India to be “a USD 5 trillion economy by 2024-25”- Winners and Losers

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In 2019, Prime Minister Modi envisioned “to make India a USD 5-trillion economy and global powerhouse by 2024-25” ( More recently, he said. “BJP’s double-engine governments see India’s need for speed as ‘ambition’ and ‘scale’ as its ‘strength’, unlike their predecessors who treated the first as a ‘luxury”‘and the other as ‘risk’,(

A  USD 5-trillion  sized economy by 2024-25 i.e. in a couple of years from now, implies a tenfold increase in the GDP, as it stands today, which no doubt implies both speed and scale, though it is doubtful whether it is achievable. Of course, the government will explain away the slippage by citing the Covid excuse. Nevertheless, in an economy growing at such a breakneck speed, who is going to corner the largest slice of the cake?

The big picture:

To find an answer to the above question, one needs to consider the occasional statements originating from bodies such as the Niti Ayog and the disruptive policies announced these days by the government, one after the other, in quick succession.

A senior Niti Ayog official was reported to have said a couple of years ago, “In India, we are too much of a democracy, so we keep supporting everybody…….For the first time in India a government has thought big in terms of size and scale and said we want to produce global champions. Nobody had the political will and the courage to say that we want to support five companies who want to be global champions. Everyone used to say I want to support everyone in India. I want to get votes from everyone.” (

These statements read together should give one a clear indication of the direction in which the present government is moving and the manner in which it seeks to achieve its objectives.

CPSE disinvestment:

In line with these underlying intentions, the Finance Minister announced a new public sector enterprises policy in February, 2021, followed soon after by a formal notification issued on December 13, 2021, initiating a massive sale of CPSEs and their assets, including lands, within the next couple of years, almost amounting to a distress sale, implying that the whole exercise was an integral part of downsizing the public sector, to allow “five or six” oligarchs to appropriate in one go, a wide range of assets of the CPSEs.

The government made no secret of its intent to give away the CPSEs at throw-away prices, by preparing the ground in a well orchestrated manner. First, it made sure to throttle competition by excluding the other well-run CPSEs from bidding. Second, some oligarchs may not have prior experience in taking over a CPSE and carry forward its activity. To help them, the government permitted even inexperienced companies to buy the CPSEs. Third, a wise ancient Chinese stratagem, for winning a war, recommended, “Loot a Burning House”. The government forced almost all well-performing CPSEs to pay unreasonably high dividends to it, making it difficult for them to expand their capacities, a sure way to make way for underselling them to private buyers. Finally, yet another sure way to weaken them is by ensuring that their senior managerial positions remain vacant for unduly long periods. Today, outstanding CPSEs like the ONGC, the CIL and its subsidiaries, the Rasthriya Ispat Nigam Ltd (RINL) and others are either headless or have many top posts vacant.

In the specific case of CPSEs like the CIL and the ONGC, which have played a pivotal role in making India self-reliant in technologies associated with exploration and development of coal, oil and gas, the government has forced them to part with the ore deposits they discovered over the years, so that the same could be auctioned off to oligarchs at nominal prices.

In a large country like ours, the annual household savings, especially those of small households, are huge and they are deposited largely with the PSU banks, or invested in the LIC and so on. As long as those deposits are with the PSU banks, they are backed by the sovereign. In the case of the LIC, millions of small families buy life policies, which provide them a social security cover. The Corporation, driven largely by its policyholders’ funds, in turn, reinvests them in socially beneficial projects of the States. Why not allow big businesses to step in and appropriate those deposits? Therefore, the government has started disinvesting the LIC and is about to privatise some PSU banks also, simultaneously choosing to dismantle the social security cover they provide.

The justification put forward by the government to privatise CPSEs is a good example of how it has consciously confused the public to benefit private entities, at the cost of the public exchequer. The argument that privatisation would yield additional fiscal resources for the government, which in turn could spend on social sector schemes, is fallacious, as those who buy the CPSEs, raise funds from the same pool of savings in the economy, from which the government could directly access and raise resources on much more advantageous terms, the only difference being that privatisation would force the government to lose control of the CPSEs to private entities at throw-away prices . The need for additional fiscal concerns of the government has partly arisen as a result of its ill-conceived priorities in spending public money and reluctance to levy income-redistributive taxes on the more affluent.

Laws a hindrance to “speed” and “scale”?

