Author: C. A. Balasubramanian

The Government has been trying to take the country by storm about its breath-taking achievement in having ensured a so-called ‘9% growth’ in the G.D.P. (Gross Domestic Product) during each of the four years 2004-05 to 2007-08 and its expectation to maintain that performance during 2008-09 also.

According to reports (January-February, 2009) the sectoral share of the GDP and the growth rates of the different sectors for the years 2007-08 and 2008-09 are:

Taking the GDP at Rs.100





Sectoral Share

Growth Rate

Sectoral Share

Sectoral Share/GDP


Agriculture, Fisheries & Mining



















(total GDP)


The growth rate according to these figures is 5.78%.

During the third quarter (Oct.-Dec., 2008) of the current ‘fiscal’, the ‘economic’ growth slumped to 5.3%, marking the lowest growth rate in any quarter, over the last five years. The country’s industrial growth ¾ growth in the manufacturing sector ¾ ‘shrank’ 0.2% into negative territory during the (third) quarter.  But, what came as a shock to these experts was the contraction in the farm sector output by a significant 2.2% even in the wake of the farm debt waiver programme.

The performance of the infrastructure growth in the first half of the ‘fiscal’ has been dismal. ¾ the index of six core infrastructure industries ¾ crude oil, petroleum refinery products, coal, electricity, cement and finished steel (carbon) ¾ are stated to have registered a ‘growth’ of 3% (against the rate of 6.9% during the first half of the year 2007-08). Electricity, for instance, showed a decline in growth rate to 2.6% (from 7.6% in 2007-08).

In all this hungama of 9% growth rate, which is supposed to have brought unheard of benefits to this country, let us note a few vital things which should be the real index of ‘progress’ ¾ or misery ¾ for the country and the people.

The External Affairs Minister, who is holding charge of Finance, was kind enough to say, while presenting the interim budget for 2009-10, that the real heroes of India’s success story are our farmers who have ensured, through their hard work, “food security” for the country. With record procurement of 22.7 million tones of wheat and 28.5 million tones of rice for the Public Distribution System in 2008, he said, our granaries are full.  During the four-year period, the annual growth rate of agriculture rose to 3.7%, and the production of food grains increased by about 10 million tonnes each year, to reach an all-time high of over 230 million tones in 2007-08. Recognising that 60% of our population lives in villages, attention had been given to the agriculture sector. When this is the case, why does the share of the output of the agriculture (fisheries and mining) sector form only 17% of the Gross Domestic Product, while that of the Services Sector forms 56% of the GDP? It will be totally ungrateful on the part of the nation to say that the output of the Services Sector is far more valuable ¾ for the society! ¾ than that of the Agriculture Sector which sustains the country amidst untold hardships.  The Finance Minister said that the government had ensured ‘remunerative prices’ for the farmers for their crops ¾ the minimum support price for the common variety of paddy was increased from Rs.550/- in 2003-04 to Rs.900/- per quintal for the crop year 2008-09. 

The increase was from Rs.630/- to Rs.1,080/- a quintal for wheat, during the same period. The increase works out to about 70% for wheat and 63% for rice, over a five-year period.  How remunerative is this increase?  When the increases in the pay scales of the officers in the higher echelons of government services, due to pay revision from 1.1.2006, are in the order of 300% (with, as usual, much lower increases in the lower grades), apart from periodical increases in their dearness allowance (to compensate for the increased ‘cost of living’), the gross injustice to those in the farming sector can be easily understood. No wonder, this gross underpayment leads to a low (annual) growth rate of about 3% and a share of just 17% in the GDP.  How unremunerative the (support) prices paid for the farmers’ produce are , and in what penury they are,can be understood from the stark statistics of Farmers’ suicides. There were 16,632 farmer suicides in the year 2007. Farmer suicides in the country since 1997  are 1,82,936. Maharashtra’s 2007 figure of 4,238 followed 1½  years of farm “relief packages” for about Rs.5,000 crore and a prime-ministerial visit in mid-2006 to the distressed Vidharbha region. In the five years till 2001, there were 15,747 farmer suicides a year, on an average, for the country as a whole. For the six years from 2002, the annual average had risen to 17,366, during the ‘glorious’ 9% growth rate period!

Among the “Flagship Schemes” of the government are stated to be the National Rural Employment Guarantee Scheme (NREGS) and the Bharat Nirman.  The NREGS purports to have generated employment for 138.76 crore man-days, covering 3.51 crore households. This works out to an average of about 40 man-days of employment per household, against the target of 100 man-days loftily envisaged under this supposedly unique scheme  in the whole world. Only an audit of the Implementation of the Scheme will reveal how far the people for whom it was intended had been benefited, whether the payments shown as made to them are properly vouched for, whether records are kept of the works executed, measurements taken, details of assets, if any created, etc.One should look forward to the Report of the C&AG of India, after his audit. A press report about the “implementation of the NREGS in Raichur”, says that, according to official records, about two lakh people have filed their applications, seeking employment under the scheme. Of these, 1.25 lakh people opened their bank account. This year, the Zilla Panchayat has received about Rs.41.75 crore for implementing NREGS in the district, in addition to the previous year balance of Rs.10.15 crore. But the authorities concerned have not been able to provide employment to the needy. So far, it has spent only Rs.7.37 crore.

