In early January 2020, Prime Minister Modi had announced his dream of a "challenging but achievable" $5 trillion economy by 2024. Like everyone else, I too have been contemplating the news even at the end of year 2024, as I write this blog. All I knew was that there was a favourable economic environment prevailing at that time for India to accept this challenge. As a layman, I just hoped for it to happen. I believed in India and knew that we have brilliant Economists, Entrepreneurs, Industrialists and of course the young talent with ever bursting and creative energy.

Alas, the economy began to falter! Where the back to back growth rate of 10-12% was required, it dropped to an abysmal level of 5.7%, due to an unexplainable drop in the investments in general and knock on effect on key sectors such as infrastructure, automobile and of course agriculture. That kind of projected growth rate could hardly cheer anyone and no wonder gloom had set on India's economic prospects.

As if this slowdown was not enough, the monstrous Coronavirus invaded the Globe, and it arrived in India in late Feb 2020. As the epidemic spread, the country was literally shut down and all the economic activities grinded to halt. The earlier projection of 5.7% was no good clearly, but the corona impact was going to break the back of the Indian economy. In fact, on April 3rd 2020,Fitch Ratings had slashed India's growth forecast for FY21 to a 30-yr low of 2%. Then, in mid April, when the media reported China's massive drop in GDP by 6.8%, the prospects for India's growth seemed very gloomy indeed. By May 22nd 2020, Goldman Sachs had projected a "5% contraction for the fiscal year"1. Now, how can any country stay optimistic with these kinds of gloomy projections? Agree, India was not unique in all this - after all the Corona had severely battered the whole world including the towering economies such as the US and Western Europe. But still India's case was special because we had entered the millennium with an aim that - "21st century shall belong to India".

But, I continued to ponder over the economic salvage of India as much as possible by the year 2024 and started some thinking - If not a $5 trillion economy by 2024, then how much could be possible?  

Again, as a layman, my concerns were largely different from the qualified Economists; that are as follows:



• Did the original $5 trillion projection of the economy also mean we would have brought into account all the black economy and wealth hidden in foreign banks? 
• Even if we were to have prospects to attain that goal of a $5 trillion economy, were we saying that we would be "prosperous"? 
• Did we take into account that the projected population of India at that time would be around 1.4 billion - making us the most populous country in the World, surpassing even China? 

My guts said - no!  

That would not make our population prosperous or happy! I feel a lot more needs to be done in parallel to uplifting the GDP. 

Further, the year 2024 won't be an end, rather it will be the beginning of a new race for India that we will have to run in all eras to come. We can question ourselves - Is India prepared to run that race, that will start after 2014 or in the post corona era?. What answer does your conscience give? 

As a result, I have come up with some additional parameters that I personally feel should also get attention in parallel to the efforts that India will make to maximise the GDP figure. Here are my thoughts:

Our hidden money abroad

It is not a hidden fact anymore that Indians have $1.5 trillion in foreign banks in the form of unaccounted/undisclosed accounts*. It is also known in the public domain that if the Government truly wish to bring back that money into the country, it can be achieved as the white paper was published back in year 2012**. Even if one takes a conservative estimate of expatriating one-third of that amount i.e. $500 billion, that would be a significant boost to the GDP of the country. Of course, how to add that money into the mainstream economy is something that Economists need to figure out. A simple idea in my mind was to make a fiscal package and distribute the money to the poor, not as alms but as micro-credits at a very low or nil rate of interest. 

If GDP is Enough, what about the UN's Development Index?

I am certain that GDP is not the best possible indicator of any country's economic health, including India. It only tells about the 'wealth' that we accumulate and nothing about its equitable generation/distribution or the quality of life that the majority of our people live in. Of course GDP can be raised if the top 10% of the population of India raise their percentage from 80.7%, (as of November 2016*) to say over 90 or 95%. But, would that be a good indicator? Of course not, unless we change something very significant!

In a complete contrast to India, Bhutan, our next door neighbour, unlike other countries does not measure its development purely on economic basis such as GDP or GNI (Gross National Income). Rather, they use a different development index called Gross National Happiness Index (GNHI). They are NOT averse of GDP/GNI per say, but take pride, nay 'bliss' in applying 9 other factors of human development that includes health and education levels of its citizens, cultural diversity and environmental resilience. 

