Author: Devadeep Purohit
Publication: The Telegraph
Date: May 29, 2003
URL: http://www.telegraphindia.com/1030529/asp/frontpage/story_2015941.asp
Communist China is known to do it.
Does Communist Bengal do it too - inflate economic growth data?
Bengal's economic growth has been
above 7 per cent from the mid-nineties till now, well over the national
average and second only to Karnataka's.
At a recent conference in Bangalore,
the then head of the Confederation of Indian Industry, Ashok Soota, called
this level of growth an "enigma" - an inexplicable occurrence.
But it may not be so inexplicable,
after all.
The measure of economic growth is
the state domestic product, or SDP. It represents the total value of goods
and services produced in a state in a year. Bengal's SDP in the past nine
years has grown between 7 and 8 per cent. The national average in this
period has been 5.8 per cent.
In his budget speech this year,
finance minister Asim Dasgupta said how the state outperformed others by
clocking a 7.6 per cent growth in 2002-2003 against the national average
of 4.4 per cent.
Few believe this but few will say
so, always couching suspicion in such polite words as "enigma".
SDP, however, is not the only measure
of a state's economic performance. Some of the other indicators do not
support Dasgupta's SDP claim.
"Economic performance doesn't only
mean rise in output. It should also be reflected in a commensurate growth
in other areas like employment and consumption of various goods and services.
But there are hardly such signs in the state," said B.B. Bhattacharya,
director of the Institute of Economic Growth, Delhi.
One such sign would be per capita
income, or income of each citizen of the state in a year. Bengal's per
capita income in the sixties was way above the national average. For instance,
if the national average is assumed to be Rs 100, Bengal's was over Rs 120.
In the eighties, the per capita
income dipped below the national average. In the nineties, it stayed below.
How is it that with an SDP growth
consistently above the national average, Bengal's per capita income languishes
below the all-India level?
There are other indicators that
do not match the SDP numbers. But before that: who compiles the data?
The finance ministry under Dasgupta
does. Rather, the state Statistical Bureau under the finance ministry is
responsible. It follows guidelines set by the Central Statistical Organisation
(CSO). The CSO, however, has no means to check the sanctity of the data
supplied by a state.
"It's common knowledge that some
states manipulate the numbers. The situation may change if Parliament passes
the Bill on a National Statistical Commission. The Cabinet has already
cleared it," said M.D. Asthana, former secretary, statistics and programme
implementation, Government of India.
If there is fudging, where can it
take place? In estimating the value of agricultural production, which has
been high in Bengal and a great deal higher than the national average.
Agricultural data is collected at
the block level, where politicisation of the administration under Left
rule has been widely talked about.
Growth in agriculture was 6.4 per
cent in the eighties and 7.1 per cent in the nineties, twice the national
average, according to Bhattacharya, who is also the president of the Indian
Econometric Society.
"There is something very strange
that we observe in Bengal which defies concepts like diminishing marginal
return. Even Punjab didn't record such numbers during the heydays of the
Green Revolution," he added.
In the first years of the Green
Revolution, growth was 6 per cent, tapering to 3-4 per cent now.
Diminishing marginal return is a
law where the yield steadily dips unless there is large fresh investment
or technical improvement. Neither of these has taken place in Bengal. What
did take place, though, was land reform, which did give a push to agriculture.
This achievement is widely acknowledged
but, at the same time, the Left Front government itself now openly admits
that the impetus from land reform has run its course. Hence, Buddhadeb
Bhattacharjee's initiatives to promote agro-industry.
M. Govinda Rao, the director of
the National Institute of Public Finance and Policy, points to another
indicator that does not square with the high SDP growth number. This is
the tax to SDP ratio - an indicator of the state's ability to raise resources.
The higher the SDP, the higher the tax collected - or the higher the tax-SDP
ratio.
"But in West Bengal, the tax to
SDP ratio is extremely low. In 2000-01, it was 4.61, the lowest among the
major states. Even Bihar (7.0), Orissa (7.1), Madhya Pradesh (8.8), Rajasthan
(7.9) and Uttar Pradesh (6.9) had better numbers," said Rao.
Neither of the two standard accompanying
realities of high SDP growth - high per capita income and high tax-SDP
ratio - exists in Bengal.
At the CSO, officials don't want
to be quoted on the reliability of numbers. But they admit states "do fudge"
SDP figures. Some overstate achievements, while others understate.
"States like Tamil Nadu underestimate
their SDP as it gives them an advantage in getting more funds from the
Centre by way of plan assistance and from the Finance Commission. But Bengal
is known for doing the opposite, which goes against the interest of the
state," said a former Finance Commission member.
If SDP figures are indeed being
fudged, Dasgupta may be doing Bengal a disservice - perhaps unwittingly.
Why would a state overstate the
growth rate? To draw investors, for one, and possibly the most important.
Is that objective being met? If
it were, Bhattacharjee would not have had to run to Mumbai - the chief
minister is going on Monday - to lobby the Tatas and the Ambanis. They
would have come to him.
