Why motivated critics of India's economic recovery are wrong: CEA Dr K V Subramanian
Author: Dr KV Subramanian
Exactly a year back, we had predicted an imminent V-shaped recovery in GDP growth after its sharp decline. At that time, a former Finance Minister wrote: “In a barren desert without any sign of water, the Finance Minister and the Chief Economic Adviser saw green shoots!” His lack of nuanced understanding was of course clear from the statement “about one-quarter of the gross domestic output as on June 30, 2019, has been wiped out in the last 12 months.”
Unlike the level of water in a tank, GDP is not a measure that captures the level of stock. Instead, like the amount of water flowing over a period of time, GDP measures the flow of economic activities in a period of time. Only if the GDP were a stock measure could one say that the stock depleted by a certain percentage! Politics as the art of pushing convenient narratives and witnessing an obsequious audience applaud can be too compelling to incentivise the hard job of acquiring a nuanced understanding of the economy.
Let us examine the evidence. After declining by 24.4 percent in the first quarter last year, the economy has registered growth rates of -7.5 percent, 0.4 percent, 1.6 percent and 20.1 percent in subsequent quarters. If these numbers are plotted, the graph looks like a ‘V’ and no other letter. Incidentally, this commentary on a K-shaped recovery is focused on sectoral patterns, not the macro-economy. Like the five fingers in a hand, sectoral patterns are never identical.
Crucially, the ‘V-shaped’ recovery is testimony to the strong fundamentals of the economy – an assertion that I have consistently made after assuming office. As shown carefully in the Economic Survey 2019-20, the pre-pandemic slowdown was only due to the problems in the financial sector, which originated from the crony lending and gross mismanagement of the banking sector before 2014. Research across the globe shows that the economic overhang engendered by such messing around with the financial sector lasts very long!
After all, bank loans given to cronies come up for repayment five years post such dubious lending. Combined with bankers’ incentives to ever-green loans by lending to zombies, messing around with the financial sector eventually spills over to other sectors thereby creating long-lasting damage! Some commentators attribute the pre-pandemic slowdown to demonetisation and GST implementation. However, research on the economic impact during the time of demonetisation, which included the GST implementation, finds no effect on GDP growth, thereby questioning such commentary and emphasizing the strong fundamentals of the economy.
Even during the pandemic, quarterly growth patterns have only reflected the presence or absence of economic restrictions, thereby reflecting strong fundamentals again. While the Q1 decline last year followed the national lockdown, the recovery till Q4 reflected the easing of restrictions. In Q1 this year, malls, shops and other establishments were closed in most states in May and June during the devastating second wave. Google’s daily indicator of retail activity was down from its 31-March level all through Q1 till mid-July. At its peak, retail activity was down 70 per cent from the 31-March level. Despite such supply-side restrictions on consumption, from its low base last year, consumption has grown 20 per cent. Since mid-July, easing of restrictions has enabled significant recovery in the high frequency indicators.
Following path-breaking reforms, the economy now is poised for strong growth. The corporate sector has become leaner by cutting costs and paring down its debt, thereby ready to invest. The banking sector has become profitable and has created a cushion to withstand imminent bad loans in retail and SME lending. About 88 per cent of every rupee of expected bad loans has been provisioned by the public sector banks. Further, the capital adequacy ratios are the highest in recent times as banks have raised capital from the markets. These successive lines of defence equip the banking sector to lend for corporate investment.
In stark contrast to the double-digit inflation following the Global Financial Crisis (GFC), inflation has averaged 6.1 per cent over the last year because of the several supply-side measures taken by the Government now. Such lower inflation in a crisis is despite the severe supply-side frictions caused by lockdowns and night curfews, which did not manifest following GFC. Also, carefully targeted and calibrated fiscal spending has ensured that India’s fiscal deficit is comparable to its peers. Because of profligate revenue expenditure, it became significantly higher compared to peers following the GFC.
The supply-side measures have ensured a comfortable current account as opposed to the drastic deterioration following GFC. While $10 billion of FPI flowed out of the country following GFC, over $36 billion came in last year. FDI inflows have been about 10 times higher at $80 billion when compared to $8 billion following GFC. While the currency depreciated by close to 60 per cent following GFC, it has held steady now. These macro-fundamentals are supported by the startup ecosystem, which was in shambles in 2014.
