The recent GDP release by the National Statistical Office (NSO), revealing a surprising growth of 8.4% in the fourth quarter, has stirred both excitement and scepticism among economists and experts alike. While some view this as a testament to India’s economic prowess, others question the validity of these figures, especially in the context of an impending general election. It’s become customary for economists and commentators to engage in a game of projections and estimates, attempting to forecast future growth figures. However, the recent discrepancy between forecasts (ranging from 6% to 6.5%) and the actual GDP growth underscores the complexity of economic prediction. The scepticism surrounding NSO’s calculations raises questions about the integrity of statistical data, particularly during election seasons. Critics argue that governments may manipulate economic indicators to bolster their political standing. Yet, amidst this debate, one cannot ignore the tangible signs of economic vibrancy evident in markets and everyday life. Indeed, the Indian economy appears to be thriving, with bustling markets and increased consumer spending. The narrative of the “Have-nots” seems to be fading, replaced by a more optimistic outlook on economic well-being. However, the true drivers of economic growth extend beyond government policies and statistical data. Historical examples, such as the impact of demonetization and the liberalization of the telecommunications sector, highlight the nuanced relationship between policy decisions and long-term economic outcomes.
Demonetization, while initially disruptive, ultimately led to a resurgence in the economy. Similarly, the liberalization of the telecommunications sector paved the way for India’s IT revolution, demonstrating the importance of freeing up markets for innovation and growth. Moreover, the stability of India’s fiscal framework, particularly with the implementation of GST, has provided a conducive environment for business operations. The shift towards a stable tax regime has been welcomed by industry experts, enabling better planning and investment decisions. Furthermore, the abolition of industrial licensing policies in the early 1990s unleashed the potential of Indian industry, fostering a culture of innovation and productivity gains. These reforms, though gradual, have contributed significantly to India’s economic resilience. In evaluating economic performance, it is essential to recognize the cumulative impact of policies over time, rather than attributing gains to specific governments. Economic progress is a continuous process, shaped by a multitude of factors beyond political rhetoric.
Looking ahead, the guiding principle for economic policy-making should be to prioritise stability and avoid actions that could harm the economy. Like the Hippocratic Oath for physicians, policymakers must first do no harm, recognizing the interconnectedness of economic decisions and their far-reaching consequences. While debates over GDP figures may continue, the underlying resilience of the Indian economy remains undeniable. By fostering a stable fiscal environment, promoting market liberalization, and prioritizing long-term growth over short-term gains, India can sustain its momentum on the global stage.
