Last week, at an election rally in Chhattisgarh, Prime Minister Narendra Modi announced that he is extending the Pradhan Mantri Garib Kalyan Ann Yojna, a scheme providing 5 kg of foodgrains free every month to beneficiaries of the National Food Security Act, by five years because he does not want any citizen to sleep hungry. This means that 80 crore Indians will still be receiving free foodgrains to stave off hunger in 2028. This is the year the government expects India to become the third largest economy in the world, with a GDP of $5 trillion. Will large swathes of Indians still be hungry with a GDP of $5 trillion? Who will benefit from the five-year dash to these targets?
AP
Last week, at an election rally in Chhattisgarh, Prime Minister Narendra Modi announced that he is extending the Pradhan Mantri Garib Kalyan Ann Yojna, a scheme providing 5 kg of foodgrains free every month to beneficiaries of the National Food Security Act, by five years because he does not want any citizen to sleep hungry. This means that 80 crore Indians will still be receiving free foodgrains to stave off hunger in 2028. This is the year the government expects India to become the third largest economy in the world, with a GDP of $5 trillion. Will large swathes of Indians still be hungry with a GDP of $5 trillion? Who will benefit from the five-year dash to these targets?
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The story of Japanâs growth
For reference, letâs take a look at Japan today, the third largest economy by GDP in the world. In Japan, there is reportedly a death by suicide every 20 minutes. About 15 lakh Japanese have not left their homes for years, a form of severe social withdrawal known as hikikomori. Old parents rent actresses who come in on Sunday to call them âMomâ and âPopâ because their own daughters donât visit any more. Every day, dead people are discovered in tiny apartments days or weeks after they died; these are called kodokushi or lonely deaths. Clearly, Japanâs climb to the third position economy-wise has not lifted all boats equally; it has tossed the weak to the margins where they languish because economic growth on steroids has unpicked the safety catch of family and community ties.
For 40 years, Japan was the worldâs second largest economy, powered by manufacturing and exports. But after the 2008 world financial crisis, the wheels came off the Japanese economy. Japanâs population started spending less, exports shrank, and government incentives dried up. On the other hand, China enjoyed a manufacturing boom and dislodged Japan to become the worldâs second-largest economy by GDP.
On losing rank, however, Japan displayed remarkable ego-free economic diplomacy. As soon as the economy plunged to the third position, Japanâs leadership publicly welcomed Chinaâs ascent, stating that sustained demand from the (then) most populous country could only be good for Japanâs exports. Even if this statement was made partially to save face, the two economies intertwined immediately. Today, China is Japanâs largest trading partner, proving that in the world political economy it pays to embrace your main competitor, even if you are Vishwaguru (global teacher). This ego-free âactivismâ has ensured that Japan has held on to the third position in world GDP rankings for the last 14 years.
AP
Last week, at an election rally in Chhattisgarh, Prime Minister Narendra Modi announced that he is extending the Pradhan Mantri Garib Kalyan Ann Yojna, a scheme providing 5 kg of foodgrains free every month to beneficiaries of the National Food Security Act, by five years because he does not want any citizen to sleep hungry. This means that 80 crore Indians will still be receiving free foodgrains to stave off hunger in 2028. This is the year the government expects India to become the third largest economy in the world, with a GDP of $5 trillion. Will large swathes of Indians still be hungry with a GDP of $5 trillion? Who will benefit from the five-year dash to these targets?
ADVERTISING
The story of Japanâs growth
For reference, letâs take a look at Japan today, the third largest economy by GDP in the world. In Japan, there is reportedly a death by suicide every 20 minutes. About 15 lakh Japanese have not left their homes for years, a form of severe social withdrawal known as hikikomori. Old parents rent actresses who come in on Sunday to call them âMomâ and âPopâ because their own daughters donât visit any more. Every day, dead people are discovered in tiny apartments days or weeks after they died; these are called kodokushi or lonely deaths. Clearly, Japanâs climb to the third position economy-wise has not lifted all boats equally; it has tossed the weak to the margins where they languish because economic growth on steroids has unpicked the safety catch of family and community ties.
For 40 years, Japan was the worldâs second largest economy, powered by manufacturing and exports. But after the 2008 world financial crisis, the wheels came off the Japanese economy. Japanâs population started spending less, exports shrank, and government incentives dried up. On the other hand, China enjoyed a manufacturing boom and dislodged Japan to become the worldâs second-largest economy by GDP.
On losing rank, however, Japan displayed remarkable ego-free economic diplomacy. As soon as the economy plunged to the third position, Japanâs leadership publicly welcomed Chinaâs ascent, stating that sustained demand from the (then) most populous country could only be good for Japanâs exports. Even if this statement was made partially to save face, the two economies intertwined immediately. Today, China is Japanâs largest trading partner, proving that in the world political economy it pays to embrace your main competitor, even if you are Vishwaguru (global teacher). This ego-free âactivismâ has ensured that Japan has held on to the third position in world GDP rankings for the last 14 years.
The moral and intellectual crises in economic policies
But let us return to the parallel story in Japan. As the high-value industrial economy took centre stage, the strength of personal and professional relationships withered and the multi-generational family and social structure became atomised. This was a perfect storm in the lives of the traditional, semi-skilled workforce. Workers moved from the countryside and satellite towns to cities expecting âsalarymanâ jobs, but many discovered that they were not trained for the technological tsunami sweeping the high-growth sectors. They fell through the cracks into financial collapse and social withdrawal.
A deep divide
Today, the Government of India claims that the country is on the cusp of an economic tsunami. How does the sprint to the target of $5 trillion bode for citizens, especially the 80 crore who will still be on free rations in 2028? Indiaâs economic growth pivots on capital, productivity and labour, and data show that for over four-fifth of Indians, the $5 trillion economy is a bridge too far.
Consider capital: in 2021, 1% of the population owned about 41% of the nationâs wealth, while 50% owned 3% of its wealth, according to Oxfam. In such an environment, the dash towards a $5 trillion economic trophy lies in the grip of the resource-rich power brokers who will seize the initiative. But ironically, it is the low-resource citizens who are funding the investment for the proposed $5 trillion economy: approximately 64% of the total Goods and Services Tax (GST) came from the bottom 50% of the population, and the top 10% contributed 3% of GST. At the same time, the contribution of labour, the other driver of growth, is hamstrung due to dubious educational and skill attainments and halting digital literacy. Productivity is just beginning to get a boost through the creation of digital and physical infrastructure.
