The Nuumber Game

The Number game

After two years of slow growth rate, we are back again at 8%. According to our finance minister, our growth for this year is 8.5%. But the million dollar question is whether 8% growth rate is sufficient for India or it needs 10% growth for longer duration of time to be a better country in view of growth. From 2000, we are consistently doing better at 8%. This has led to a sense of complacency amongst the government, bureaucrats and the media. The second fastest growing economy appears to be waiting for China to stumble so that we can perhaps even lay claim to being the fastest growing economy in the world.

I agree we have a steady growth rate but we also have high inflation and high interest rates. Do we need to look after the macroeconomic policies of the country? Some among us argue, why with so much diversity in the nation we do not do better than 8% while others say that when the growth rate is 8% with over 7% unemployment, then we better aim for a lower rate with employment. According to a latest report, India’s wealth may jump nearly two fold to a whopping $6.4 trillion from the country’s current wealth of $3.5 trillion. But, if we look at the reality the World Bank estimates that 41.6% of India’s population lives below $1.25 per day and 75.6% live below $2 per day. This is much higher than the 73% in sub-Saharan region. Living conditions in India is still among the worst; many of our children are malnourished and have no access to education, drinking water, or basic hygiene. 

So, what can we do to eradicate all these problems? We have to have a growth rate of 10% and more to reach our goal. We cannot feel satisfied with 8.5% rate. Therefore, those who believe 8% is enough, they are pricing the country at less. Our $1.235 trillion dollar economy today will grow to only $5.75 trillion and per capita to $4800 at a rate of 8% over 20 years to 2030. We can do better than this. Supposing a 10% growth rate however, the GDP would be $8.3...