It is an open secret that many political parties are in cahoots with affluent business houses, to be able to take the latter’s implicit and explicit support in splurging money on electioneering, not merely for buying voters, wherever they can, but also for buying elected legislators to grab power at any cost. The equations between the political parties and the business houses are unambiguously clear. The latter would fund the political parties and, in return, the political parties should not only agree to provide them cover against regulatory oversight and penalties but also amend the laws and regulations to make it easy for them to do business without having to answer for the environmental and human rights violations they commit in carrying on their businesses, maximising their profits This explains why the present government at the Centre has diluted the provisions of the Forest (Conservation) Act, the Mines and Minerals (Development and Regulation) Act and so on.

Does consultation with the States slow down “reforms”?

India is a nation of diverse cultures, languages and regional characteristics. Those who framed the Constitution consciously provided a federal structure in which the Union and the States should operate within their respective legislative and executive domains and complement each other’s role for promoting the overall well-being of the people. It was never their intention that the Union should bulldoze the States’ legitimacy. Of late, this is what exactly is happening. For example, the Centre tried unilaterally to push through three farm laws and a Bill to amend the 2003 Electricity Act, which in effect would hurt the interests of the farmers. When there was an intense resistance to these from the farmers, the Centre had to back out but one should not be surprised if it revives these laws aggressively once again.

It was the States that acquired lands for setting up CPSEs in the first instance and they have a stake in the CPSEs. Ignoring this, the Centre is unilaterally going ahead with CPSE privatisation.

To cite another example, devolution of tax revenues between the Union and the States should be on the basis of the Finance Commission’s recommendations, whereas the Centre is unilaterally imposing a large number of Centrally Sponsored and Central Schemes on the States, intruding into their areas of governance, by unduly invoking its exceptional authority under Article 282, making a mockery of the role of the Finance Commission.

Apparently, the present political executive at the Centre views the States as a hindrance to its plans!

Should the Centre abandon the “welfare” obligation under the Directive Principles:

When the Niti Ayog official complained of “too much democracy”, as referred above, he perhaps expressed his abhorrence to the three essential elements of a democracy, namely, “dissent, discussion and debate”, in addition to the need for consulting the States in a quasi-federal system like ours and also expressed his dissatisfaction towards the “welfare” obligation cast upon the government by the Directive Principles and the other provisions of the Constitution.

The concept of a welfare state is explicit in Article 16(4)  [reservations as a means to compensatory discrimination], Articles 38(1) [“welfare of the people”], 38(2) [minimise the inequalities in income”…..eliminate inequalities among individuals…groups of people], 39(b) [“that the ownership and control of the material resources of the community are so distributed as best to subserve the common good”], 39(c) [“ensure that the ‘operation of the economic system dies not result in the concentration of wealth and means of production to the common detriment’]. Since the idea of indiscriminate privatisation or grooming a few business houses into “global champions” is clearly incompatible with these welfare concepts, the political parties that have ruled the country since the eighties, particularly post-1991, have conveniently ignored the same, as evident from the growth trajectory that the economy has followed since then.

Is the government ignoring Articles 38(2) & 39(c)?

The World Inequality Report (WIR), 2022 ( observes as follows.

Indian income inequality was very high under British colonial rule (1858-1947), with a top 10% income share around 50%. After independence, socialist-inspired five-year plans contributed to reducing this share to 35-40%. Since the mid- 1980s, deregulation and liberalisation policies have led to one of the most extreme increases in income and wealth inequality observed in the world. While the top 1% has largely benefited from economic reforms, growth among low and middle income groups has been relatively slow and poverty persists . Over the past three years, the quality of inequality data released by the government has seriously deteriorated, making it particularly difficult to assess recent inequality changes.”

As per the data presented in the WIR, the following are the income and wealth distribution patters in India.


share (%)

Share of

Income (%)

 Share of

wealth (%)

Bottom 50% 13.1 5.9
Middle 40% 29.7 29.5
Top 10% 57.1 64.6
Top 1% 21.7 33

The top 1% of the population in our country account for 21.7% of the total income and 33% of the total wealth of the country, a pattern that is becoming more and more skewed in their favour as years pass by, as a result of the growth paradigm we have adopted.

The oligarchs of India, mostly billionaires, who are held in awe and admiration by several political leaders, many civil servants and even some media houses, belong to the uppermost income bracket, even more exclusive from the point of view of the top 1%. They own fabulous, energy guzzling, luxurious multi-storeyed mansions, jets, yachts and so on, both in India and elsewhere, insensitive to the plight of millions of their countrymen, who stand deprived of even the basic amenities to which one should be entitled in a civilised society. They have amassed wealth by making huge investments in projects, that have displaced millions of voiceless families over the years, devastated forests, exposed people to toxic pollutants and damaged their health beyond repair. They seem to forget that the mansions in which they live would not have been there but for the sweat and toil put in by lakhs of construction workers, working at wages below sub-marginal levels, living in urban slums, subject to disease and deprivation.

