It is no secret that many take India’s Growth Story — as is projected by the establishment – with a sense of cynicism. The growth is not reflected in the lives of the three-fourths of the population in any significant way while the top layer – the upper middle class and the rich – is jet-set and they are swarming the urban hi-flying eateries, shopping malls and branded shops. The dichotomy is all too glaring yet produces no social upheaval as had been the case in the long past. A noted economist, who was with the Prime Minister’s Economic Advisory Committee, has zeroed in on this by saying, “India shows all signs of a failed middle-income country.” He points out that, for the past 15 years, incomes of ordinary people are stagnating while some 10 per cent of the young uneducated people – 120 million — are simply lazing their time. The share of manufacturing in GDP is at its lowest level in 30 years. The average resident of Bihar or Uttar Pradesh “earns less than” the average Bangladeshi or Nepali. This, says Rathin Roy, can land India in the middle-income trap that nations like Brazil have fallen into. The way forward is to create employment opportunities in backward regions – by producing mass consumption items there.
People can now afford to spend much less than what they could during the pre-pandemic period, reflecting the odds or a stagnation in the purchasing power of the ordinary masses. Investment is low and so is productivity, with the result, “India can produce shirts for the rich but imports shirts for the poor.” People who do not have enough money are patronising the wayside eateries. This encouragement to the informal economy is what failed Brazil and Thailand, while the reverse is happening in successful economies like China and South Korea. In an economy where people’s purchasing power increases, they move away from cheap goods and patronize quality items. Here, the ‘patronization’ of the poor by governments through a subsidy raj since the 1990s meant people are getting things from the government and spend very little in the market. “This is a reflection of the governments’ failure to create universal prosperity.”
A failing economy is the antithesis of a buoyant economy. The present analysis is a true reflection of the ground realities that the governmental heads refuse to accept and acknowledge. An ailment can be overcome through proper treatment at the right time. A delay in addressing issues could worsen one’s health. It is fine to aspire for a super power status or a sharp jump for the national economy in the global sphere. But, a state of hallucination is unacceptable. The central government must address these issues with a sense of urgency and seriousness.
