The dhaba, lorry, GST, GDP and India’s growth story

MJ Akbar reminds us in his famous book “Nehru:The making of India” that Pandit Nehru held close to heart Pulitzer winner Robert Frost’s quote “The Woods are lovely, dark and deep, But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep”. Despite the significant progress that was unleashed in a short span the quote rings true as much today as it did then.

Numerous studies by academicians & technocrats have reiterated time and again that India’s focus should be on education, development of a skilled workforce, infrastructure and resource planning to achieve consistent and above average growth numbers. The golden quadrilateral envisioned by the erstwhile planning commission, is rightly being extended in all directions. The planning commission in order to create a uniform market also brought into effect the GST.

Translating common economic and developmental performance into statistical numbers, there are a few distinct figures that help us visualize the Indian growth story. When one envisions Indian logistics or highways, we, with the help of Bollywood imagery visualize slow moving, dusty,over loaded trucks, lines of trucks queued up at toll booths, and truck drivers relaxing at dhabas en-route their 6 plus day journey to cover 1400 Kms. Effectively achieving a speed of less than 30 kmph-on road.

As stated in the Ernst and Young report of 2013 and several other studies, the average trucking speed in India considering only driving time is about 30 kms/hr vis-à-vis 80 in developed countries, and in India trucks cover about 300 kms per day vis-à-vis 800 in developed nations.

Considering there are very few busy logistical routes in India, only 24% of them are 4-lane roads.

Using the data from an IIM report of G. Raghuram it can be statistically taken a step further and calculated assuming that highway infrastructure is developed, that if the speed of the trucks can be increased from the present 30-40 kmph to 70 kmph the GDP growth in 2025 can be 10.04% where as at the present 40 kmph rate it would be around 7.5%. In 2020 at a pace of 40kmph Indian growth rate would stand at 6.7%, and at 70 kmph it would be 8.75%. In a longer run in 2032, a trucking speed of 40 kmph would help Indian GDP travel at 8.28%, likewise 70 kmph at 11.85% and 80kmph at 12.96%.

Taking into consideration the assumptions and calculations for the year 2020, the difference of GDP percentage between 40kmph and 70kmph stands at around 2 percentage points. For an economy and nation as large as India, if not any given nation, a 2 percent difference can significantly impact not less than a few hundred million citizens.

India’s development cannot be pinned to just one fact – however improvement in logistics and highway infrastructure will go a long way in nurturing it. That said – Job creation, manufacturing, education, and health among many other factors will play an equally significant role.

The Transport Corporation of India (TCI) and IIM-Kolkata report further concludes that between 80,000-1,00,000 crores are withdrawn as a waste from India’s GNI, due to traffic logs and toll delays alone, amounting to around 1.2% of India’s GDP.

If we can achieve a head way in logistical improvements and place on priority highway infrastructure, this coupled with efforts to ease traffic in Delhi, Bangalore, Mumbai, Hyderabad and Chennai allow India to travel to “acche din”at 80 kmph rather than the presently aimed 30 kmph (in lighter vein). Thereby making the GoI’s ambitious plans of Make-in-India and start-up India gain steam naturally and relieving the stress from the Government.

While the newly formed Niti Aayog is developing India’s 25-year road map. It is interesting to note that along with Start-up India, Make-in-India and Digital India. These numbers provide a raw yet interesting insight into the most basic and literal “Road-Blocks” lags or impediments in India’s much-anticipated goal to become a strong global force.

The growth of India cannot be subject of a one handed clap of the GST bill but furthered with a push in infrastructure development, will make the sound much clearer and louder as visible in the numbers above.

Taking a cue from the poem that touched the founding Prime Minister, India still has many a miles to go but let us cover them with a faster speed, while taking along the Goods, Handlers and the Dhaba men-women.

Statistical assistance from, Dr.SB Madagi, Chair-Bioinformatics, Karnataka State Women’s University.

*Raw numbers based on the data given in table 1 of G. Raghuram’s paper, W.P.No 2015-12-02 dated December 2015 it seems,

Dr.Madagi’s Findings:
There is high correlation between freight by road mode and GDP
The correlation appears to be 0.77 (Significantly high) and the regression equation comes out to be:
Y= 0.148x+4.08
And base GDP of 2001-2002.