India’s missed growth opportunities

In the last couple of years, India has been on a shaky growth path, regularly being called “the world’s fastest-growing economy" and losing grip of the title just as often. India has also made headlines for the lack of employment, a worsening crisis in the farm sector, distress in the banking sector and serious strain in the rural sector. Even if the misgivings about the credibility of India’s growth numbers are tuned out, the fault lines in the country’s wavering growth trajectory are hard to ignore.

As the economic discourse in India becomes increasingly riddled with doubts, The Lost Decade: 2008-18, by journalist Puja Mehra, brings in relevant context to understand the gaps in the nation’s growth story. In Mehra’s account, the story of India’s economic underperformance goes back to a decade that spans two different political regimes. At its heart lie arbitrary and myopic decisions inspired by politics rather than sound economics.

Before the global financial meltdown of 2008, the Indian economy was thriving and its GDP growth was cruising at 8.8%, writes Mehra. Even if unequally, this growth impacted the lives of large sections of Indians. But in the decade that followed, Mehra chronicles, this “growth story" unravelled into “growth without a story".

Thanks to the coordinated efforts of crisis managers in the Reserve Bank of India (RBI) and the Manmohan Singh-led government, India managed to avert a growth collapse following the 2008 crisis even as its financial institutions emerged largely unscathed. But two black swan events that closely followed the crisis proved far more damaging to India’s growth story.

The Lost Decade, 2008-18: By Puja Mehra; Penguin Random House; 360 pages; ₹599.

The two unrelated events—the November 2008 terrorist attack in Mumbai and the coronary bypass surgery of Singh, then prime minister, in January 2009—put a new finance minister, Pranab Mukherjee, in the driver’s seat of the economy. This marked the beginning of an era in which economics was enervated by politics.

Mehra criticizes the ill-informed economic decisions of politicians which derailed the economy. Before Mukherjee’s appointment as finance minister, Mehra writes, India was on the verge of being christened a “miracle economy". By the time Mukherjee left his office in North Block to become president of India in 2012, large fiscal deficits, double-digit inflation and a huge international debt had made the country once again vulnerable to internal and global shocks.

Mehra exposes how petty politics and inflated egos played their part in derailing India’s growth, while she subtly narrates the story of a prime minister who shied away from confronting his finance minister as the latter was his former boss. Mehra maintains objectivity as her story ventures into the controversial indictment of the spectrum scam by the Comptroller and Auditor General that led to “policy paralysis" under UPA-II (United Progressive Alliance), holding accountable the aggressive and dirty politics played by the opposition as well as the fallibility of the ruling coalition.

She exposes the similar mistakes made by policymakers in the two (the UPA-II and NDA, or National Democratic Alliance-II) governments even as she brings out the stark contrast in the styles of governance. If under UPA-II the economy suffered from “policy paralysis", she writes, under NDA-II it was hurt by hasty, ill-informed and arbitrary decision making. “There was no policy paralysis. On the contrary, decision making was speedy. But it was of poor quality.... They betrayed (Narendra) Modi’s abiding suspicion of qualified experts, disdain of expertise, rejection of evidence-backed analyses, valorizing of feelings of people and weakness for simple, quick but ineffective solutions," says Mehra.

While the government had come to power with a reformist agenda, reforms were quickly sidelined in favour of UPA-like schemes and programmes, with the government becoming eager to redefine its image as “pro-poor" rather than “pro-business" as “suit-boot-ki-sarkar" barbs from the opposition became shriller and politically threatening.

Mehra’s story brings to light the paradox of India being the fastest-growing economy in the world without any material economic prosperity on the ground. It leaves the reader with a sense of “what could have been". It’s a story of missed opportunities, of a growth “take-off" that has in the last 10 years eluded India’s economy.