Follow Us:

India Today~II

Our biggest businesses are building international brands, yet red-tape continues to throttle the new entrepreneurs and frustrate the small business owners.


The path well-trodden by most developed countries is to provide employment to unskilled population in the course of development. But India has never been able to achieve this. In spite of decades of reforms, the share of manufacturing in the gross domestic product (GDP) has stagnated at around 15-16 per cent. The economy has been powered on the strength of the expansion of services. Services have generated employment but can never match the scales possible with mass industrial production that serves both domestic and foreign markets. What is significant is that the missing stage of manufacturing extension in India’s development has kept disproportionally high numbers of its labour forces engaged in agriculture as employment growth has been too slow. No other major economy has been expanding as fast as India lately, including both China and the US.

But the growth appears to be jobless growth as beyond the headlines lies the grim reality of rising unemployment. The nation of 1.4 billion people is not creating enough jobs for its growing workforce, despite campaign promises by the Prime Minister Narendra Modi to make it a priority. Indeed, India is facing such levels of unemployment that have not been seen in the last 45 years ~ that is a 6.2 per cent unemployment rate. The major portion of the workforce (80 per cent) is in the unorganised sector and willing people are not able to get jobs according to their ability and skills leading to unemployment in India. The government has taken various steps to tackle it such as Kaushal Vikas Yojana, MNREGA, Garib Kalyan Yojana and so on. Output is increasing as a result of pandemic-related government spending while the private sector sits on the fence, deterred by dim conditions for new investment. Meanwhile, pandemic-related disruptions and rising inflation are making it harder for everyone to get by.

Tensions boiled over in June 2022 when angry youth facing bleak job prospects blocked rail traffic and highways in many states for days, even setting some trains on fire. Contrary to popular belief, growth by itself cannot change the associated processes for creating livelihood security which is a basic prerequisite for empowering of the people. Undoubtedly, the living standards of the ‘middle classes’ (which tends to mean the top 20 per cent or so of the population) have improved well beyond what was expected ~ or could be anticipated ~ owing to the rapid economic growth in recent decades. But, in the words of Prof. Amartya Sen: “The story is more complex for many others such as the rickshaw puller, domestic worker, or brick-kiln labourers. For them, and other underprivileged groups, the reform period has not been so exciting. It is not that their lives have not been improved at all, but the pace of change has been excruciatingly slow and has barely altered their abysmal living conditions.”

The poor are caught in what economists call a ‘poverty trap’, unable on their own to escape from extreme material deprivation. Two-thirds of the people in India live in poverty: 68.8 per cent of the Indian population lives on less than $2 a day. Over 30 per cent even have less than $1.25 per day available ~ they are considered extremely poor. Precisely, more than 800 million people in India are considered poor. As per the data of the Global Multidimensional Poverty Index 2022, the ranking of India is 62 among 107 countries. Dr Manmohan Singh, distinguished economist and former Prime Minister, aptly said: “India happens to be a rich country inhabited by very poor people.” Whereas to be well nourished is both a development and ethical imperative, the shocking prevalence of malnutrition despite its rapid economic growth and spending on several programmes is the urgent social and political issue of India today.

After the Green Revolution in terms of high-yield crop varieties in the 1960s, it seemed that increase in food production would invariably take care of hunger. But the coexistence of hungry millions and the rising buffer stock of foodgrains has exposed the serious imbalances in India’s food policy. Moreover, the tragic paradox is that even while democracies are apathetic to mass starvation they downplay and ignore the fact that hundreds of millions of children and adults continue to lead lives of severe malnutrition since it hardly provokes public outcry. The Global Hunger Index (GHI) is a tool designed to comprehensively measure and track hunger and malnutrition across countries using four indicators ~ undernourishment (share of population with insufficient caloric intake); child wasting (share of children under age five who have low weight for their height, reflecting acute undernutrition); child stunting (share of children under age five who have low height for their age, reflecting chronic undernutrition), and child mortality (the mortality rate of children under the age of five).

Based on the values of the four indicators, the GHI determines hunger on a 100-point scale where zero is the best possible score (no hunger) and 100 is the worst. Each country’s GHI score is classified by severity, from low to extremely alarming. India has slipped to 101st position in the GHI 2021 of 116 countries, from its 2020 position of 94th. India’s GHI score has decreased from a 2020 GHI score of 38.8 points ~ considered alarming ~ to a 2021 GHI score of 27.5 ~ considered serious. Nothing can be more appropriate nowadays than a debate on the perceived level of corruption, because it is a collusive act between the bribe giver and bribe taker. But ultimately the victim is society as a whole. It is not adequately realized that corruption is one of the primary reasons for low productivity of investments, fiscal drain and continued mass poverty. Gunnar Myrdal, the Nobel laureate Swedish economist, aptly said that “the prevalence of corruption provides strong inhabitation and obstacle to development.”

Corruption in the public sector must be seen in the broader context of overall corruption in society. The most tangible form of corruption is money earned from illegitimate sources, a substantial part of which find its way into investments in real estate, gold, film financing, narcotics and terrorism. Thus the ‘Black Economy’ gets intertwined with the nation’s economy. This results in the creation of a patron- client network. The patron may be a political boss, a businessman, or even an executive with the authority to provide or divert resources and services in favour of many. In most third world countries, clients are expected to buy support from the patrons in exchange of their votes and resources. Thus the clientelism takes the form of political support and often involves quid pro quo. There is widespread public acceptance of corruption as an unavoidable accept of Indian life.

The Corruption Perception Index (CPI) released by Transparency International, ranks 180 countries and territories by their perceived corruption on 13 independent data sources and uses a scale of zero to 100, where zero is the highly corrupt and 100 is very clean. The CPI 2021 awarded India a score of 40, and ranked India in 85th place out of 180 countries (86 in 2000 and 80 in 2019). The World Inequality Report ranks India as one of the most unequal countries in the world. The ratio between the top 10 per cent to the bottom 50 per cent income gap stands at 22, making it among the most unequal countries. India was once known as the mine of wisdom and the fountainhead of justice and was credited with excellent intellect, exalted ideas, universal maxims, rare inventions and wonderful talents. But India today is marked by various contradictions. India boasts the world’s second largest pool of trained scientists and engineers but it has the largest number of school dropouts in the world.

Our biggest businesses are building international brands, yet red-tape continues to throttle the new entrepreneurs and frustrate the small business owners. Though India has climbed rapidly up the ladder of economic growth rates, it has fallen behind in the scale of social indicators of living standards, even compared with many countries India has been overtaking in terms of economic growth. At one end, the country is dealing with stone-age poverty and 19th century toilet issues while on the other end it is engaged with space exploration. The point is not that there has been no progress in India, nor that other countries have done better. But what is important is that India’s success in removing ‘poverty, ignorance, disease, and inequality’ has been markedly less substantial than that of many other countries.

To build up a new India we can do no better than follow the sage advice of Prof. Sen: “If the challenge of economic development in India is understood in terms of the need to expand social opportunities, then liberalization must be seen as occupying only one part of that large stage. By spotlighting that one part, the rest part of the stage is left obscure. The limitations of the Indian experience in planning lie as much in omissional errors in the dark part of the stage as it does in the commissioning mistakes in the spotlight section. The uneven concentration extracts a heavy price. The first step is to bring the darker part of the stage more into consideration. The attention needed is not just from the government, but also from the public at large.”