OK, for all other countries who solely rely on GDP/GNI, it might not be feasible to make a switch to GNHI. But they can certainly take a leaf or two from the UN's Human Development Index (HDI) (http://hdr.undp.org/en/content/human-development-index-hdi), which also doesn't advise to drop GDP or GNI but propagates a culmination of GDP/GNI with welfare index on the similar lines to Bhutan's GNHI. This Index can be summarised in the figure below:

Fig 1- Components of HDI

©UNITED NATIONS DEVELOPMENT PROGRAMME

It is ironic that India is the world's fifth largest economy by GDP - lagging behind followed by US, China, Germany and Japan, yet surpassing the UK*. Yet, we rank 130 as per the UN's HDI. See the link: http://hdr.undp.org/en/composite/HDI. The top 5 countries as per this Index are - Norway, Switzerland, Australia, Ireland and Germany. These five countries along with 53 other nations are classified as the Countries with 'very high human development index'. After this category comes the second category of nations that have 'high human development index' that contains a total of 52 countries such as Iran (at the top in the category), Turkey, Cuba, Mexico, Sri Lanka and China; and we are not found there either! India, unfortunately falls in the third category of 'medium human development' sharing the index with war-torn (terrorism-torn) nations such as Iraq, Palestine and our immediate neighbour Pakistan. The last and fourth category being 'low human development', that consist of 37 nations, all unfortunate, such as Afghanistan, Syria, Nigeria and Uganda. Clearly, there is a concern! 

Agree, a lot is being done by the Government of India as we all are witness to this. But, now it is becoming very important to raise not only the GDP of India, but also its HDI and push it to the category 2 of 'high human development index' to begin with ASAP. For this, even though the Governments (Central and States) have to lead the way, their efforts won't be enough as it is the responsibility of each and every citizen to contribute where s(he) can. But the government has the responsibility to steer the efforts of the masses.

As is obvious from Fig 1, the whole population of the nation must be healthy and educated to boost up the GNI. Let's visualise this 'obvious' correlation:

• Longer lifespan of a person clearly implies more productive/adult years in a person's life and hence more contributions s(he) can make for the nation - for longer. A person with a longer life span works more, raises her/his 'standard of living' and adds to the GDP/GNI of the nation for longer.
• Similarly, if a person is educated or skilled, s(he) would add more value to the job she performs on a daily basis. For example, if a street cleaner is trained in modern equipment (a capital investment) to clean the roads, such as indigenously manufactured road cleaning machines, wouldn't the person enjoy doing this job (that otherwise is classified as a 'menial work') with more dignity and be able to do more in a given time compared to the street cleaning done with the broom alone? Another key point is that something indigenous could be manufactured to aid similar other key workers such as garbage collectors and land fillers. A better and cleaner streets would add to beautiful neighbourhoods that would further feed into the comfort levels of the citizens and they in turn contribute better to their respective jobs, eventually raising the living standards of the country that all gets reflected in the GDP/GNI.

Another interesting fact is - these additional factors of 'long and healthy life' and 'knowledge/literacy' are calculated in the census* of the nation after every decade. That implies, calculating the HDI is not that difficult at all. With the political will, all these figures that get published anyway, could be collated for HDI. 

A very big advantage of publishing HDI is a big morale booster for the nation's working population and everyone can give their best in whatever they pursue for a living!!

Asset Capitalisation of the Poor

A decade or so ago I read an amazing book named ‘The Mystery Of Capital’ by a Peruvian Economist - Hernando De Soto.

In his work of life he argued:

“Poor people, especially in poor and developing countries, too have assets but they are not brought into the books because of lack of ownership documents [of the assets] - that apparently were never created. These people also fail to become active participants in the Country’s Economy. Governments must drive ‘Property Reforms’ to bring/release these ‘Dark Assets’ - as he called them - into the mainstream financial system of the country i.e. within the domains of the ‘national economic worth’”. 

These property reforms are also not difficult to implement, conditionally the Governments (Central and State) are willing to do it. The assets can be priced at prevailing market rates. The only cost involved is the administrative cost.

However, my personal view is that while capitalizing these assets, the poor themselves must not be made liable to pay the fees or land duties. These reforms must be carried out by the Governments and accounted as long term investment for the country. 

