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The way the Indian Economy is being managed leaves a lot to be desired. While on one hand, we have the chest-thumping about the “world-beating” record growth of the post-Pandemic Indian Economy, on the other hand, we have distressing images of students and unemployed youth taking to the streets in an act of desperation, unable to secure jobs or sustain their livelihoods. Indeed, the paradox at the heat of the Indian Economy is that a tiny percentage of White Collar Professionals in the services sector have been doing extraordinarily well, whereas the rest of the populace is either subsisting or having trouble making ends meet.
While there are many reasons for this paradox, some dating back to the time of the liberalization process, a clear view is that the “structural” problems of the Indian Economy haven’t really been addressed by successive dispensations. For instance, the Indian Economy, after nearly four and half decades of reform is yet to “leapfrog” from the agrarian to the modern version, dependent as it is on the Agriculture sector, which in turn, is at the mercy of the rain gods, thanks to our inability to develop an efficient irrigation and drip faring system. So, with nearly half of the population dependent on farming for their livelihoods, there is little chance of alleviating rural distress, much as we try, with the protests over the farm laws being the latest example of how reform and rejuvenation of this sector is a complex and time-consuming process.
Next, despite the then-prevailing wisdom of the decades following liberalization, the Indian Economy has not and some would say, cannot, bypass industrialization altogether and take the “quantum leap” into services such as IT and Financial services, since this would mean a herculean effort from these sectors to “absorb” the Millions of jobseekers who graduate every year in India. Indeed, industrialization has been and would continue to be the job creator engine of the Indian Economy and hence, lifting off from the farm and into the firm does not work for a large country like India. Of course, this is not to belittle the contribution of the services sector, notably the Indian Software industry, which with its global reach has managed to vault the nation into the mind spaces of the world.
While we have these structural problems that drag down the economy, we also have to contend with truly baffling policies on Petrol, Diesel, and LPG pricing. Why on earth should we be paying one of the world’s priciest rates (after adjusting for PPP or Purchasing Power Parity) for petrol, diesel, and gas, when the global prices are at record lows? Of course, there is no denying that these “gains” make up for the budget deficits and shore up the finances. However, there are better ways of tackling these deficits than burdening the common person, Instead, as has been suggested by many recently, the government can well levy a 1% tax on the Top 1% of the richest Indians, which alone can help buoy the entire resources needed to fight the pandemic.
While “everyone and their dog” is aware of the gross inequality in India, especially after the pandemic widened the already “yawning gap” between the haves and the have nots, there is the little-noticed aspect of the Indian Economy is typically a case of how the “poor subsidize the lifestyles of the rich”. With labour at dirt cheap wages and with a humungous pool of human resources, the supply is there for the taking and this often results in the Informal Sector providing almost bonder labour like systems for the ones who can afford it. Indeed, talk to any of the “ladkas” on whom everyday India runs, and we would then see how the Trickle Down of wealth is not happening and instead, what we have is an upward siphoning of the gains.
Talking about the Informal Sector, decades of efforts to “formalize” this sector have failed to do what Demonetization and the Pandemic have done, though the outcomes are again misplaced and paradoxical. Instead of bringing the Informal Economy into the ambit of rules and labour laws, the effect has been to shrink it by nearly half, and displace the Millions of Indians who are part of this sector. Indeed, if not anything, the Digital Leap has been achieved as far as payments and other aspects are concerned. thanks to Demonetization, though whether this resulted in net gains for the workforce is debatable.
So, what we have is an economy that “works for the few” instead of the many, and sooner or later, anyone who is governing the country, must address this paradox. Otherwise, there is every possibility of social unrest, much like the violent protests that have been rocking the nation from time to time, as disaffected and dispossessed groups take to the streets, in acts of desperation and frustration. To conclude, we cannot afford to “ignore” this paradox any longer, if we are to emerge stronger after the pandemic.
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