Not only is the number of unicorns highest ever in Indian history, the number of IPOs in August is the highest in 17 years. The unicorns have grown on the quality of their idea and not due to dynastic money or connections. This meritocracy is a wonderful sign for the economy. In sum, unlike the economic disarray following the Global Financial Crisis, nuanced understanding and clarity in thinking have enabled India to judge and implement salutary economic policy amidst this once-in-a-century crisis. /PIB/
(The writer is Chief Economic Advisor, Government of India. The views are his personal)
More In Public Affairs
NEP-2020 aspires for inclusive excellence in school education
Rajeev Ranjan Roy
The New Education Policy-2020 (NEP-2020), unveiled recently, aims at achieving excellence in school learning by imparting quality, affordable and inclusive education to all, with an extra emphasis on those children coming from socially and educationally disadvantaged groups of the society. It is a futuristic endeavour towards building Ek Bharat, Shrestha Bharat. The previous education policies largely focussed on the issues of access and equity in giving school education, while the NEP-2020 commits to laying the foundation of a vibrant Bharat where no one is devoid of a kind of school education, which helps every student become an asset for the nation in a true sense. The unfinished agenda of the National Policy on Education 1986, which was modified in 1992, has been effectively dealt with in the NEP-2020 along with the vision behind the Right to the Free and Compulsory Education Act, 2009, which “laid down legal underpinnings for achieving universal elementary education.”
Given the undisputed role of education in nation building, the NEP-2020 rightly lays the stress on standardization and accreditation of school infrastructure and teachers as well, since education with accountability, transparency and affordability is the need of the hour, and hence the need to “empower schools, teachers with trust, enabling them to strive for excellence and perform at their very best, while ensuring the integrity of the system through the enforcement of complete transparency and full public disclosure of all finances, procedures and outcomes.” Since private sector is significantly present in the field of school education, the idea to promote ‘not-for-profit’ entities is a unique feature of NEP-2020, which at the same time intends to promote private philanthropic efforts for quality education, thereby affirming the public-good nature of education, while protecting parents and communities from arbitrary increase in tuition fees.
An equally important area, which has got due attention in the NEP-2020 is the need for efficient resourcing and effective governance through school complexes and clusters, a significant initiative in view of the fact that nearly 28 per cent of India’s public primary schools and 14.8 per cent of upper primary schools have less than 30 students. The average number of students per grade in the elementary schooling system – Grades 1 to 8 – is about 14, with a notable proportion having below six students during 2016-17, the year which also had 1,08,017 single-teacher schools, and majority of them – 85,743 – being primary schools taking care of Grades 1-5 children. It was, therefore, a pressing need to evolve a mechanism for establishing a grouping structure, say, school complexes, consisting of one secondary school together with all other schools, which lead to greater resource efficiency and more effective functioning, coordination, leadership, governance, and management of schools in the cluster. This will not only ensure optimum utilisation of resources, but will also foster the sense of oneness and togetherness among the school children, who are the future of the nation.
What further makes the New Education Policy-2020 uniquely special is its pledge for equitable and inclusive education for all, one of the great dreams of our founding fathers. Education, as the NEP-2020 rightly envisions, is “the single greatest tool for achieving social justice and quality.” Inclusive and equitable education, indeed an essential goal in its own right, is also critical to achieving a social order where every citizen has “the opportunity to dream, thrive, and contribute to the nation.” Quality, affordable and ethical education to all is the first move to break multiple social and economic barriers, which sow the seeds of exclusion, discrimination and exploitation against our own people on different parochial considerations.
Needless to say efforts were made in the past as well to bridge the educational chasm between socially and educationally disadvantaged groups (SEDGs) and the children of top social strata, but the desired results remained elusive. SEDGs account for the country’s overwhelming population, but their children’s share in quality school educational institutions has been minimal over the years. Early childhood care and education (ECCE) needs to be handled more comprehensively. According to the Unified-District Information System for Education (U-DISE) 2016-17 data, about 19.6 per cent of students belonged to Scheduled Castes (SCs) at the primary level, but this fraction fell to 17.3 per cent at the higher secondary level. These enrollment drop-outs were more severe for ST students (10.6 per cent to 6.8 per cent), and differently-abled children (1.1 per cent to 0.25 per cent), with even greater declines for female students within each of these categories. Thus, there is no scope for any complacency on the part of the government. A series of interventions including better facilities, more and more hostels, scholarships and other enabling support have been provisioned in the NEP-2020 so that the idea of ‘learning for all’ is realised in a more comprehensive manner.
