FASTEST GROWING ECONOMY - SAME AS BHUTAN, BANGLADESH, MYANMAR?

By Ruma Dubey

Last week, two diagonally opposite news left all of scratching our heads and wondering, “what’s going on?”

First the news of the GDP for Q4FY16. When things on the ground were not-so-good – banks in losses, huge NPAs, unemployment soaring, drought, rising prices, India Inc posting losses and slower growth, IIP coming in dismal; one could not help but wonder how Q4 showed the highest GDP growth for the fiscal at 7.9%? We can talk about changes in the methods of calculation till the cows come home but the fact remained that the figure was cut-off from the reality on the ground.

Well, despite all these niggling doubts, we went ahead and congratulated each other about being citizens today of the fastest growing economy in the world. Yes, we have superseded China and the rest of the world. Despite this, there was not toast raised to India anywhere in the world, apart from only in India. This actually zeroed in the bitter truth – our PM might be really working hard (almost 20 hours a day) and putting in place a new, more vibrant India, building new diplomatic ties around the world; the fact still remained that we do not matter much to the world. We have the second largest population in the world and that makes us a great market place; that’s all we are to the world.

And while these thoughts were running in the mind, we read that World Bank has gone ahead and changed our ‘nomenclature’. From a ‘developing country’ we are today a ‘lower middle-income economy’. It was with a sense of incredulousness that we read this news– what! We are the fastest growing economy in the world and we are rated as lower middle-income economy – along with Pakistan, Sri Lanka, Bangladesh, Bhutan, Myanmar, Lesotho, Zambia, Honduras, Ghana, Guatemala and Djibouti.

Are we missing something here – fastest growing economy in the world needs to be clubbed with China, USA and the rest. So why are we with the likes of Pakistan, Sri Lanka, Bangladesh, Bhutan, Myanmar and the rest when economically, there is simply no comparison? Yeh baat kuch hazam nahi hue!

For the current 2016 fiscal year, low-income economies are defined as those with a GNI per capita of $1,045 or less in 2014; lower-middle-income economies are those with a GNI per capita between $1,046 and $4,125; upper-middle-income economies are those with a GNI per capita between $4,126 and $12,735; high-income economies are those with a GNI per capita of $12,736 or more.

The World Bank said in its report, "In our World Development Indicators publication, we've stopped grouping low- and middle-income countries together as 'developing countries. We are not changing term 'developing countries' or 'developing world' in our general work but when it comes to presenting specialized data, we will use more precise groupings of countries; the term developing country was no more useful for analytical purposes.”

Why the need then for this change? Today there seems to be no distinction between developing and developed countries but at the same time, there is really no data forthcoming when it comes to average life expectancy in ‘developing’ Asia or the carbon emission of ‘developed’ Europe.

So when we talk about India it will continue to be referred to as ‘developing’ but when World Bank represents its reports, India will be referred to as ‘lower middle-income’ economy.

Thus it’s a just a classification as far as calculation for World Bank reports are concerned. But as we move ahead into a world where inequalities are increasing while global prosperity is also increasing, these terms – developing or lower-income economy will actually have no relevance; it’s like naming a road – people will call it “school road” or “paanwallah nukkad” ; no one remembers the name. It’s the same difference….