The Indian economy has seen many ups and downs in the past. During the last 72 years, we have passed many hurdles against faster development. But the current situation has been said to be more structural than policy/governance that concerned. How could it be?
Immediately after the freedom, advocacies for land reform, faster industrialization, education, health and basic amenities to all were a few things that happened. In due course of time, war and famine changed the discourse and food security, and geographical security came into prominence as well. Dialogues and debates were raised when the country needed reforms to restructure the economy leading to more progress. In the post-reform era, once again, there are demands for second-generation reforms and re-structural strategy for further growth push.
In this context, it is better to analyze why the voice for re-structural strategy is facing a few adversaries. The sluggish growth is continuously occurring in the last few years if not late for more than a decade. The global meltdown was recognized while the US sub-mortgage lending crisis hit in 2008. It is accepted that the Western economy has saturated and firms looking out for new markets and emerging economies provide some access. In contrast, India has a dichotomy to acquire new markets and allow access to local markets. Hence, it has to look more on the inside to address poverty and wealth imbalance. Therefore, there is an urgent need to look into issues that hinder hassle-free growth.
Rich–Poor Division
Today it is widely said that the gap between the rich and the poor has been widened and intensively spreading more. Around 1 per cent of the population holds 73 per cent of the total wealth, according to both public and private surveys. How did it happen and what way it could impact the growth story? As it is evident from the allegations that current public policies encourage the rich to become highly rich and, as a result, poorer become deeply poor. In such a case, the growth momentum achieved would be dispersed and provide a very low level of net growth among the vulnerable sections.
Also Read : How Would India Become A 5 Trillion Economy
To exactly know the magnitude of the rich–poor gap, one has to understand that it has around 3,400 persons who have a net worth of $50 million at least. About 90 per cent of the poorer section has wealth below $10,000.
This would restrict the growth in several ways as the wealth heaped would remain idle and therefore unproductive. A large portion of such wealth which is not under distribution from the ‘wealth creators’ would not help in the expansion of the economy.
Unidentified Lower Middle Class Disrupts the Flow?
Moreover, both central and state governments can formulate through integrating various welfare schemes against currently implemented numerous schemes.
Also Read : Pds System One Nation One Ration Card And Beyond
Vicious Circle of Corruption and Unaccounted Wealth
Corruption and unaccounted wealth over the years had social recognition. Poverty and corruption could be understood but corruption and power/authority can neither be understood nor recognized. At the same time, poverty is the axis of corruption. This vicious circle breaks even re-distribution and challenges to the government. Every tax evasion, bribing and other corruption increases the further chance for alienating financial resources, which keeps increasing correspondingly. Several global studies pointed out that poverty and corruption are deeply inter-related. As long as one exists,the survival of the other is ensured without a doubt. Over the course of development, poverty shall be countered and corruption shall increase. This is in fact history in our country. Post liberalization poverty did decrease but not in tandem with corruption.
In addition, there are other factors like demography, culture and sociological development which make intangible impacts on the development. However, those issues could be resolved with other measures than three issues that were discussed earlier. Prime Minister Modi’s $5 trillion economy initiative might be looking to resolve them for making it a great success.
Leave a Comment