Monday, November 18, 2019

People want the full glass, not top ups.

The survey of household consumption expenditure was carried out between June 2017 and July 2018, "about half a year after the demonetization move of November 2016" which maybe the reason why it showed that the "average money spent every month by rural residents in 2017-18 was 8.8% lower than six years earlier". "The government has rejected the survey as flawed -- and it may well be," wrote an editorial in the Mint. However, that does not explain why "India's factory output shrank for the second straight month at 4.3% in September, recording its worst show since the present series was launched in April 2012," and "The output of eight core industries in September contracted to a low of (-) 5.2 per cent, due to a decline in coal, crude oil, natural gas, cement, and electricity". The State Bank of India (SBI) predicted that the rate of growth of GDP will drop to 4.2% in the second quarter, ending 30 September. "Optimists, Indian and international, say growth will pick up soon," wrote Prof Ashoka Mody but, "GDP growth could, in fact, fall and languish in the 3-to-5% a year range." Economic reforms following the balance of payments crisis in 1991, when India had to pledge 67 tonnes of gold to meet expenses, forced economic reforms but only the financial and construction sectors benefited. Manufacturing languished. A long list of scams resulted from easy money. India failed to invest in its people by improving education. "The Americans achieved near-universal high school education in the early 20th century and they followed it up after the Second World War with the spread of state-financed universities." "East Asian -- including by now Chinese -- schools got steadily better; the governments there began the task of building world-class universities." India has 3 times the number of schools than China has but the Annual Status of Education Report (ASER) on reading and basic arithmetic makes depressing reading. Many children come to government schools only for the mid-day meal and teachers are burdened with work other than teaching. After coming second last in the Program for International Student Assessment (PISA) test in 2009 India stopped participating in the test. Vietnamese students are "among the very best in the world in science" in the PISA test and "in mathematics, they are at the OECD average, above France". Growth reduces poverty, wrote Rangarajan and Dev. Growth will come by increasing consumption of the poor by supplementing their income so that basic income is at least Rs 20,000 per year. The NYAY scheme proposed by the Congress would have guaranteed an  income of Rs 72,000 per year for the poorest 20%, by supplementing what they were earning. Nobel Prize winner Abijit Banerjee was also consulted about feasibility of the scheme. Trouble is, Congress got thrashed in the general election in May. People don't want supplement, they want lump sum. 

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