De Soto also commented that once the owners realise the capital value of her/his assets, s(he) can participate in the banking sector by taking credits from the banks, thus contributing further to the productivity of the Economy. 

Lastly, the credits from the banks supplemented with the micro-credits will work in synergy and the poor will be able to pull themselves out from the miserable poverty they are stuck in.

Productivity of HouseWives

Cases of house wives performing household works are glaring examples, where their works are clearly contributory but never get reflected in the economic indicators anywhere in any Country. 

Nobel laureate Amartya Sen in his book “Development As Freedom”, had put forward a case for women empowerment, in order to develop a country in real sense. He proposed-

“Needless to say, women’s work at home can be backbreaking, but it is rarely honoured or even recognized (and certainly not remunerated), and the denial of the right to work outside the home is a rather momentous violation of women’s liberty" (Page 115 on Democracy as Freedom - Oxford University Press paperback -2001)

Clearly Dr Sen is not happy that the work that housewives do at home and do not get rewarded.

The irony is that no such indicators were ever created! This is clearly a big loophole in the way GDP of a nation is calculated. Now as we embark on the journey to restart the economy, it is an opportunity for the Ministry of Women and Child Development to take initiative and come up with a method to calculate the contribution of the household work into the country's GDP. Agree, it would be an almost impossible job to put in place a proper framework immediately, but till then, nothing is stopping the Government to add some ‘tentative’, but justifiable, figures in the GDP calculations, using the minimum wage of ₹ 178 a day (as per Code on Wages Bill, 2019) on ASAP basis. Of course, in reality, it should/would be more than that.  

Volunteer Work

Similar to the productivity assessment of the housewives, is the case of volunteer (unpaid) work that is performed by millions of people everyday. It is astonishing that there is no accountability of such work. Again, no such indicators were ever created that could measure the volunteer productivity in the economy and its worth in the financial terms or contribution to the GDP of a nation. However, just like housewives productivity, things are not that hopeless either. With little political will and initiative and support from the population, these figures could be derived and plugged into the GDP, no matter how small they are compared to the originally projected figures of $5 trillion. After all, every little drop contributes to making an ocean. And volunteer work is no way a drop, it is being carried out in far larger extents, that go unnoticed while compiling the figures for the GDP and certainly do not get plugged in anywhere.

We can always plugin the numbers by using the same or similar sort of work that is performed in the parallel - paid sector. For example, if a person plants trees for a day, then in the nation’s GDP, a day’s salary of a government hired gardener can be added. Similarly, if people are performing volunteer work of caring for elders (or other people), I do not see why we cannot attribute a government hospital nurse’s salary to their efforts?

We can also take some inspiration from other countries who are doing this kind of assessment already. A classic example to my mind is UK’s, The National Council for Voluntary Organisations (NCVO), which as per their website (https://www.ncvo.org.uk/) , states the following- 

“NCVO champions the voluntary sector and volunteering because they’re essential for a better society.

Each day, millions of people make a difference through voluntary organisations and volunteering. Our vision is a society where we can all make a difference to the causes that we believe in.”

As per their 2019 Almanac, the voluntary sector contributed £17.1bn to the economy in 2016/17, representing around 0.85% of total GDP, which I think is not bad at all. I personally think the Government of India can also come up with figures like these and seek cooperation with the NGOs to feed the numbers in the GDP.

Summary

In summary, the concentrated efforts to just raise the GDP of India won’t be enough. What would be the point in having wealth without all around prosperity, happiness, health and “sukh” for all the people of India?

That’s the reason we need to have supporting activities as well that should make the $5 trillion (or whatever) “worth” having. Because that magical figure, as I mentioned, would not be an end, but a new beginning for us- for India. 

Personally, I would prioritize the sections above in the following order:

1. Asset Capitalisation of the Poor - ideally should be done ASAP.
2. Adopt (preferably officially), the United Nations’ Human Development Index - also should be achievable anytime, but rising up in the ranking might not be possible immediately.
3. Begin accounting of Volunteer Work - Should have some reasonably tentative figures by the next budget and a solid IT infrastructure in place over the next 2-3 years, say by 2030 at the latest.
4. In the same lines with Volunteer work accountability, perform the tentative figures collation by the next budget and synergise with the IT infrastructure to be built for Volunteer activities.  

Jai Bharat