The remark Rahul Gandhi made in Berkeley, the US, recently has set in reverberations that hardly seem to die down. While acknowledging that the UPA lost the 2014 polls because it could not create enough jobs, he had pointed out that the Modi government had also not delivered on it.
He seems to be spot on, because now the data from the National Sample Survey corroborates his take, according to YogendraAlagh, an economist and former minister.
He is not surprised that Gandhi’s statements during the US trip have provoked lengthy responses from the establishment.
One commentator, for instance, has said it won’t matter in eastern UP, while another said that Berkeley and the Ivy League schools don’t matter either. Alagh begs to disagree because he had gone to the University of Pennsylvania, the iviest of the Ivy Leagues and also taught there, including at Wharton and Swarthmore College.
The professional crowd there has strong connections with home and their opinions are respected in India. In fact, according to him, they remain more often than not more connected with India than other NRIs.
Despite this, he says, the Empire had struck back. In his defence, Dr. Manmohan Singh said liberalization was a success and employment was only part of the story, while the former NITI Aayog vice-chairman, Dr.ArvindPanagariya, was more direct. He said the corporate sector has performed well and investment output and employment have been rising. He took averages to make comparisons, which are not ideal statistics for analysis of short-run perturbations because they flatten out. Dr. Panagariya used averages to force the argument that the blip last year and this year will be reversed.
The 2012 de-acceleration of growth was policy-induced and so were the troubles that ensued, he said. The economy de-accelerated and voters very correctly placed the blame on the UPA and Gandhi was absolutely correct in accepting the mistake.
Dr. Alagh says there is no evidence to suggest that the economy will pick up now without policy reversals. Dr. Panagariya had gone great lengths to showcase the rose garden of corporate performance, but he is too good an economist to ignore the non-corporate sector. He pointed out that the corporate sector accounts for less than a tenth of the economy and the non-corporate sector is more important as it creates more jobs.
He says half the problem is solved if a mistake is admitted and amendments made and he hoped that someday ‘we will get to one, or maybe two rates and have a real GST, which then, after six months, will start working the way it is supposed to. And some day, the effects of demonetization will wear off.’