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Biswajit Dhar, Professor of Economics, Jawaharlal Nehru University, is a sceptic when it comes to the GDP data series put out by the government. In an interview to BusinessLine , Dhar lays out his reasons. Excerpts:
How realistic are the growth numbers given out by the government?
If you look at the composition of GDP in the last quarter (of 2016-17), 60 per cent was private consumption expenditure. As per the numbers, private consumption expenditure in the quarter was the highest in the last 12 quarters. This is astonishing. In a period of the most severe consumption squeeze, you are getting such high numbers for private consumption expenditure. Had the high growth in GDP been attributed to, say, a growth in government expenditure, it might have been more credible. But these make you think that something is seriously wrong.
In the future, too, GDP growth could be muted as there are clear signs that the economy is losing momentum. On one hand, we are being made to believe that everything is hunky dory with GDP, but when you see the low saving rates and investment rates, you realise that things don’t add up.
Is job creation an area of serious concern?
In the area of jobs, the RSS-affiliated trade union—Bhartiya Mazdoor Sangh—itself has said that the situation is bad. One has to go by these signals coming from stakeholders. I am disappointed with the execution of the government’s own pronouncement that SMEs have to be promoted for job growth. What SMEs need is access to credit but nothing has been done. Not much can actually be expected from big corporates; with digitisation their hiring might go down.
In its present form, what will be the eventual impact of GST on the economy?
There are clear indications that in the short run, tax rates will go up. If they do, it will affect the competitiveness of Indian entities. In the area of imports, one can balance through countervailing duties, but exports will become uncompetitive unless they are given tax breaks. There is also the question of how much of simplification in the taxation process will happen. One assumes that States will be properly compensated. What actually happens, we will have to see.
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