Indian Economy and Inclusive Growth

I Satya Sundaram

A two-day National Seminar on the theme “75 Years of Indian Economy: Economic Growth and Distributive Justice” was held under the auspices of the Department of Economics, Acharya Nagarjuna University, Nagarjuna Nagar-522 510, Andhra Pradesh on 9th & 10th March, 2023. The Vice-Chancellor is Prof. Raja Sekhar Patteti. The Seminar Director is Prof. K. Madhu Babu.

The Vice-Chancellor has observed that mere accumulation of knowledge is not enough, we have to strive hard to achieve social justice. He underscored the need for improving quality of life. Of course, growth rate matters. The Principal Prof. Ch. Swaroop Rani said distributive justice is as important as higher growth rates.

Prof. Sudhakar Panda, former Vice-Chancellor, Birla Global University, Bhubaneswar, delivered the Key-note Address. He said the economic reforms undertaken in the early 1990s are inevitable as growth rates need to be stepped up.

If anything the world economy is in trouble. The recent (January 2023) annual meeting of the World Economic Forum (WEF) at Davos, Switzerland, pleaded for a new world order based on justice, equality and peace. India is not well placed on social security front. The poverty ratio, though declined, is still there at 20 percent. India’s unemployment rate rose to 7.45 percent in February, 2023. In December 2022, the over-all unemployment rate was 8.3 percent, with urban unemployment at 10.09 percent and rural unemployment at 7.44 percent.

The share of agriculture in GDP came down to 18 percent. Yet, around 50 percent of the labour -force works in this sector. Food-grain production increased from 252 million tonnes (MT) in 2014-15 to 323 MT in 2022-23. Agriculture showed resilience even in the period of COVID-19. Yet, India’s food security is tenuous. In the Global Food Security Index 2021, India ranks 71st out of 113 countries. Of course, the food-grain stocks were of the order of 51.14 MT as of October 2022.

Agriculture exports are showing encouraging trend. Exports of major agriculture and processed food products promoted by the Agricultural and Processed Food Products Export Development Authority (APEDA), in 2022-23, are likely to touch $ 26 billion as against $ 24 billion in 2021-22.

The real problem is that the farmer’s income is low for various reasons. The Government is depending on modern technology. Reducing cost is important. What is necessary is to encourage natural farming. As farmers do not get remunerative prices, marketing reforms are very important.

Micro, Small and Medium Enterprises (MSMEs) sector is receiving due attention because its contribution to gross value added increased from 29.3 percent in 2018-19 to 30.5 percent in 2019-20. This sector accounts for 90 percent of industrial units, 40 percent of the total manufacturing output and nearly 35 percent of exports. The Government measures to boost MSMEs sector include the modification of the definition of MSMEs, the provision of Rs 20,000 crore subordinate debt for stressed MSMEs, Rs.50,000 crore equity infusion through Self Reliant India Fund, the waiving of the global tender requirement for procurement of up to Rs.200 crore and launching of the Udyan portal for MSMEs registration. The Union Budget 2023-24 revamped the credit guarantee scheme. For the financial year 2022-23, the Government set up Micro Units Development and Refinancing Agency (MUDRA) Bank. MUDRA loans worth Rs 3.56 lakh crore were sanctioned, of which Rs 3.48 lakh crore were disbursed as of March 3, 2023.

The performance of health sector is disappointing. Malnutrition should be considered as a broader issue, involving food and livelihoods. The problem is how to combine agriculture, nutrition and health. At present, among aged five years, 35.5 percent are stunted, and 32.1 percent are underweight. Health expenditure increased from Rs 52,954 crore in 2018-19 to Rs 76, 379 crores in 2022-23 (RE). However, health expenditure as a percentage of GDP is very low. It is just 1.28 in India against 16.9 in the US, 8.1 even in South Korea and 4.2 in Turkey. There are rural-urban disparities. The stress should be on balanced food. Some voluntary agencies have developed low cost health delivery system. The Government should use their services.

The performance of education sector, at all levels, is not up to the mark. Though quantitative expansion is impressive, quality continues to be poor. There are 51,999 higher education institutions of which 993 are universities, 10,725 are standalone institutions, 39, 931 are colleges. However, not a single university ranked in the top 200 of the world. The National Education Policy 2020 laid stress on accessibility and equity, flexibility in curriculum design, skill development and employability, multidisciplinary degree option. The move to set up foreign universities campuses in India has serious implications.