Similar may be the situation in quite a number of zilla parishads; etc. The other major scheme for the ‘benefit of the poor’ was the loan waiver scheme, for which the government said it had allotted Rs.70,000 crores, and which was intended for rehabilitation of the farmers who could not continue their farming activities because they had defaulted on the loans taken from the Banks and could not, therefore, get any further credit. The Finance Minister said, while presenting the interim budget, that a sum of Rs.65,000 crore had been waived (and relief given to 3.6 crore farmers). Only a thorough audit can reveal whether the government reimbursed to the Banks the waiver of the loans granted to those farmers who were eligible for the waiver of the loans ¾ that is, whether the amount reimbursed by the government went towards the rehabilitation of the farmers, or it was more a rehabilitation of the Banks which had contracted these irrecoverable loans. The observations of the veteran journalist Pran Chopra in regard to this scheme are very pertinent. He noted that, when the government announced that it had allotted an impressive amount of Rs.70,000 crores for the benefit of the poor, the public response was so enthusiastic that it improved the government’s chances in some impending elections!  But, precious little had been heard since then, about how much of the amount had been actually allotted, how it had been spent, with what benefit to those for whom it was meant. 

It shows what sells in the headlines market of the media: a grand announcement, not what happens thereafter. The same persons and institutions who own the media control the vote market through the media they own. In fact, according to reports, bankers have replaced with their own criterion and side-tracked the definitions of small and marginal farmers, codified by the RBI and circulated to all nationalized and co-operative banks, with the result that farmers eligible for total loan waiver have been denied the facility. The government has been campaigning through advertisements in regional and national newspapers, with statements of loan waiver to farmers. But these announcements in ad campaigns do not tally with the actual experience, as bankers have not been agro-friendly, particularly while providing benefits to distressed farmers, according to the criteria codified by the RBI. It looks as if the farm loan waiver has been only on paper!.

Is it any wonder that, despite all the hullabaloo created by the government about the (illusory) 9% growth rate in four successive years, and poverty having gone down under its tutelage, a study made by the Indian Statistical Institute (ISI) based on the data collected by the National Sample Survey Organisation from about 1,24,000 households across the country, brought out a shocking revelation. The number of people living below the poverty line had actually increased by a horrifying 20%! The country had some 27 crore people below the poverty line in 2004-05. That number has gone up by 5.5 crore or 20% ¾ after five years of policies, named after the aam admi (common man) but shaped for the khas admi (vested interests), remarks the veteran journalist M.J. Akbar.

The government says that it is already spending more than Rs.70,000 crores on food and fertilizer subsidies (Rs.66,537 crores), interest subsidies, etc., besides the flagship programmes, debt-waiver and relief, and ensuring farm credit disbursements (touching Rs.2.5 lakh crore in 2007-08), meaning thereby that all that could be done by a ‘caring government’ had been done, and nothing further is possible to improve the lot of the people in the agriculture sector..

Is there no way we can come out of this impasse? For one, we have to discard the economic principles of the Western countries, the World Bank, the IMF, etc., as these are totally irrelevant for a vast, highly populated and essentially agricultural country like India. All economic policies and progress should be centered on the agricultural and rural sector, with 60% of the populating living in the  villages. The minimum support price for food grains, etc. should be substantially increased and the resources should be found by abolishing the atrocious exemptions granted to the SEZ industries, coming to more than 2 lakhs crores per annum , in taxes,etc. The RBI, through its various monetary measures taken since September 2008, has, for instance, made available a whopping sum of Rs.3.88 lakh crores in the banking system, for credit growth for productive purposes, “in view of the economic slowdown”. Surely, a report from the R.B.I., indicating what was sought to be achieved by this massive injection of money in the economy, for whom it was intended, to whom the credit was made available, and when the banks intend to get back the money advanced should be expected by the public?.

Industrial production does not seem to have picked up despite all this credit facility. It is quite possible that a good portion of the liquidity was used for speculation in the stock exchange, real estate and so on. A similar dispensation is called for, for economic activities in the rural and agricultural sector for employment generation, and so on. According to the Finance Minister, farm credit disbursements ‘touched’ Rs.2.5 lakh crore in 2007-08.

Another area of dismal performance by the government is the implementation of Centrally sponsored schemes aimed at improving rural  infrastructure and alleviating poverty. A recent review meeting of the ‘flagship’ Bharat Nirman programme (completing four years now), found that the huge Rs. 1,76,000 crore infrastructure improvement programme, which has six components, including electrification, roads and irrigation, is way behind the targets. Only 18% of electrification, and less than 50% of irrigation targets were met till Dec.,2008.Obviously, the entire corpus of funds will not be utilized before the end of the financial year, even with the help of accounting jugglery! The same is the case with programmes like the employment-oriented NREGS and the Pradhan Mantri Gram Sadak Yojna. Very few schmes have seen more than 50% of utilization of their allocation.Only a lack of will and sincerity can be seen as the reason for the lack of performance. Bureaucratic apathy, administrative failure and poor management, along with lack of political supervision, have ensured that many thousands of crores of rupees would lapse—and thousands of the unemployed would have been deprived of employment opportunities, When the govt. goes to the people, claiming credit for all the schemes for the poor and the backward, it might go unnoticed that more money was unspent than spent on them, writes the Editorial of a national newspaper.

To sum up then, the so-called growth rate, the Sezs, the Sensex, the Services and manufacuturing sectors, imports &exports growth rates,etc, are the priority sectors for the govt.—while 60% of the population living in the villages, the urban poor, etc., have been relegated to the ‘also ran’ category. The concerned citizens should really apply their mind to this stark reality.       

C. A. Balasubramanian

[Additional Controller General of Accounts, Government of India (retired)]

By lal2017

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