Teachers are not only an integral part of an education system, but the most important stakeholder in the entire gamut of things. Their quality and ability to teach school students, when they are in their formative age, become something of paramount importance. From their recruitment to training, every precaution needs to be taken to ensure that school education is not rendered to a mere formality, but becomes a game changer. The New Education Policy-2020 comes with a basket full of tools and parameters to ensure holistic training and upgradation of teachers and their teaching skills in a sustainable manner. From continuous professional development (CPD) to career management and progression (CMP), the NEP-2020 vouches for a set of common guidelines – National Professional Standards for Teachers (NPST), which will be put in place by the National Council for Teacher Education (NCTE) in its restructured new form as the Professional Standard Setting Body (PSSB) under the General Education Council. This exercise will be carried out in consultation with National Council Educational Research and Training (NCERT), SCERTs, teachers from across levels and regions.
The teacher education will also undergo a sea-change. By 2030, the minimum degree qualification for teaching will be a 4-year integrated B.Ed. that teaches a range of knowledge content. Today B.Ed. teaching is most poorly regulated in our country ever since the standalone B.Ed. colleges were allowed to be opened up in the private sector. It is high time to take B.Ed. teaching more than seriously. The NEP-2020 stipulates that by 2021, a new and comprehensive National Curriculum Framework for Teacher Education (NCFTE-2021) will be formulated by the NCTE. NCFTE, which will also factor in the requirements of teacher education curricula for vocational education, will be revised once every 5-10 years.
In conclusion, the NEP-2020 visualizes to impart a school education which lays the foundation of a self-reliant India and also to help our country emerge as a knowledge hub. From the foundation of learning to foundational literacy and numeracy to checking drop outs and ensuring universal access to education for all and at all levels to the restructuring of school curriculum, India is in for a metamorphosis in the field of school education, recognizing, identifying and fostering the unique capabilities of each student. Tools such as multi disciplinarity, emphasis on conceptual understanding, creativity and critical thinking, ethics and human and constitutional values, full equity and inclusion, and light but tight regulatory framework are bound to do wonders. Education is a public service, a rare pursuit in nation building, which should be holistic and inclusive and must make one take pride in India and its rich, diverse, ancient and modern culture and knowledge systems and tradition. The NEP-2020 aspires so, indeed!
( The writer is a senior journalist and author. The views expressed are strictly personal.)
NEP-2020 aspires for inclusive excellence in school education
Rajeev Ranjan Roy
The New Education Policy-2020 (NEP-2020), unveiled recently, aims at achieving excellence in school learning by imparting quality, affordable and inclusive education to all, with an extra emphasis on those children coming from socially and educationally disadvantaged groups of the society. It is a futuristic endeavour towards building Ek Bharat, Shrestha Bharat. The previous education policies largely focussed on the issues of access and equity in giving school education, while the NEP-2020 commits to laying the foundation of a vibrant Bharat where no one is devoid of a kind of school education, which helps every student become an asset for the nation in a true sense. The unfinished agenda of the National Policy on Education 1986, which was modified in 1992, has been effectively dealt with in the NEP-2020 along with the vision behind the Right to the Free and Compulsory Education Act, 2009, which “laid down legal underpinnings for achieving universal elementary education.”
Given the undisputed role of education in nation building, the NEP-2020 rightly lays the stress on standardization and accreditation of school infrastructure and teachers as well, since education with accountability, transparency and affordability is the need of the hour, and hence the need to “empower schools, teachers with trust, enabling them to strive for excellence and perform at their very best, while ensuring the integrity of the system through the enforcement of complete transparency and full public disclosure of all finances, procedures and outcomes.” Since private sector is significantly present in the field of school education, the idea to promote ‘not-for-profit’ entities is a unique feature of NEP-2020, which at the same time intends to promote private philanthropic efforts for quality education, thereby affirming the public-good nature of education, while protecting parents and communities from arbitrary increase in tuition fees.
