From a 6 % growth to a double digit growth rate would be a cause for celebration of course. Hence, the industry experts, economists and the think-tank of the Indian politicians are hopeful that soon we will be on the 8 % plus trajectory of growth. But Indian tragic growth in terms of absolute numbers will continue. Let’s look at these absolute numbers. India’s GDP is estimated at Rs. 65 Lakh Crores and its population at 115 crores. If the nominal GDP growth is estimated at 17 % (i.e. 8.5 % GDP growth rate plus 8.5 % of inflation- RBI estimation), we can get a Rs. 1105000 Crore of growth in absolute terms. Divide this by the population figure of 115 crores and you get a Rs. 10000 growth on a per capita basis. That is just around Rs. 30 per day per capita on a daily basis. Add to this the misery that 80 crore of our population earning less than Rs. 20 per day are facing, and you will get a clearer picture of what these growth rates, even if double digit mean to the vast majority of the Indian people. They mean nothing but hand-to-mouth existence. Hence the think-tank must stop Tom-Toming about the double digit growth rates and start working towards fair and equitable distribution of wealth generated by making policies that reduce inequity on a sustainable basis. Lump sum tax on the rich Crorepati households will be one way of garnering revenue to fund infrastructure projects and social sector schemes, rather than through deficit financing. It will ensure less inflammatory impact and more equity and will be sustainable too!
Similarly, expenditure at the current scale on various important social sector projects on a per capita basis would be just meager though it would appear huge on a absolute basis. Thus, for inclusive growth to be meaningful, resource mobilization should be huge to match the backlog in development needs created in the 5 decades of a subsistence base of our GDP. To lift this GDP to a higher base and grow reasonably is a humungous task. We must think non-conventionally if the problems are to be address. Tax the Crorepati households and the rest will fall in place.
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