India is the fastest growing large economy in the world. That is a fact the Bharatiya Janata Party (BJP) government can make much of. But being the party accused of running a “40% sarkara” in Karnataka indicates that some voters think a part of the money produced by the growing economy is going into the black economy. It’s the economy that the 2016 demonetisation was meant to kill but didn’t.

In a recent Business Standard article, Behind The K-shaped growth, Debashis Basu argued that the way money was being spent indicated the economy was growing unbalanced to benefit the rich. As evidence, he compared the poor sales of kitchen appliances companies, underwear manufacturers and sellers of two-wheelers with the 44% growth of the March quarter sales of Ethos, the seller of watches only the rich could think of buying. Basu guessed the short answer to the cause of this imbalance was “widespread corruption.” Expensive watches and luxury motor cars are just the sorts of purchases black money is spent on, but can we judge a growing economy on their sales? What about the growing middle class? What about the long-term benefits the poor get from all that money spent on them — the improvements in housing, roads, and transport, for instance? Should they be considered money spent on the downside of an economy growing in a K shape? They are undervalued because the benefits are mainly seen in rural areas, and urban dwellers know so little about what happens in village India.

I may be worrying too much about what has happened in the past. I should try to forecast the future. When I do that, I wonder if we are being taken back to where we started to escape from in 1991. If I am right — and I certainly hope not — we could be on our way to an L-shaped economy as we did in the past. In those days, we had the neta-babu raj. The politicians with all their hangers-on, many of whom dealt in the black market, were the netas. Growth was meant to be produced by protecting industry. Instead, it spawned corruption and stagnation. Now this government is protecting industry again. It has, for instance, been criticised for being protectionist by not joining some regional free trade arrangements.

India is a large market, but being out of regional trading will likely mean being excluded from international supply chains too. Protection by tariffs alienates potential traders and does not encourage efficiency in manufacturing. We know no way of preventing corruption. India has strength in the growing services and knowledge market.

Last year, it was 42% of total export earnings. But judging by recent state investment fairs and other promotional efforts, they still seem to be looking for manufacturers to invest. So maybe what is needed to prevent the emergence of an L-shaped curve in India is a focus on the services sector, competitive manufacturing, and a renewed drive against corruption.

The views expressed are personal