The Hindu : Opinion/News Analysis : Economic growth rate is sustainable: Jaswant

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Sunday, Apr 04, 2004

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Opinion - News Analysis

Economic growth rate is sustainable: Jaswant

By Alok Mukherjee

NEW DELHI, APRIL 3. With official statistics indicating that the economy grew at a whopping 10.4 per cent during October-December 2003, the Union Finance Minister, Jaswant Singh, is convinced that India is shining. More than that, he feels that the high growth rate will surely benefit the common man, particularly the farmer who the Opposition alleges has been left out of the `feel-good' loop.

Talking to The Hindu after receiving a good performance report from the Central Statistical Organisation, Mr. Singh was dismissive of the charge that the high economic growth rate was not sustainable. He conceded that the `India Shining' campaign of the Government had given rise to cynicism, but blamed it on the natural inclination of politicians to be ``uninhibited in their cynicism.'' Admitting that the mismatch between job creation and job expectations was a major challenge before the Government, he called for a change in the mindset that ``jobs mean Government jobs.''

For the `citizens of India,' he promised to hold down inflation even after the elections were over and reaffirmed his promise to senior citizens that the `Dada-Dadi' bonds would be launched soon. Excerpts from the conversation:

The Hindu: The 10.4 per cent growth is a big boost.

Jaswant Singh: It is, without doubt, gratifying because 10.4 per cent for one quarter is perhaps the highest ever and is certainly the highest in the world today. It is much higher than [that of] our eastern neighbour.

But the main concern is whether it is sustainable.

Of course it is sustainable. When I had earlier said and indeed the Prime Minister had said `about 8 per cent growth', then that was scoffed at. Then, in the second quarter, we demonstrated a certain result. We crossed 8 per cent and we were asked whether it was sustainable. Now we have reached 10.4, which is the highest-ever and we are asked whether it is sustainable. I do believe it is sustainable. We will attain 8-plus growth this year and we will continue on this path in the coming years.

But the big boost is from agriculture, which went up from a negative 9.8 per cent to a positive 16.9 per cent. Compared to the previous year's third quarter, industry has improved from 6.9 to 7.4; mining has dipped from 7.6 to 4.2...

I am rewarded from your dissatisfaction that the industry has grown only from 6 point something to 7.4... To say manufacturing is only 7.4 or services is only nine is actually music, because the country's mindset is now recognising the potential and moving in that direction.

What does the high growth mean to the common man?

This common man fallacy.... Take agricultural growth. It is a movement from minus nine per cent to plus 17 per cent growth. That is 26 per cent growth... 26 per cent growth in what? It is in agriculture produce, produced by the common man. What has the common man done with it? He has sold it. So the common man has an additional income of 26 per cent. It is total fallacy that the common man has not benefited. Agriculture and agriculture growth has always driven our industry, demand, production... also our manufacturing... so much of the service sector is related to agriculture.

But economists talk about lack of investment in industry. Has there been any pick up in investment?

Yes, it is already demonstrated. There is a pick-up in non-food credit from the banking sector. There is always a lag between policy pronouncement and investment. It takes time for investment to ripen and it will.

Your `India Shining' campaign received a pounding and has given rise to deep cynicism even about certain positives in the economy.

`India Shining' was a programme approved by Parliament as part of the India Development Initiative to project India as an investment destination, both internally and internationally. Now.... it has received adverse comments... it doesn't surprise me... the very success of the campaign has drawn in the effect of envy. I know it has led to cynicism, but my community, or rather politicians, particularly when in the Opposition, do not suffer from any inhibition, cynicism or cynical expression of view.

Another major Opposition charge against the Government has been its inability to provide the promised jobs....

There has been job enhancement, only it has not kept pace with expectations and that is the dilemma that not only this Government, but all earlier Governments since 1952 have faced. It is a major challenge. Job availability has not been able to keep pace with expectations. There is a second thing that has to still happen. Jobs are equated with Government service. There is this study by a management school in London, and I have asked for details, which has come out with a figure that I am very gratified with — that in the last one year, new start-ups have contributed 17.7 million jobs. Now, all the infrastructure work that has started, the highways, the ports, are areas where jobs have been created. But are they all Government jobs? No. I think the path of Government jobs being the answer... we have to mentally alter that thinking.

But unemployment has become an election issue. How do you tackle it politically?

Politically, one has to tackle this problem by being absolutely candid about it. But the country, the country's electorate and the youth are mature enough to understand the reality of today. You cannot blow it out of proportion simply because it is convenient to do so. You can do it, but I have my serious doubts whether it will wash.

There is this feeling that prices will go up once elections are over. Petrol, diesel, cooking gas, the price increase has been put off because of elections. Is there a hidden inflation in the official statistics?

There is nothing hidden. After elections... I am not an economist and certainly not an astrologer. My job is to manage the country's economy. So to say after elections prices will go up... I would much rather wait than say what will happen after elections. Yes, it is correct that crores of rupees will come into circulation during elections because candidates will be spending that money and that can have an effect on demand and supply. Why don't we wait and watch this space?

What happened to the `Dada-Dadi' bonds, which were to be launched on April 1?

It will be done very soon. Some finer details are being worked out.

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