An equally important area, which has got due attention in the NEP-2020 is the need for efficient resourcing and effective governance through school complexes and clusters, a significant initiative in view of the fact that nearly 28 per cent of India’s public primary schools and 14.8 per cent of upper primary schools have less than 30 students. The average number of students per grade in the elementary schooling system – Grades 1 to 8 – is about 14, with a notable proportion having below six students during 2016-17, the year which also had 1,08,017 single-teacher schools, and majority of them – 85,743 – being primary schools taking care of Grades 1-5 children. It was, therefore, a pressing need to evolve a mechanism for establishing a grouping structure, say, school complexes, consisting of one secondary school together with all other schools, which lead to greater resource efficiency and more effective functioning, coordination, leadership, governance, and management of schools in the cluster. This will not only ensure optimum utilisation of resources, but will also foster the sense of oneness and togetherness among the school children, who are the future of the nation.
What further makes the New Education Policy-2020 uniquely special is its pledge for equitable and inclusive education for all, one of the great dreams of our founding fathers. Education, as the NEP-2020 rightly envisions, is “the single greatest tool for achieving social justice and quality.” Inclusive and equitable education, indeed an essential goal in its own right, is also critical to achieving a social order where every citizen has “the opportunity to dream, thrive, and contribute to the nation.” Quality, affordable and ethical education to all is the first move to break multiple social and economic barriers, which sow the seeds of exclusion, discrimination and exploitation against our own people on different parochial considerations.
Needless to say efforts were made in the past as well to bridge the educational chasm between socially and educationally disadvantaged groups (SEDGs) and the children of top social strata, but the desired results remained elusive. SEDGs account for the country’s overwhelming population, but their children’s share in quality school educational institutions has been minimal over the years. Early childhood care and education (ECCE) needs to be handled more comprehensively. According to the Unified-District Information System for Education (U-DISE) 2016-17 data, about 19.6 per cent of students belonged to Scheduled Castes (SCs) at the primary level, but this fraction fell to 17.3 per cent at the higher secondary level. These enrollment drop-outs were more severe for ST students (10.6 per cent to 6.8 per cent), and differently-abled children (1.1 per cent to 0.25 per cent), with even greater declines for female students within each of these categories. Thus, there is no scope for any complacency on the part of the government. A series of interventions including better facilities, more and more hostels, scholarships and other enabling support have been provisioned in the NEP-2020 so that the idea of ‘learning for all’ is realised in a more comprehensive manner.
Teachers are not only an integral part of an education system, but the most important stakeholder in the entire gamut of things. Their quality and ability to teach school students, when they are in their formative age, become something of paramount importance. From their recruitment to training, every precaution needs to be taken to ensure that school education is not rendered to a mere formality, but becomes a game changer. The New Education Policy-2020 comes with a basket full of tools and parameters to ensure holistic training and upgradation of teachers and their teaching skills in a sustainable manner. From continuous professional development (CPD) to career management and progression (CMP), the NEP-2020 vouches for a set of common guidelines – National Professional Standards for Teachers (NPST), which will be put in place by the National Council for Teacher Education (NCTE) in its restructured new form as the Professional Standard Setting Body (PSSB) under the General Education Council. This exercise will be carried out in consultation with National Council Educational Research and Training (NCERT), SCERTs, teachers from across levels and regions.
The teacher education will also undergo a sea-change. By 2030, the minimum degree qualification for teaching will be a 4-year integrated B.Ed. that teaches a range of knowledge content. Today B.Ed. teaching is most poorly regulated in our country ever since the standalone B.Ed. colleges were allowed to be opened up in the private sector. It is high time to take B.Ed. teaching more than seriously. The NEP-2020 stipulates that by 2021, a new and comprehensive National Curriculum Framework for Teacher Education (NCFTE-2021) will be formulated by the NCTE. NCFTE, which will also factor in the requirements of teacher education curricula for vocational education, will be revised once every 5-10 years.
In conclusion, the NEP-2020 visualizes to impart a school education which lays the foundation of a self-reliant India and also to help our country emerge as a knowledge hub. From the foundation of learning to foundational literacy and numeracy to checking drop outs and ensuring universal access to education for all and at all levels to the restructuring of school curriculum, India is in for a metamorphosis in the field of school education, recognizing, identifying and fostering the unique capabilities of each student. Tools such as multi disciplinarity, emphasis on conceptual understanding, creativity and critical thinking, ethics and human and constitutional values, full equity and inclusion, and light but tight regulatory framework are bound to do wonders. Education is a public service, a rare pursuit in nation building, which should be holistic and inclusive and must make one take pride in India and its rich, diverse, ancient and modern culture and knowledge systems and tradition. The NEP-2020 aspires so, indeed!
( The writer is a senior journalist and author. The views expressed are strictly personal.)