Women empowerment and gender equality are receiving attention. But the challenges are many as women continue to work in the unorganised sector. In the political field, there are reservations. But, in the case of panchayats, husbands of women sarpanches (chiefs) enjoy actual power.

In recent years, microfinance has emerged as a tool not only to empower women, but to achieve inclusive growth. As on June 30, 2022, microfinance loan portfolio stood at Rs 2.93 lakh crore. If one takes into account the SHG (self-help group)-bank linkage, the over-all size is at around Rs 4.82 lakh crore.

The centre has been concentrating on capital expenditure (Copex) in recent years. The allocation for copex zoomed from Rs 3.39 lakh crore for 2019-20 to Rs 7.5 lakh crore for 2022-23. The focus is on infrastructure development. Under PM Gati Shakti plan, 196 projects have been notified. The government is also depending on the Production Linked Incentive (PLI) scheme.

The problem of cost and time overruns has assumed ominous dimensions. There is undue delay in the completion of projects. The Government has lost crores of rupees because of cost escalation which is again due to delay in executing projects. This issue is not taken up seriously.

There were four invited talks. The Papers presented touched on the various facets of the Indian economy.

1. Prof Sudhakar Panda said the year 2023 is not rosy for the global economy. He traced the changing economic thinking in India during the last 75 years. Today, the Government wants to play the role of a facilitator of development. Importance is given to private capital and technology. But, there are pitfalls of the present strategy. The economy has become a high cost economy. The policies placed burden on the poor because even the GST has been used to mobilise revenue.

2. Dr I Satya Sundaram, economist and writer, underscored the need for developing a low-cost health delivery system. He said the Government should seek the help of private sector and Voluntary agencies to strengthen health infrastructure at the grass-roots level. Better funds allocation for health sector is needed. Innovative strategies alone can deliver.

3.Dr Sri Krishna Sudheer Patoju of School of Rural Development, Tata Institute of Social Sciences (TISS), Tuljapur Campus-413 601 spoke on Crafts and Arts. India is known for its cultural heritage. Crafts and Arts are an important ingredient of Indian culture. But, there is no patronage for them either by the Government or people in general. They remain unorganised, decentralised and labour intensive. Foreigners are giving importance to them. Hence, crafts and arts should become an important ingredient of tourism policy.

4. Dr Sasmita Swain from School of Rural Development, TISS, Tuljapur, spoke on social entrepreneurship. She said when the market fails, state has to intervene. She declared social entrepreneurship is needed to achieve social inclusion.

The conference covered a number of issues relating to poverty and inequality, agriculture reforms, farm credit, farmers’ suicides, employment situation, industrialisation, tribal economy, services sector, status of handicrafts, regional disparities in development, special economic zones, power sector reforms, demographic dividend, social sectors like health and education, Indian exports, and women empowerment.

Major Recommendations
*    There is an urgent need to boost both wage employment and self-employment.
*    Diversification of agriculture sector is needed to enhance employment opportunities.
*    Rapid rural industrialisation is the key to India’s prosperity. Chinese policy is successful. India has to change its approaches by laying stress on technical education and skill promotion. Boosting rural entrepreneurship is important.
*    Any employment strategy should give importance to agriculture. The employment potential of this sector should be properly utilised. The focus should be on organic farming.
*    Agriculture’s performance is satisfactory. But, farmer’s income is low. Price support alone is not enough. Marketing support holds the key.
*    Crafts and Arts have special significance. Yet, they remain neglected. A special package for traditional artisans and craftsmen under the PM Vishwa Karma Kaushal Samman was announced to integrate them with the MSMEs value chain and enable them to improve quality, scale and reach of the products.
*    The current stress on digitalisation, make in India and financial empowerment of women are no doubt welcome.
*    The allocations for social sectors like health and education need to be stepped up. Better management of funds is important.
*    Neo-liberalism has not benefited the common man because of wrong priorities. For instance, the stress is on high-speed trains, but, the senior citizens are denied concessions. Can the poor afford to use gas cylinders? Inflation is a problem because even the GST is used to raise revenue.

At the Valedictory Session, university Rector, Prof. Varaprasad Murthy underscored the need for interaction between the university and the affiliated colleges in respect of academic activities. Officer on Special Duty, Prof Suneetha, observed that those who recovered from COVID 19, are suffering from side-effects. These should be minimised.

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Frontier
Vol 55, No. 40, April 2 - 8, 2023