By Moin Qazi
Dr. Moin Qazi is a Ph.D. in Economics and English.
The recent times have certainly been Indias elemental moments. The World Economic Summit at Davos recognised India as an economic and geopolitical power. Moodys upgrade of India for the first time in 14 years and the countrys entry into the World Banks top 100 Doing Business rankings last year have burnished the credentials of India in the worlds eyes. According to the World Bank, India is projected to be the world’s fastest-growing large economy for the rest of the decade. In light of all these achievements, Prime Minister Narendra Modi has succeeded in projecting himself as a strong leader, a man who can undertake tough reforms and be the one with a vision for a better India. However, much is still needed in terms of execution in the country, where the confidence is gradually becoming strained. This is compounded by several dismal economic indicators, explained below, that have thwarted the desired level of progress of the country.
Increasing gap between the rich and the poor
According to the report India Income Inequality, 1922-2014: From British Raj to Billionaire Raj?, published by French economists Lucas Chancel and Thomas Piketty, the share of the national income accruing to the top 1% income earners is now at its highest level since 1922, which is regarded as the milestone year for the Indian Income Tax Act. The top 1% earning class had captured less than 21% of total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% today.
Other indices have also confirmed the rising inequality in India. The latest Oxfam survey shows that India’s top 1% of the population now holds 73% of the entire wealth generated in the country. According to the National Council for Applied Economic Research (NCAER), only 12% of the population falls in the middle class. This indicates the growing inequality in the country, where the income levels of the richest and even the middle class do not fall on a close spectrum.
Incessant corruption in the country
It is time now that Prime Minister gets down to delivering the long list of promises that have added up with each of his new pronouncement. Modi has been announcing several grandiose plans by casting around for straws to clutch, the budget promises being a case in point. However, the priority here is to fund the infrastructure that fulfils the promises that have already been made. For that to happen, it is important to fix corruption, the greatest hindrance to all the ambitious planning.
Currently, the government estimates that 36 percent of subsidies never make it to any household and another 36 percent finds its way to non-poor households. Only the remaining 28 percent reaches its intended beneficiaryIndias poorest 40 percent. Prominent economists, Jagdish Bhagwati and Arvind Panagriya have noted that in the eight years of implementation of the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), costing Rs 266,000 crore, a sum of Rs 248 was spent to deliver a net of just Rs 50 per person per day.
Harmful unemployment in the country
Jobless growth, which has been more dramatic in the past two years, is probably the main issue of the Indian economy today. Due to difficulty in securing jobs in the private sector, people have been falling back on government jobs. But the public sector is shrinking. Not only are jobs fewer than before, but those that have been created are precarious and badly paid because of the informal nature of the economy.
Almost no new jobs have been created during the tenure of Modi. In the late years of Manmohan Singh, economists say, 6,00,000 extra jobs were added each year. That was far too few, considering roughly one million people joining the labour force every month. However, under Narendra Modi, the job-creation rate has fallen to zero. Modis economic promises are audacious, but given their lack of delivery, seem implausible.
India has ranked 131st among 188 countries surveyed for human development in 2016, according to a recent UN report. It has made no improvement in its ranking over the previous year. The report puts it in the “medium human development” bracket, which also includes nations like Bangladesh, Bhutan, Pakistan, Kenya, Myanmar, and Nepal.
To deliver development that is both a GDP-booster and at the same time is egalitarian and equitable, Modi will have to recast the development paradigm in its entirety. The country needs plans, systems, mutual accountability and financing mechanisms. Even before having all of that apparatus in place, we must first understand more concretely what each strategy means to the people who can be helped. While it is important to understand the faults, it is equally important to find out just the right way to bring corrections without hurting the sentiments of the country. Technology can be the key enabler, but to deliver the promise of connecting all the citizens of India, the technology has to be relevant and developed by keeping specific needs and challenges in mind.
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