to latest mining technologies, environmental concerns and previous incidents of labour exploitation in mines have prevented India thus far from exploring this opportunity.
• The new MMA Bill promises to change that through private sector participation in exploration of strategic minerals including lithium.

Way forward

• It is very important for political leaders to change the nation’s economic discourse and abandon this blind quest for headline GDP growth.
• Economists, technocrats and the IMF peddle GDP growth, since it is a convenient measure to compare what they can forecast through excel models on their computers.
• For political leaders who are entrusted with people’s real welfare, it is critical not to fall prey and question whether such headline GDP delivers true economic prosperity to all its people.