Global downturn can only partly be blamed for India’s economic woes: expert

While the decline in the Indian economy is very much a fallout of the global slowdown, at least a part of the poor GDP growth, especially in the last two years, has to do with administerial shortcomings, Ajay Chhibber, Director General of the Independent Evaluation Organisation, said on Thursday.

In an address on ‘India’s development record in an Asian context’ under the auspices of the Madras Institute of Development Studies (MIDS), Dr. Chhibber pointed out that while the economies of its Asian counterparts too had slowed down, the decline in India’s growth rate was much sharper and held implications for the labour market in terms of unemployment, underemployment, lower participation of women in the labour force and youth unemployment.

While this decline for an economy that was not export-driven like China’s could be partly explained by reasons such as the drop in Total Factor Productivity, part of India’s growth problem was “administerial” in nature as there was a huge amount of capital locked up in infrastructure projects.

For instance, though huge investments had been made on infrastructure projects in the power sector, their completion had been delayed due to the lack of effective coordination among Ministries, said Dr. Chhibber.

He was formerly a former United Nations Assistant Secretary-General and Assistant Administrator for the United Nations Development Programme (UNDP).

He also found it peculiar that India had regressed from a low inflation economy to an economy with the highest inflation in the world.

That the inflation was largely driven by food prices in spite of bumper crops, a good PDS mechanism and the fact that the government was the biggest grain trader pointed to a mismanagement of food and inflation policy, he said.

“Tackling India’s growth rate decline is largely in our hands. There are global factors for sure but the extent of the decline cannot be explained by global factors alone,” Dr. Chhibber said.

He also advocated stepping up inclusive social policies to narrow inequities in health and education, managing urbanisation with focus on job creation in manufacturing, which was key to growth and poverty reduction, and capitalising on the demographic dividend over the next two decades.

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