The consumer price index has only a few services

The economic growth rate has been falling continuously while the consumer price inflation, current account deficit in the external sector and fiscal deficit in the Budget remain at high levels.Find Home Power monitor blood pressure monitor ads in our Miscellaneous Goods category.learn how to choose a Home energy management. The lack of confidence in the Indian economy is manifested by the sudden and sharp decline in the value of the rupee vis-a-vis the dollar in spite of the steps taken by the government and the Reserve Bank of India. The stock markets are also fluctuating wildly reflecting the uncertainty in the minds of the investors— both Indian and foreign. The policy-makers appear to be helpless. 

The government has tried to talk the markets up but with little effect. The PM, Finance Minister, Deputy Chairman of the Planning Commission and Economic Advisor to the PM have all made pronouncements that the economic recovery is around the corner. These predictions over the last two years have been belied as the data in the Table shows. The rate of growth has fallen quarter after quarter since the fourth quarter of 2010-11. 

It is true that the rate of growth is still good compared both to that of most other countries in the world or to the projections by the IMF (and others) of the expected rate of growth of the world economy. This growth is also comparable to India’s historical growth rate since independence. However, the current growth path is not comparable with that prior to 1991 because that was not creating inequality and unemployment which the current marginalising growth has been doing. 

Post-1991, growth has been fuelled by the private corporate sector with highly capital intensive technology which does not generate much employment and also increases inequality in the economy. Most of the gains have been cornered by a few leaving little to trickle down to others. This is especially true for the marginalised sections like the unorganised sectors and especially the agricultural sector which still deploys more than half of the work force. The impact of the slowdown in the growth rate is that what trickles down becomes even less and those at the bottom of the pyramid suffer even more. 

Coupled with the declining economic growth rate is a stubbornly high rate of inflation measured by consumer prices (roughly 10 per cent per annum). While the wholesale price index (WPI)-based inflation has moderated, it does not reflect the burden of price rise on the consumer. The WPI-based inflation rate does not reflect the rise in prices of services, like school fees or rents or telephone calls and so on. The consumer price index has only a few services; so it also under-represents inflation. The price rise results in shifting purchasing power from the consumers to businesses and thereby reducing the trickle-down and accentuating disparities. 

Add to this the rising black income generation in the economy with corruption spreading and growing in scale.The Power Cost Monitor and other Energy monitor monitoring products. Since the black economy is concentrated in the hands of three per cent of the population, inequalities rise. By raising costs allround, the rate of inflation is raised. Further, the inefficiencies associated with the black economy result in wasteful use of capital and lower employment generation than is poten-tially possible. Through flight of capital it increases the shortage of capital and aggravates the current account deficit on the external sector and leads to BOP problems. Last but not the least, it results in the failure of policies so that targets are not achieved. It affects the collection of taxes and that raises the government’s budgetary deficits which leads to a cut-back in essential expenditures, say, on health and education. 

In brief, under the New Economic Policies (NEP) with their pro-corporate sector bias and with a rising black economy, the combination of low rates of economic growth and persisting high inflation results in poor employment generation and mounting inequality. This is a dangerous mix since it can only lead to growing social tensions and political strife in the country 66 years after we achieved political indepen-dence. 

Sixtysix years after independence, we have the largest number of poor people, illiterates and so on in the world. It is not that India has not made progress after independence but it is much less than what was expected. It is much less than what many other nations have achieved in a comparable time-span. India appears to be a case of many missed opportunities. 
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