7/04/2019

INDIA'S ECONOMICS INTUIT


WHAT then is the true rate of economic growth in India, now? Former civil servant Mr. Sen said he would not even hazard a guess.

DISPUTES over India's data prompted rancor, including complaints from 108 economists and social scientists who signed a letter in March that contended the Modi government was silencing bad news.

''In fact, any statistics that cast an iota of doubt on the achievement of the government seem to get revised or suppressed on the basis of some questionable ideology,'' the letter said.

Prime Minister Narendra Modi abruptly recalled the country's largest denomination currency bills in November 2016.

It was mostly unsuccessful effort to catch people skirting taxes.

Large businesses could adapt by asking customers to use credit-cards or bank wire transfers for easier transactions. Small businesses, reliant on cash, suffered months of severe disruption.

Seven months later, in summer 2017 a single value added tax introduced, partly to better monitor taxable revenue.

The new tax replaced a labyrinth of 17 state and national taxes, and considerably curtailed  widespread bribery between businesses and tax collectors. Big businesses could afford to hire specialists to cope with the change and the government's buggy software.

Small businesses struggled, and are still struggling to adjust.

Government economic statistics  have not measured the divergence between how small and large businesses were affected by the reforms.

The Modi campaign ran partly on its efforts to free businesses from red tape, but it provided no data from the past two years on joblessness, a key factor in the informal sector's health.

Mr. Modi's economic policy commission has insisted that the unemployment survey survey data    which remains unpublished - needs further review.

News reports that unemployment may have doubled, as the Business Standard account indicated,  have inflamed the debate. Some business allies of Mr. Modi have taken to questioning how unemployment is even recorded.

Mr. Sen the retired civil servant, said he believes that workers who were paid directly for individual jobs, like Uber drivers, were being properly counted.

The most likely explanation for the reported leap  in unemployment, he said, is that many small businesses are still recovering from the currency overhaul of two years ago.

What is the true rate of economic growth now? Mr. Sen said he would not even hazard a guess. 

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