April 5, 2004
Press Release
Industry and more importantly, corporates, that too a select group, are those on whom the BJP and NDA pin their electoral hopes on. In the last study, we have shown how the taxation measures have been singly aimed at benefiting these small groups. Today, in our fourteenth and final study from the series, "Lies, damned lies and statistics", we have shown how dismal the performance of industry has been, given the extremely narrow focus of the government, whereas the overwhelming larger sections of industry have languished.
Is India Really Shining?
Lies, Damned Lies and Statistics
Indian Industry under NDA Rule
The industrial scenario of the country under the NDA rule does not correspond with the picture of a ‘shining India’, which was being painted by the NDA government through media advertisements till a few days back. It is evident from the Chart 1 given below that industrial production as a whole experienced a decline during the period 1995-96 to 2003-04, with the index of industrial production falling to as low as 2.6 during 2001-02.
Chart 1: Index of Industrial Production in India
The story behind the overall poor industrial performance during the tenure of this government gets clearer if we compare the growth in incomes of the industries falling under different size classes. Big business has enormously gained during this period and registered significant increases in their income growth. Chart 2 given below shows that the top 50 business houses had a real good time from the year 1998-99 following the advent of the NDA government. Their income growth ballooned from a growth rate of 7.4% in 1998-99 to 22.4% by 2001-02 in sharp contrast to what was happening to the rest of the industry during this period.
Chart 2 
Source: CMIE, Corporate Sector 2002
The rest of the industry has done badly during the tenure of the NDA government, particularly the medium and small scale industries. The chart below brings out starkly the pro-big business bias of the NDA government. It shows that while income growth have come down across all size classes of industries, the bottom 40% has suffered the most.
Chart 3
Source: CMIE, Corporate Sector 2002
The small scale industries are one of the major sources of employment in the Indian economy. The small-scale industries (SSIs) in India have been facing several institutional bottlenecks ranging from marketing, finance, infrastructure, technology, poor working environment etc. because of which they are unable to face competition from domestic big business as well as the MNCs. Opening of trade barriers in a backdrop of sluggish domestic demand has adversely affected the growth of SSIs, as they are not able to compete with the technologically more sophisticated foreign firms. The decline in the growth of the number of total units as shown in the following chart substantiates the dismal picture of small-scale industries under the NDA rule.
Chart 4
Source: Economy Survey, 2002-03
The growth of production of the small-scale industries also experienced a decline during this period. Therefore, not only was it the case that the number of small scale industries increased at a lower rate but the existent units produced much less.
Chart 5
Source: Economic Survey, 2002-03Employment growth in the small-scale industries also experienced a slowdown during this period. The growing unemployment experienced under the NDA rule is explained to an extent by the declining absorption of labour in the labour intensive small-scale industries.
Source: Economic Survey, 2002-03