Byomkesh Bakshi and Satyavati were sitting on the verandah of their home in Kolkata, enjoying their morning tea, when Ajit rushed in, frantically waving a newspaper.
Ajit: Have you seen the full front page ads by the West Bengal government? It says the state’s economy grew at 10.5% in 2014-15, compared to a mere 7.5% for India as a whole. And increase in income per head in West Bengal was 12.8%, more than double all-India growth of 6.1%. We’re living in paradise.
Byomkesh (shouting): Putiram, bring some salt.
Satyavati: You want salt with tea?
Byomkesh: No. But I take whatever Mamata di says with large doses of salt.
Ajit: Oh, be positive.
Satyavati: I knew it. Everybody said cousins Poltu and Bubli can’t find jobs here because there aren’t any jobs. They are total idiots, unable to get work even when the state’s economy is booming.
Byomkesh: But does it really feel like 10.5% growth? Are people rushing here for jobs? Are businessmen pushing and shoving to set up industries? It’s a conundrum.
Ajit: A what?
Byomkesh: A conundrum is a con and a drum.
He returns with some papers.
Byomkesh: The state government says economic growth has been well above the all-India average since 2012-13.
Satyavati: Wow. You think all those bomb-manufacturing units boosted industrial growth?
Ajit: Maybe our core competence in chit funds did the trick? Or perhaps folks tried to drown their sorrows and that revived the liquor industry?
Byomkesh: This document says the state’s own tax revenues grew by 11.8% in 2014-15, when the economy grew at 10.5%. But that is at constant prices. If you take economic growth at current prices, which is what you should take because taxes are collected at current prices, then growth should be around 6 percentage points more, say, 16.5%. So why should growth in tax collections be so low?
Ajit: Umm … because people don’t pay taxes?
Satyavati: And can income per head rise 12.8% if the entire economy grows at 10.5%? Shouldn’t growth in income per head be lower, since the population is increasing?
Byomkesh: Maybe income per head is rising faster because the population is declining.
Ajit: Yes, lots of people I know have left the state.
Satyavati: And they’re probably inept people like Poltu and Bubli, who can’t find work here. Also political cadres bumping off each other every day must have helped reduce the population.
Byomkesh: Oh, well done. And the super-productive geniuses like us left in the state have pushed up economic growth, while the lower population has boosted growth in income per head. Excellent, the mystery of the Mamata rate of growth has been solved.
That was when Putiram spoke.
Putiram: Byomkesh babu, if growth in income per head at constant prices is 12.8% plus say inflation is 6%, shouldn’t I get a raise of at least 18.8%?
Manas Chakravarty is Consulting Editor, Mint
The views expressed are personal