It is ironic that some of these billionaires should resort to such unethical practices as laundering money through illicit overseas accounts to maximise profits at the cost of national interest, whereas low-wage migrant Indian workers toiling hard under hostile conditions in the Middle East should pool their hard earned savings and remit the same to India, providing a helping hand to stabilise India’s fragile foreign exchange budget.

Apparently, Indian billionaires, the “champions” in the language of Niti Ayog, are far too insensitive to natural human instincts of guilt and shame to think of the contributions made by unfortunate migrant workers, domestic and overseas. How far is it desirable to build a five trillion dollar economy based on such regressive ideas as developing oligarchs into “global champions”, shrinking the role of the government as a provider of welfare and social security cover for the masses and viewing privatisation as the panacea for all problems?

Carbon billionaires:

Some of these billionaires even figure among the wealthiest in the world. Interestingly, their lifestyles and their projects spew large quantities of greenhouse gases into the atmosphere, which in turn have caused global warming and climate changes that threaten life on this planet. Just as in the case of income and wealth inequities, there is a skewed pattern of carbon inequities in India, as evident from the data available from WIR, as shown below.

Total population share (%) Tonnes of CO2 per capita
Full Population 2.2
Bottom 50% 1
Middle 40% 2
Top 10% 8.8
Top 1% 32.4

It implies that the top 1% of the population are responsible for more than 30 times the per capita carbon emissions from the bottom 50%!

OXFAM ( in their recent report, “Carbon billionaires:  The investment emissions of the world’s richest people”, based on a fairly comprehensive analysis, found that “the world’s richest people emit huge and unsustainable amounts of carbon and, unlike ordinary people, 50% to 70% of their emissions result from their investments. New analysis of the investments of 125 of the world’s richest billionaires shows that on average they are emitting 3 million tonnes a year, more than a million times the average for someone in the bottom 90% of humanity”. These billionaires earn profits from investments in carbon-intensive industries such as power, cement, aluminium and so on. Considering that Indian billionaires are subject to comparable regulatory oversight, if not less, as for their counterparts elsewhere, they are perhaps responsible for a staggering 24,000 tonnes of CO2 per capita, which is 12,565 times the average per capita CO2 emission in India and 1546 times of the per capita CO2 emission in the USA. That way, these billionaires can be called super-polluters of the atmosphere.

The Prime Minister has recently assured the global leaders that India now stands committed to reduce Emissions Intensity (EI) of its GDP by 45% by 2030 ( However, the domestic policies he has adopted so far do not add up to it. Considering that India is aggressively auctioning hundreds of new coal blocks for development, continues to promote further additions to coal-based electricity generation on a large scale, India will find it challenging to reduce the emission intensity of GDP as committed.

Increasing income inequities & economic growth:

There are a number of studies (e.g. IMF Working Paper WP/19/34 Inequality of Opportunity, Inequality of Income and Economic Growth & OECD’s Working Paper No. 163:   Trends in Income Inequality and its Impact on Economic Growth) that found a negative correlation between inequities and long-term growth. India cannot therefore hope to sustain rapid economic growth for long, with increasing income inequities.

Had Indian policy planners grasped the wisdom underlying the Directive Principles and consciously adopted policies to narrow down income inequities and reduce concentration of wealth, they would have been in a better position to realise a more balanced and sustainable rate of economic growth.

There is perhaps something more fundamental about the way economic growth is measured. The present approach does not capture natural resources depletion, environmental degradation, erosion of human rights and, in short, it fails to assess the social benefits vis-a-vis the social costs. In the long run, perhaps, these factors need to be taken into account for a more realistic assessment of development based on a social-cost, social-benefit evaluation.

Gandhiji’s words of wisdom:

Coming back to the idea of a Five Trillion Dollar Economy that the PM has envisioned, he should listen carefully to what Gandhiji had said long ago:

Recall the face of the poorest and the weakest man whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him. Will he gain anything by it? Will it restore him to a control over his own life and destiny? In other words, will it lead to swaraj for the hungry and spiritually starving millions? Then you will find your doubts and your self melting away

Gandhi also said

Earth provides enough to satisfy every man’s need, but not every man’s greed.”

E A S Sarma, Former Secretary to Government of India


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