Calcutta, May 28: 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.