Without reservation, and by any standard one wants to measure the growth, the Indian economy has been moving in an enviable fashion. But to some sociologists, this may seem only an exercise that has increased income inequality. A simple statistical fact is that when some sectors grow, even if others stay at the same level, the inequality of income automatically increases. The Indian case is not very different from this trend. When 33% of the population is still below the subsistence level (defined as an income of $2 per day), India needs to keep growing for a long time to reduce absolute poverty to a manageable level. Second, one can point out the “digital divide” that has created two separate population groups within India. The so called “skilled” (and elite) people live a whole different lifestyle than the poor and unskilled ones. Bridging this divide will be a challenging and a monumental task in the future.
Indian lawmakers need to overhaul the legal system urgently to manage this problem. There are three ministers of the ruling party already in jail, and few more deserve to be with them. It is a matter of public trust that moves the country successfully and efficiently. For economic growth, as many economists have already pointed out, no other factor is more important than the public enthusiasm, productivity, entrepreneurship and enterprise. Without these important ingredients, even the current economic growth can be in jeopardy unless the ruling party takes care of the public perception of impropriety.
Second, the effect of Indian economic growth seems to have created fewer jobs than economic growths across the world. Here is the dilemma: In the service sector, where the growth is concentrated, labor productivity is significantly higher than in manufacturing or in agriculture. Therefore, the “growth without employment” is a possible logical outcome when the service sector grows the fastest; Indian economic growth tends to fall in this category. The young, inexperienced, religious minorities, poor and illiterate still find job hunting a tedious exercise.
Third, in recent months, the inflation of food items has created a major worry for policymakers. The prices of gasoline, onions, cooking gas, diesel, rice and tomatoes have all skyrocketed for one reason or another. While price controls are not a solution for any inflation, an efficient market system where the government takes away all impediments for the smooth flow of supply and demand is necessary. It will also help if the production of these necessities is promoted with special subsidies. Some short-run solutions on an emergency basis are necessary if the inflation has to be brought under control.
Finally, political trouble in the Northeast (by Communist forces), in the south (by Naxalites), and up north (by so-called Kashmir liberators) cannot be ignored. These forces have a propensity to get stronger, and unless the government watches them carefully, they can significantly lower the economic growth rate. Additionally, the supply of real ingredients needed for meaningful sustainability has to be increased. This should include improved infrastructure facilities, a steady supply of necessities such as items for food, clothing and shelter, and improved efficiency in the public sector – which is still very dominant and intrusive in the Indian business environment.
In other words, there are some major challenges to be faced in the upcoming years. Answering “YES” to whether or not economic growth is sustainable depends upon how the Indian economy finds solutions to these challenges.
Indian lawmakers need to overhaul the legal system urgently to manage this problem. There are three ministers of the ruling party already in jail, and few more deserve to be with them. It is a matter of public trust that moves the country successfully and efficiently. For economic growth, as many economists have already pointed out, no other factor is more important than the public enthusiasm, productivity, entrepreneurship and enterprise. Without these important ingredients, even the current economic growth can be in jeopardy unless the ruling party takes care of the public perception of impropriety.
Second, the effect of Indian economic growth seems to have created fewer jobs than economic growths across the world. Here is the dilemma: In the service sector, where the growth is concentrated, labor productivity is significantly higher than in manufacturing or in agriculture. Therefore, the “growth without employment” is a possible logical outcome when the service sector grows the fastest; Indian economic growth tends to fall in this category. The young, inexperienced, religious minorities, poor and illiterate still find job hunting a tedious exercise.
Third, in recent months, the inflation of food items has created a major worry for policymakers. The prices of gasoline, onions, cooking gas, diesel, rice and tomatoes have all skyrocketed for one reason or another. While price controls are not a solution for any inflation, an efficient market system where the government takes away all impediments for the smooth flow of supply and demand is necessary. It will also help if the production of these necessities is promoted with special subsidies. Some short-run solutions on an emergency basis are necessary if the inflation has to be brought under control.
Finally, political trouble in the Northeast (by Communist forces), in the south (by Naxalites), and up north (by so-called Kashmir liberators) cannot be ignored. These forces have a propensity to get stronger, and unless the government watches them carefully, they can significantly lower the economic growth rate. Additionally, the supply of real ingredients needed for meaningful sustainability has to be increased. This should include improved infrastructure facilities, a steady supply of necessities such as items for food, clothing and shelter, and improved efficiency in the public sector – which is still very dominant and intrusive in the Indian business environment.
In other words, there are some major challenges to be faced in the upcoming years. Answering “YES” to whether or not economic growth is sustainable depends upon how the Indian economy finds solutions to these challenges.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
